Exact Sciences Management Discusses Q3 2012 Results - Earnings Call Transcript

Oct.30.12 | About: EXACT Sciences (EXAS)

Exact Sciences (NASDAQ:EXAS)

Q3 2012 Earnings Call

October 30, 2012 10:00 am ET

Executives

Rod Hise

Maneesh K. Arora - Chief Financial Officer, Chief Operating Officer, Principal Accounting Officer, Senior Vice President and Secretary

Kevin T. Conroy - Chief Executive Officer, President and Director

Laura S. Stoltenberg - Chief Commercial Officer

Analysts

Brian Weinstein - William Blair & Company L.L.C., Research Division

Jeffrey T. Elliott - Robert W. Baird & Co. Incorporated, Research Division

Jon Davis Wood - Jefferies & Company, Inc., Research Division

Raymond A. Myers - The Benchmark Company, LLC, Research Division

Zarak Khurshid - Wedbush Securities Inc., Research Division

Operator

Great day, ladies and gentlemen, and welcome to the Exact Sciences Corporation Third Quarter Earnings Call. [Operator Instructions] As a reminder, today's conference call is being recorded. I would now like to turn the conference over to your host, Rod Hise. Please begin.

Rod Hise

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

Exact Sciences issued a news release earlier this morning, detailing our third quarter 2012 financial results. If you've not seen it, please go to our website at exactsciences.com or call (608) 807-4607, and I'll provide it to you.

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

Before we get underway, I'd ask everyone to take note of the Safe Harbor paragraph that appears at the end of the news release issued this morning, covering the company's financial results. This paragraph states that any forward-looking statements that we make are: 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 on 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 laws, we disclaim any obligation or undertaking to publicly release any updates or revisions to any forward-looking statement contained herein or elsewhere to reflect our 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 and Financial Officer, Maneesh Arora.

Maneesh K. Arora

Thank you, Rod, and good morning, everyone. We are very pleased to report that patient enrollment for our DeeP-C clinical trial will close in 2 weeks on November 15. Kevin will provide a complete update on the trial and our FDA submissions in a moment.

As the clinical trial concludes, we're continuing our efforts to make the company ready for commercialization of the test once it's approved by FDA. These efforts are on track and will intensify as we approach FDA approval. We remain on track to meet our full year 2012 cash utilization target and narrow the guidance range for cash utilization to $42 million to $43 million. Our cash balance at the end of the third quarter was $118.6 million after we raised $57.8 million during the quarter. We now anticipate a 2012 yearend cash balance of between $108 million and $109 million.

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

Kevin T. Conroy

Thanks, Maneesh. First, before we get underway here, I'd just like to express on behalf of the entire team at Exact Sciences how concerned we are for all of those friends and colleagues of ours affected by Hurricane Sandy, and we hope that you and your families are safe and recover quickly from this devastating storm.

Today, we would like to talk about 5 things. First of all, our recent cutoff study data. Secondly, an update on FDA and CMS. Third, an update on our clinical trial. Fourth, an update on how we plan to pursue our test commercial opportunity, and finally, a new opportunity that we see in screening in patients with inflammatory bowel disease.

We are very pleased to see the performance of the test in a large study showing 98% cancer detection in that study; 83% detection of high-grade dysplasia, we'll talk about high-grade dysplasia shortly; 57% detection of pre-cancers greater than or equal to 1 centimeter and 90% specificity.

This data is the third consecutive study over the last 3 years showing that this is a test with great performance. I would like to drive home the point that point-in-time sensitivity is not the most important part of this test clinically. The impact of this test will be felt from repeated screening and the cumulative sensitivity, like the pap smear, of detecting pre-cancers, which take a long time to develop and turn into cancer.

This study was conducted on 1,003 patients, a very large and statistically significant population. It exceeded our expectations. It's important to note that the data was generated from samples processed on the very automation system that we're using in the DeeP-C study. Again, it detected 83% of high-grade dysplasia. This is very important because the majority of these pre-cancers progress to cancer.

And finally, the cutoff method that was established in the study has been locked down, submitted to the FDA and will be used in the DeeP-C study. Another important aspect of this data is that we see a significant increase in the sensitivity of the test as the size of the polyp grows, from 1 centimeter to over 3 centimeters. This is important clinically because as a polyp grows in size, the risk of progression to cancer increases. So over time, as the polyp grows, our test is better at detecting. This is an important part of increasing the programmatic sensitivity of the test.

