Thank you, Karen, and thank you for joining us for Exact Sciences' first quarter 2012 conference call. On the call today are Kevin Conroy, the company's President and Chief Executive Officer; Maneesh Arora, our Chief Operating Officer and Chief Financial Officer; and Laura Stoltenberg, our Chief Commercial Officer.

Exact Sciences issued a news release earlier this morning, detailing our first quarter 2012 financial results. If you have not seen it, please go to our website at exactsciences.com or call (608) 284-5735 and I will provide it to you.

Following the Safe Harbor statement, Maneesh will provide a summary of our first quarter financial results. Next, Kevin will provide an update on our DeeP-C clinical study and recent scientific data.

one, speak only as of the date made; two, are subject to inherent risks and uncertainties, including those described in our most recently filed annual report form, or Form 10-K, and our subsequently filed quarterly reports on Form 10-Q; and three, should not be unduly relied upon. Except as otherwise required by the Federal Securities law, we disclaim any obligation or undertaking to publicly release any updates or revisions to any forward-looking statement contained herein or elsewhere to reflect any change in our expectations with regard thereto to any change in events, conditions or circumstances on which any such statement is based.

It is my pleasure now to introduce our Chief Operating Officer and Chief Financial Officer, Maneesh Arora.

Thank you, Cara, and good morning, everyone. I'm pleased to report that patient enrollment in our DeeP-C clinical trial remains on track.

We expect to complete enrollment during the third quarter. We continue to make significant investments in the trial to ensure its timely and successful completion.

We are increasing our cash utilization guidance to $41 million to $43 million. This additional cash utilization is being set primarily on ensuring that we enroll the appropriate mix of subjects in the study.

In the first quarter, we implemented a plan to increase payments to patient enrollment sites to recruit patients 65 and older. As a result, we are confident in the enrollment rates that we are seeing.

Our cash balance at the end of the first quarter of 2012 was $83.5 million.

It's now my pleasure to introduce Exact's President and CEO, Kevin Conroy. Kevin?

Thanks, Maneesh. Let's start with an update on our DeeP-C clinical trial.

One of our objectives has been to bring more sites into the study to ensure that we maintain a high pace of patient enrollment. We have enrolled and shipped collection kits to more than 80 enrollment sites, which represent over 100 physician office locations.

Overall, patient enrollment remains on track. The observed cancer incidence in our patient population also is on track.

The number of cancer patients is important because it determines the total number of patients we need to close enrollment. We remain confident that we will complete patient enrollment during the third quarter.

Now let's review the timeline for FDA submission. We are planning on a modular PMA submission.

This approach allows us to submit and be reviewed by the FDA on a rolling basis.

After completing patient enrollment in the third quarter, we plan to announce topline results of this study in a scientific forum during the fourth quarter.

Our first PMA modules will be submitted during the fourth quarter as well. We plan to submit our final clinical module in early 2013.

Let's turn to scientific data regarding Cologuard and cancer screening compliance. Several recent and upcoming data presentations are worth calling your attention to.

At the American Association for Cancer Research annual meeting in Chicago, Dr. David Ahlquist of the Mayo Clinic, presented data from a study using our validation study markers.

These data demonstrated that patients do not have to adjust their diet, lifestyle or medication before being screened with a noninvasive DNA stool test. Doctor Ahlquist believes these findings could benefit compliance.

On Saturday, May 19, Dr. Ahlquist will present data at the Digestive Disease Week meeting in San Diego, detailing his work with methylation markers and the detection of colorectal cancer in patients with inflammatory bowel disease.

He found that stool-based testing highly discriminated between cases of IBD, where cancer and precancers were present and those where they were not.

Finally, we will be presenting a poster at DDW that highlights the performance of our fully optimized test. We presented these results for the first time [Audio Gap] Association for Molecular Pathology meeting last November.

They demonstrate 98% cancer sensitivity, 59% precancer sensitivity and 91% specificity.

Let's turn now to a study regarding screening compliance. A recent study published in the Archives of Internal Medicine explored colorectal cancer screening compliance, which remains lower than the methods of cancer screening like those for cervical and breast cancer.

Study participants were randomized to receive a recommendation for screening by fecal occult blood testing, or FOBT, colonoscopy or their choice of either FOBT or colonoscopy. Only 38% of those who received a recommendation for colonoscopy followed-through and received that procedure within 12 months.

