I joined Exact Sciences at the beginning of last year because of the opportunity to play a major role in the prevention of colorectal cancer. We believe that we are on the cusp of introducing a revolutionary, non-invasive screening tool for the early detection and prevention of colon cancer. After more than a year as CEO, I feel even more strongly about our prospects for success. During the last year, our team has made great strides in developing a product that reliably detects both colon cancer and the precursor polyps that lead to it.

The year 2009 was one of great change and even greater accomplishment for Exact Sciences. Maneesh Arora, our chief financial officer, and I began the year as the company’s new management team. By the end of the year, the company was settled in Wisconsin, had moved into a new facility and was executing well on critically important product development and clinical trial planning milestones.

After joining the company, we developed strategic and operating plans for 2009. These plans dictated our three 2009 priorities: product development, clinical trial planning and creating a performance culture in the company. As we entered 2010, our product and clinical trial work continued, while we began our market development efforts.

We continue to make great strides with assay development and we are on track with our plans to bring a highly-accurate, patient-friendly colon cancer screening test to the clinical lab. Our product development efforts have been aimed at delivering a user-friendly test that reliably detects precancer and cancer with low false positive and false negative rates. We simplified our collection device, shrinking it from the size of a bucket to a small vial that is both patient and lab friendly. We condensed the workflow of our test, reducing DNA extraction from roughly two days to about three hours and increasing the DNA yield ten-fold. We also are highly focused on automating the test, which is critical for the wide adoption of what we expect will be a high-volume laboratory test.

We made an addition to our test that will improve its performance without increasing its complexity. To our panel of powerful DNA biomarkers, we added a fecal blood marker. Fecal blood tests are used as an adjunct to colonoscopy to detect colon cancer and currently have a market in the United States of 7 to 8 million tests annually. When used in combination with our DNA biomarkers, the fecal blood test will enhance our test’s sensitivity and help us market it to physicians who already order the fecal test.

There were two important events during 2009 that will significantly influence our research and development efforts for years to come. The first is the hiring of Dr. Graham Lidgard as the company’s chief science officer. Graham has more than three decades of clinical diagnostic product development experience, overseeing teams that have successfully developed and gained FDA approval for approximately 80 diagnostic tests. The second is the product development collaboration we began with the Mayo Clinic and Dr. David Ahlquist’s lab. Both Graham’s arrival and the strong relationship we have developed with Dr. Ahlquist and his team can be seen in the outstanding strides we made in product development in 2009 and continue to make today.

The great progress we have made with our product development is tied directly to our efforts to prepare for the test’s clinical trial. This work also progressed well during the past 18 months. We remain on track to begin our trial in the second or third quarter of 2011 and make our submission to the FDA in 2012.

Throughout the last year, we have been planning a clinical trial that we believe will provide ample data about the efficacy of our test. While we still have a great deal more work to do to finalize our trial design and initiate the trial, we are pleased with the progress we have made to date. In particular, we have hired a clinical affairs team, a clinical research organization, or CRO, a regulatory advisor and top-tier clinical investigators. We also are in the process of recruiting enrollment sites and continue to have discussions with the FDA regarding our study design. We’re bringing the same focus and precision to our upcoming clinical trial that brought us success at our previous company, Third Wave Technologies, with the approval of an important molecular diagnostic screening test for the prevention of cervical cancer.

The precursor to our clinical trial is a large pre-clinical validation study. We are on plan to complete the study during the second half of this year. This study will establish the clinical performance of our test, namely its sensitivity and specificity.

We also have begun to prepare to commercialize our test. Though there remain several significant projects to complete before our test is launched, we must prepare for it now. We have engaged key physicians, laboratorians and payors. These leaders continue to provide us with valuable insight into the market and how they expect it to change. We are coupling these important perceptions with a thorough review of several cancer screening success stories in our industry, including Digene and Cytyc.

Continuing execution on our priorities requires significant capital, of course. We have utilized our cash very efficiently during the past 18 months, while making the critical investments we have needed, particularly in research and development, to advance our priorities. Our balance sheet also has benefited from two fundraising events during the past year. First with an $8.2-million private placement and then with an $18.7-million stock offering, we have ensured that Exact can execute on each of its goals and move closer to commercializing our one-of-a-kind, patient-friendly colon cancer screening test.

We will focus in the coming months on testing and refining our product, conducting the pre-clinical study, and designing and preparing for a robust, pivotal FDA clinical trial. These goals, and the accomplishments of 2009 and early 2010, simply would not be achievable without the remarkably skilled and dedicated employees of Exact Sciences. There is one thing I know about my colleagues here. They are driven to succeed. We are excited about what the future holds and appreciate your long-term commitment to Exact Sciences.

Sincerely yours, Kevin T. Conroy
President and Chief Executive Officer