Now, taking a look at the detection of the test in cases of high-grade dysplasia and cancer. High-grade dysplasia is a condition that occurs and typically takes 2 to 5 years to progress to cancer. The goal is to detect as many of these high-grade dysplasias before cancer is possible. And as you can see, the sensitivity of the test there is extremely strong. Our members of the scientific advisory board were very impressed with this level of sensitivity, and we're pleased that this should have a very significant impact clinically, following approval of this test.

Now, turning to an update on the FDA and CMS. I'm pleased to report that the company made a pre-PMA submission to the FDA, and we held a joint meeting with the FDA and CMS following this meeting. Agency comments have been incorporated into the submission plans, and we expect to pursue a modular submission that is a sequential submission of the manufacturing, analytical and clinical modules. And we also expect an expedited review.

With CMS, we have worked very closely with both their coverage and payment groups, and we expect a national coverage determination to be made in parallel with FDA submission leading to coverage, coding and payment decisions within 3 months of FDA approval. This parallel review, we believe, differentiates us from other diagnostic tests and many other medical devices, in that we expect to have FDA approval and CMS reimbursement, broad reimbursement method, shortly after FDA approval and at the time of launch. This is important because nearly 50% of our intended patient population are covered by Medicare. This is unique for a molecular diagnostic to have such broad reimbursement at the time of launch. And typically, private payers follow the inclusion of a test on the fee schedule, the Medicare fee schedule. Further, the ACA mandates insurance coverage for screen tests that are upgraded either A or B by USPSTF, and we expect that the USPSTF will evaluate our test in the 2013 to '14 timeframe.

Now, turning to an update on our clinical trials. We expect to complete enrollment on or about November 15. Today, we have had over 12,000 patients enrolled at 87 sites in 28 U.S. sites or states and 1 Canadian province. 50 cancer patients have been enrolled to date and more are likely.

There are over 1,500 patients that are in process for which we do not have colonoscopy or pathology data on yet, so more cancers are likely from that patient population. We also expect to have over 700 precancerous polyps in the study -- or 700 pre-cancer patients in the study. This trial is one of the largest, most well powered colon cancer screening trials ever conducted. This will put us in a very good position with FDA, CMS and private insurers, and most importantly, physicians and patients.

This team has shown incredible devotion to the cause to achieve our enrollment goals. As I mentioned a moment ago, we are very pleased with the results of our most recent validation study, which were announced earlier in October. These results give us great hope going into the DeeP-C pivotal study -- testing.

During late August, September and October, we saw few new cancer patients enrolled into the clinical trial. Immediately, we made plans to enroll approximately 2,000 additional patients into the study. We had seen a significant increase in the number of cancer patients enrolled recently.

Today, we have approximately 50 cancer patients and are waiting on colonoscopy and pathology reports for an additional 1,700 patients. We have made 2 decisions that will push out the date of the data read. First, we made the decision to continue enrollment through November to maximize the trial's power. Secondly, after discussions with our statistical consultant and the agency, we made the decision to test all of the patient samples rather than a randomly selected portion of the over 10,000 normals, as we had previously planned. By testing all of the patient samples, we reduced any risk of proceed bias in the trial. This, however, will take additional time and resources to complete. Though we realize that the delay in investors seeing the data is not optimal, we expect that these delays will push back submission of the final module by only 30 to 45 days. We do not anticipate that this will materially affect the PMA review or approval timeline.

FDA and CMS are both devoting significant resources to this project and we anticipate making a high-quality FDA submission and CMS application.

Our first module, the manufacturing module, will be submitted to the FDA in December as planned. Because of the 2 factors I've just described, our second analytical module will be submitted in February. We now expect to announce top line results of the trial in March.

Three submissions will follow the announcement of the top line results. First, we will submit the final module to the FDA, which is the clinical module. Second, we will make our application to CMS for Medicare coverage of our test. Finally, we will submit manuscripts to peer review publications that we expect to be published in 2013.

While this timeline deviates from our original expectations, we don't believe that it will have a material effect on the timing of commercialization.

Let's turn now to a new opportunity the company will pursue. Let me revise that. Now, let's turn our attention to our commercialization plans. First of all, we have decided to focus at launch on the highest impact group, and that is the 400 largest hospitals and systems that cumulatively employ about 40% of primary care physicians, so that we can maximize our access to patients. These large hospitals and group practices make systemwide screening decisions, in other words, they choose which products will be used by their patients, whether it's colonoscopy or FOBT or FIT. They also employ their own screening programs using techniques such as electronic reminders and mailers to get patients into the screening population. And typically, they only offer one fecal test, a noninvasive test, not multiple tests.