On the other hand, 69% of those who were given a choice of FOBT or colonoscopy were screened within a year. It's important to note that FOBT requires patients to provide 3 samples over 3 days and follow a significantly restricted diet, and the FOBT test does not significantly detect precancers and has less than optimal cancer detection.

This study shows that by offering patients a choice, we can nearly double the compliance rate. And this study demonstrated that colonoscopy rates are not significantly affected by providing the choice.

31% of those in the study who were given that choice still chose the colonoscopy.

By offering patients a choice of colonoscopy or a noninvasive test, overall compliance will dramatically increase, yet overall colonoscopy utilization will likely grow because more patients will need their precancerous polyps removed.

preparing and submitting our PMA application, getting our manufacturing facility ready and developing the market for Cologuard.

We just discussed our FDA submission in detail. We remain on track for all of our manufacturing goals, including having in place a fully implemented quality system.

Our automation software validation also is on track. We look forward to being able to show off the system and the touch screen software later this year.

Likewise, we continue to make the progress we expected on our market development priorities. They include securing the appropriate level of reimbursement, working with key opinion leaders, medical groups and GI and primary care physician societies.

We are really excited to have Laura Stoltenberg on board. She has made a very positive impact, even in the short time that she has been with us, and is intently focused on implementing the plan and building a team to ensure successful commercialization.

In conclusion, our DeeP-C clinical trial is on track. We have a plan to complete the DeeP-C study and submit a PMA application to the FDA in 2012.

Our manufacturing and market development goals are on track. And Cologuard addresses a significant clinical need and large global market opportunity.

I especially want to thank the team at Exact for keeping the DeeP-C study and product development on track and we look forward to the back half of this year.

Thank you, and we would be happy to take any questions.

Kevin, Maneesh, as I look at the quarterly expenses, the SG&A expense dropped a little bit from the fourth quarter to the first quarter, what should we expect modeling going forward for the rest of the year?

Quin, yes, that was just a function of some of the timing of some of our activities, so you should not expect that to continue to trend and expect a return to fourth quarter levels.

Got it. And then a question maybe for Laura.

Now that you've been there for a couple of months, a little bit longer, can you tell us a little bit about what you're seeing so far and kind of your plans in the development side?

Sure. First of all, I am thrilled to be here.

Just as far as prioritization, my top priority is ensuring that we have all commercial initiatives aligned for Cologuard to become a global standard of care for colorectal cancer screening. So in addition, some market development priorities that you've seen before.

I'm expanding those to include payer initiatives beyond CMS to private payer panels to ensure that we ultimately obtain optimal routine payments for our test. As Kevin mentioned, we continue our outreach to physicians to ensure we have the market insights for product development, as well as working with providers on understanding their requirements to prescribe the test and also understanding our patient requirements to ensure that they have a positive experience with Cologuard.

And I guess, any updates that you or Kevin might have on your discussions with CMS?

We don't have any update at this time. As you know, we've been working through this parallel review process, which is a pilot program.

And we have had really kind of deep and active engagement with CMS and FDA as part of that process.

This is actually Will [ph] on the line on Wood. I know you talked about some paper being presented at the DDW on May 19 regarding the methylation markers.

Can you clarify, is there something -- does that actually relate to the Cologuard or is that a separate study evaluating the same methylation markers that are used in the Cologuard assay?

Yes, it's the same markers that are used -- the same methylation markers that are used in the Cologuard product. So it directly implicates a product that we're launching, and we think it is significant because, as you know, the other noninvasive tests require dietary and medication restrictions, which the data in this test indicate will not be required.

So it really speaks directly to the patient experience, and we think that's important in terms of compliance.

Okay. And for the other study that you mentioned, is that the exactly same study that was presented at AMP or do you have additional data there?

Or is that a new study that you're going to present at DDW?

Which one are you speaking to? We mentioned 3 posters or presentations altogether.

One was the IBD and the other was a representation of the data that was presented late last year at AMP.

Okay, so that was the same as that -- the one presented at AMP. And are you conducting any other validation studies with your final locked by a marker panel?

I know you said you are going to conduct a few more studies before submitting your PMA. Do you plan to present those studies at any of the conferences in the near future?

Due to the timing of that work, it's most likely that we'll have the DeeP-C study data available for presentation around that same time that we have additional internal validation data. So we'll provide more clarity in the future.