It's also important to note that over the last several years, the FIT test has rapidly penetrated the FOBT market. Despite the FIT test's minimal increase in sensitivity, the FIT test is about 65% sensitive for cancer detection, whereas the FOBT test is approximately 40% sensitive. This minor increase in cancer sensitivity has still increased or has generated an increase in penetration from 200,000 tests to 3.4 million tests and growing. Neither of these tests are particularly sensitive for pre-cancer detection, both at or below 20% pre-cancer sensitivity. So by and large, they do not help in the prevention of cancer.

We believe that our tests will outperform both of these tests, and we plan to aggressively pursue displacement of FOBT and FIT testing in that -- those institutions that employ large numbers of primary care physicians. Further, we are very focused on the 8% of the known primary care physician prescribers that generate 60% of the FOBT and FIT test volume. We know who these physicians are and part of Laura's commercial strategy is to focus intently on those physicians.

Now, moving to a new opportunity, the detection of colon cancer and pre-cancers in the inflammatory bowel disease population. This population includes patients with Crohn's disease and ulcerative colitis who suffer from a significant increase and a lifetime risk of colon cancer. It is a major, actually, a leading cause of death in these patients. And inflammation obscures lesion detection by optimal colonoscopy. The test uses -- the test that we will deploy into this market uses our current markers and testing system. And in one study by Mayo Clinic on a small sample population, there was 100% cancer sensitivity and 80% pre-cancer sensitivity at an 89% specificity. We believe that this is a significant market opportunity because today, about half of patients with IBD won't get screened. They get what is called colonoscopy fatigue. And it's clear from the key opinion leaders that they seek any improvement in IBD cancer surveillance because of this problem.

Today, the main method for screening in these patients is to use colonoscopy, but rather than relying on optical colonoscopy, the standard is to take multiple biopsies and hope that you are able to biopsy the exact location of the pre-cancer or cancer.

We have formed an advisory group of key opinion leaders that have looked at the data and our plans for this test. A protocol has been drafted. We are currently planning to get IRB approvals by the end of this year and begin enrolling patients in Q1, looking for 300 IBD patients, 50 with -- who are -- 30 with cancers and 20 with high-grade dysplasia, with 250 controls without dysplasia or cancer.

We believe that this is a new better solution to IBD patients for colon cancer screening, and we look forward to bringing this test to market. Today, there are over 1.4 million patients diagnosed with IBD and some estimate that IBD patients comprise 1% to 2% of the U.S. population, with 30,000 new diagnoses every year. And the peak onset age is at age 15 to 30, with annual colon cancer screening recommended 8 years after diagnosis. There only are approximately 500 IBD specialists who screen about half of these patients for colon cancer. And so it's a very targeted audience for us to launch this test into.

In conclusion, we see a major market opportunity for this test. It's a unique and patient-friendly product that directly addresses an underserved market. Not enough people are getting screened for colon cancer, and we believe that this test will increase the number of patients and the percentage of patients who are willing to be screened. The robustness of this test has been confirmed now through 3 separate studies. We have, again, one of the largest and most highly powered clinical trials ever for a prospective colon cancer screening study. The importance of the parallel review by Medicare and FDA can't be overstated, and we have a very focused commercial strategy focus on getting rapid adoption of this test.

In closing, I'd like to thank the entire team here at Exact Sciences. We have worked tirelessly to make sure that we have this product available in a timely way so it can be most impactful into the market that we intend to pursue. Thank you. Any questions?

Question-and-Answer Session

Operator

[Operator Instructions] Our first question comes from Brian Weinstein of William Blair.

Brian Weinstein - William Blair & Company L.L.C., Research Division

A question. Kevin, you talked a little bit about kind of a 30- to 45-day delay here. Can you just talk about why you don't expect that would result in a delay to FDA approval and go through that again? And then what is your expected timeframe for FDA approval?

Kevin T. Conroy

Sure. So because of the sequential submission to the FDA, they will be reviewing, first, our manufacturing module, and then the analytical module before getting to the clinical module. So on the last call, we had said that we expected to submit both the analytical and clinical modules at the same time. That would have required the FDA to sequentially review those modules internally. So we think that the submission -- based on our discussions with the agency, the submission of a clinical module, and they would prefer to see the submission this way, separated from the analytical module. That gives them time to, first, look at the analytical module, then examine the clinical module. And so this shouldn't have an impact on the ultimate approval timeline. As you may recall from our days at Third Wave, we had a similar -- towards the end of that trial, we had a couple of month delay in the data readout, but ultimately, FDA approval occurred in about 9 months. And our feeling here, and there's no guarantees with this, but our feeling is that the attention level to this submission couldn't be higher on both the part of the FDA and CMS, and we expect to submit an incredibly high quality series of submissions. And our engagement level with the FDA and the number of turns on -- or the number of discussions that we have had leading up to these submissions give us confidence that this will occur rapidly after submission to the agency. Now, with that said, we do not plan on giving guidance as to when FDA approval occurs. Although, we will continually update investors qualitatively as to how the submission process is going along.