But I think the DeeP-C clinical data will be the highlight there.

Question for you. I think last quarter and even before that, you guys have talked a little bit about some additional revenue, potential opportunities and things that you guys were thinking about doing in terms of maybe a processing center and then the potential of maybe even doing a Cleo [ph] lab.

Can you just update us as to what your thoughts are on those 2 opportunities and where are now that you're onboard, if you have any thoughts on those in particular?

So all along, we've believed that it is very important for as to have our own lab, although that is not the core part of our model. Our model is that we're a kit company and we want to have this test widely distributed to molecular diagnostic laboratories.

We also believe that having our own laboratory may help expedite the adoption of this test. For example, if you take a look at a particular healthcare system that wants to begin offering this test early on at launch, typically it takes 3 until, sometimes even 6 months for a lab to get a test up and running.

Well, we want to make sure that our test is available to that healthcare system in that intervening period before their lab has the test up and running. So if you think of our lab as being the transition site to help customers start utilizing the test faster.

We also want to do everything possible to make the process of processing the stool sample as easy as possible. So we are likely also to offer to our customers, and this still has to be embedded more thoroughly, but offer a process to our customers whereby the sample could be processed down to a small tube of DNA that they could take from there forward.

And obviously, that would have to be at the appropriate price point for us to take on that work. And that's where our thoughts are today.

Laura, do you have anything to add there?

I'd also say that taking a look at potential future pipeline opportunities and a broad portfolio, that it provides us some flexibility for the future for additional product extensions or offerings.

A couple of questions. Kevin, with regard to pharmacoeconomics study you've talked about in the past, have you started that or are you planning to start it soon and when will that data be available for Cologuard?

Yes. So yes, we have started that.

A pretty significant project is underway right now. What we have decided to do, however, is to push out the submission of a paper.

What we have -- it's been requested from payers is that they see our internal perspective and we want to vet that. Ultimately, we will expect to see a paper published.

What Laura has done, she's come in and had us take a step back, and put together a plan for all of the things, not only a peer review paper, but all of the other things that are required to secure routine and optimal payment from private insurers. And so that's -- we kind of expanded what we want to do this year in terms of reimbursement.

And as part of that, we've actually defocused that presentation or that paper until sometime next year.

Okay, that makes sense. And also I wanted to ask you -- oh, first of all, thanks for the update on the progress with the DeeP-C study on the cancer patients.

But what about adenoma and perhaps the strategy around adenoma's sensitivity? What would you consider to be too low of a sensitivity on adenomas to make it a viable test?

Well, because of cumulative sensitivity, you could have something even in the 40s still be very effective as a colon cancer screening test. However, all along, we had set guidance that said our test will be at least 50% sensitive for 1 centimeter in greater adenoma.

Now, Charles, the important thing to note is that a 1 centimeter precancerous polyp is about 10% likely to proceed to stage I cancer. Our test detects and one study was shown to detect about 80% of 2-centimeter polyps.

Most polyps are about 80% likely to go to stage I cancer. So it's really important not only to think of this in terms of an absolute number of 1 centimeter and greater sensitivity, but also what is the sensitivity for the most dangerous precancerous polyps?

Our testing in that same study would show to be 90% sensitive for 3-centimeters and greater polyps, which almost all go to cancer. So that's where we are in terms of our view of precancer sensitivity issue.

You also know in the clinical study, with the significant number of patients that we expect to be enrolled in the study, up to 10,000 patients, now we expect, the number of precancerous will be significant, probably in the range of 500, and that significantly powers the study.

Okay, that's helpful, Kevin. With regard to DDW, you mentioned data on potential use in IBD.

And frankly, that's somewhat intriguing to us because we've never considered IBD potential use in our market projections. I'm sure it's a little too early, but could you help us understand if that would be a different test and what the regulatory strategy would be around the potential use for Cologuard or a Cologuard-like test in IBD?

Sure. Well first, let me take a step back and emphasize that this particular data could have a huge impact in a population that does not today have a very good screening method.

And also that this idea emanated from the Mayo Clinic, and really I think speaks to the power of the collaboration between Exact Sciences and the Mayo Clinic. They really have brought a lot of different ideas to the table that are -- we believe will have a big impact in our product pipeline in the future and really have a significant impact on patients.

Here, with the situation that you have with Crohn's disease patients and ulcerative colitis patients is that their colon -- go on Google, Crohn's disease, and look at the images, it's nearly impossible to see a precancerous polyp or even cancer in one of these patients' colons when it's highly inflamed. As a result, what GIs do when they screen -- and you're supposed to be screened every year if you're an IBD patient after you've had the disease for a certain period of time -- is they go into this 5.5-foot long cylinder and take random biopsies, let's call it about 30 random biopsies, and then they look at those polyps and they hope that they detected a precancerous polyp or cancer.

Obviously, the odds of doing so aren't great. I've told the story many times that our Chief Medical Officer's brother died last year after having been scoped virtually every year and having been recently scoped and then he -- they missed stage IV cancer because it's just really hard to see in a colon that is inflamed.

As a result, a stool-based test that is highly sensitive for cancer and precancer can help a GI who is screening these patients every year. So it should speak to the power of combining a stool DNA test with colonoscopy to find more cancers.

And then you may ask, well how could that potentially help you find a cancer? If you spray the colon with a particular dye, it's called chromoscopy, you are then able to better see either dysplasia or cancer.

And so we think that this is a potential pipeline product down the road, and we look forward to see this presentation in May.

And my last question is for Maneesh perhaps, regarding R&D expenditures, this quarter was about 9, I think you spent probably the vast majority on this particular DeeP-C study. What happens at the end of the year?

Would you anticipate expenditures to drop off with the completion of this trial or would you redeploy those expenditures into some of the pipeline programs?

We expect them to tail off a little bit in the fourth quarter from an R&D perspective. But that's -- other than that, we don't expect a significant redeployment in the current level of R&D spending back into R&D, going forward and the out years has before.

It's actually Dave Clair here for Bill. First question for me and maybe for Laura, any comments, I mean, the initial discussions you're having with the private payers?

And then how big of a salesforce do you think will be necessary to commercialize the assay?

Okay, so on the first point with private payers, we're just starting to initiate some of the insights as far their requirements on evidence generation and how they are taking a look at establishing routine optimal payments. We'll be able to provide some additional guidance as we go through that process later this year.

As Kevin mentioned, we're just expanding our scope as it comes to reimbursement, so it's a bit premature to get some details or guidance on that point. As far as salesforce, we won't be discussing at this time actual plans.

What I can say just to reiterate is we're having those discussions with different stakeholders, including physicians group and group practices, as well as GIs to help inform how we are going to launch the product. So more to come there as we go through the year.

Okay. And then you mentioned that we should see the system sometime this year.

Do you have any target conferences we should look forward like AMP or ACC?

We will also provide those details later in the year because we just have some planning to do there.

First, I wanted to clarify with Laura, a little more, specifically around the receptivity that you're finding toward a proposed Cologuard price that we have forecasted around $300, have you talked about specific pricing potential with payers?

Let me take this one. We, initially in the past couple of years, have talked about a target price, and more recently, based upon input that we've gotten from reimbursement experts that we have had analyze our product, we believe that there is potential upside to the pricing.

We think that it wouldn't be prudent for you to change your models. But we do think that because of the value of this test, there is a path to -- of securing greater reimbursement.

A lot of work has to be done. So I don't think that you should take anything into your plans.

But rest assured that we are intensely focused on making sure that we secure the optimal reimbursement for the test.

Well, that's great news. Next let me just discuss the pipeline with you.

First, you mentioned the ulcerative colitis and Crohn's disease as a potential pipeline product. Are there different markers in that test?

Is that substantially different than Cologuard?

Those markers are the same markers that are in the Cologuard test, absent 1 marker. So we pulled one of the markers out, and I'd rather not talk about it at this point for intellectual property reasons.

But we're really pleased to note that we happened to pick the right combination of markers for the different patient population. And let me reemphasize there the -- that's a significant opportunity by itself in that there are about 1.5 million, easily 1.5 million IBD patients, which are recommended to be screened every year.

And this is an awfully high-value test for those patients.

Yes, sure is. Absolutely.

What about some other pipeline products? I think some of them hinted at in the past, are there some other pipeline products that you're working on?

And can you...

At the appropriate time, we will lay out a more thorough pipeline. The real focus, obviously, has to be on Cologuard because there's a significant opportunity here.

What I will say is that we're focused on making sure that we deliver products that help GIs and that detect more cancers. And the GI track is an area that we don't think a lot of people spend a lot of time focusing on.

And fortunately, the collaborators that we have worked with, Mayo Clinic and others, really are knowledgeable in that space. So we're going to keep building on the momentum that we have here and the relationships that we've developed to enhance the value of the company.

Maybe just one last clarification. We've targeted all along that we expected full enrollment in the third quarter, and I think you've said on the call that you're comfortable that you will achieve full enrollment in the third quarter.

I just want to clarify, the third quarter begins in 2 months. So you're telling us you're comfortable you're going to finish in 2 months, you must be pretty close to full enrollment now, is that a reasonable assumption?

Well, the third quarter has 3 months in it, first of all. But yes, we are very comfortable.

Now the risk is that the patients that are enrolling now, none of them have cancer. And that's obviously something that we can't control.

What Maneesh and the clinical affairs team have done is an incredible job of enrolling the appropriately-aged patients. As we said in the last call, it's awfully easy to enroll younger patients because there is a requirement in the clinical study that a patient in the study not have had a colonoscopy in 9 years.

So that's pretty easy for 50- or 55-year-old patient. It's easy to find those patients.

It's harder to find 65-year and older patients that haven't had a colonoscopy in 9 years and to convince them to be a part of the study. And the team has done a Herculean job, and it's been a little bit more expensive than we anticipated, but a Herculean job exceeding on a week-to-week basis our enrollment for that age group.

So we are very confident that if we continue with the same cancer incidence rate and the current enrollment rate that this team is delivering, I'll only tell you it is not an easy thing to enroll at a rate faster than you really ever anticipated. But if the cancer incidence rate remains the same, and enrollment remains the same, we'll finish this in the third quarter.

Just a follow-up question for Laura. So do you expect to secure some of the private payers before you have the pharmacoeconomics study published?

Our private payer initiatives aren't necessarily tied to the health economics study. And again, being fairly new to the team, this is a plan that we are just initiating, so I can't give any guidance on timing at this point.

Okay. And then maybe for Kevin, with respect to manufacturing, so if you submit your protocols and then -- I guess, in the fourth quarter.

When you think everything is locked down, ready to go to receive your sales forecast in hand, is it better to assume by mid-year, next year I'm talking, Kevin?

Well, we can't give guidance at this point in terms of when we would expect FDA approval. In fact, we haven't given guidance that it's next year.

I think it's reasonable to assume that if we submit late this year, early next year, that is within a 12-month process. So I think any assumption that there is a launch middle of year is a very aggressive assumption, knowing the realities of an FDA submission.

It could happen, but I think it's important to be realistic for planning purposes.

Okay. And then I just want a quick follow-up on the 80 sites, are those up and running?

Yes, all of those sites have received collection kits and are enrolling patients.

Kevin, I was wondering if you might talk a bit about the automation process, where you are, what kind of capacity you need to have when in fact you do go to commercial launch?

Yes. So we have multiple instruments, more than 1/2 a dozen instruments that are being tested today.

They are up and running here. And the instrument program is on track.

One thing I'd like to note is I don't know if a molecular diagnostics program has ever, and I think it's been about 14 months, progressed this far within instrument program and it's remained on track. The software is today being validated by a outside vendor who specializes in validating software for molecular diagnostics in clinical diagnostics companies.

So we're just really pleased with where we are. It's a very scalable offering because this is manufactured by a third-party that manufactures instruments with the kind of phones of an instrument and the core underlying software for these instruments for clinical diagnostics companies.

It's not their first rodeo and that has been a big part of the reason we've been successful so far. So we're nearing the end of that process and we will then quickly be deploying those instruments to 2, possibly 3, external clinical trial sites.

Okay. And then will you do all the manufacturing though, in Madison or will you do it regionally, or how will you go about doing that?

The manufacturing of the instruments, is that your question?

No, the kits.

Well, the kits will be assembled here in Madison. And they will then be shipped to the appropriate sites.

I just have a quick question for Maneesh, with regard to the cash utilization number. Just for clarification, that $41 million to $43 million, that's cash utilization for the year or for the execution of that trial?

No, that's full year cash utilization, so prior guidance was $36 million to $39 million and the new guidance was $41 million to $43 million.

Well, thank you very much and we look forward to talking to you in the near future.