Brian Weinstein - William Blair & Company L.L.C., Research Division

Okay, that's helpful. And then how should we think about high-grade dysplasia here? Maybe you can kind of go through the importance of it and how it will be used in kind of a clinical setting and as an indication of disease. And then, is it actually included in the DeeP-C trial? Is it one of the kind of formal end points or is it something that we'll just get a readout on?

Kevin T. Conroy

Yes, so it's the latter. High-grade dysplasia is not part of the formal end point other than high-grade dysplasia is a subset of pre-cancers. So high-grade dysplasia can occur in small polyps or large polyps, although it's much more frequent in larger polyps. So, for example, with a 5-millimeter polyp that has high-grade dysplasia, that is included as one of our pre-cancers. So that's one exception to the 1 centimeter rule, if that precancerous polyp shows signs of progressing further, and it's a pathology determination of having features of high-grade dysplasia, which simply means that starting to look more and more like cancer, that is included in the study. The importance clinically of this is, is that even small polyps, 5-millimeter polyps with high-grade dysplasia, are likely to progress to cancer. They're the riskiest polyps. And so, it's really important to be able to detect these at a high level. Now remember, optical colonoscopy, we know from the various back-to-back colonoscopy studies, are only -- only detect about 65% to 75% of polyps. So this is a test that is probably quite similar to colonoscopy, maybe even a little bit better in identifying patients with those high-grade dysplasia pre-cancers. We think this will be a powerful and motivating aspect of the adoption of this test, the high reliability of detecting these polyps.

Brian Weinstein - William Blair & Company L.L.C., Research Division

All right. The last thing for me is, how easy do you think it's going to be for reps to bring on the instrumentation here once you get commercialization? What specifically are they going to need to kind of think about purchasing? And any idea of kind of what the upfront total capital commitment is going to be? And will a large system, given that you're going after these -- given that you're going after the large systems, will a large system be able to kind of handle what could be kind of an immediate surge in test volumes or do you think that you'll have to do something in terms of supporting that?

Kevin T. Conroy

Yes. So typically, it takes labs 3 to 6 months to bring on any new instrument or system. And let me take a step back. One of the most important strategic decisions we made to pull our instrument program forward because the automation of this test was critical. As you know, last year, we were able to do that, meet our cash guidance, and then perform the testing on the product this year, on the assay this year, on that automation platform. So we were really thrilled this summer when we generated data showing the kind of sensitivity for cancers and pre-cancers on that automation platform. We are seeking a PMA approval on this platform, which means getting this platform into the clinical lab will be relatively straightforward process. People are familiar with this type of automation and they are very familiar with the utilization of it in a high throughput setting in these labs. So the value proposition to them is significant because they can generate about 43 results per shift, the automation focuses on the back end of the process, not on the front end. So it really makes -- takes away all of the fine pipe petting steps. The impact to us as we go to launch this is that we will be prepared with our own lab to take on the surge in volume that we expect, following the significant awareness that we expect to create around this test, following FDA approval and CMS coverage. And we need to be prepared for that surge in volume because if we were to get a significant number, tens of thousands of tests, right away, we can't miss there. So we do plan to have our own clinical lab and other lab partners available at launch to meet that demand. Does that answer your question, Brian?

Brian Weinstein - William Blair & Company L.L.C., Research Division

It does.

Operator

Our next question comes from Jeff Elliott with Robert W. Baird.

Jeffrey T. Elliott - Robert W. Baird & Co. Incorporated, Research Division

Just quickly on DeeP-C enrollment. Any guess on why you didn't see the number of cancers you had expected through third quarter?

Kevin T. Conroy

No, Jeff, this has been consistent throughout the trial, that we tended to get cancer patients in groups. So early on, we saw a significant number of cancers and then we saw a dry spell and then we saw another uptick, and then unfortunately, we saw another dry spell in late August, September and going into this month. Just recently, we saw a significant number of cancer patients all within the same week. The good news here is that our goal was to get to 49. We are now at 50, and I always say approximately 50 because patients can later be determined that it wasn't colon cancer or is a metastasis from another organ, so we need to be careful about that. But we're at 50 today with another likely, if you just look at the statistics, another 7 or 8 that we should see with the additional patients that we can enroll. And now that could be 5 or it could be 10 or it could be 0, but if it's 0, we still have a study that is sufficiently powered as we've previously planned. It did take more patients than we anticipated as recently as early August. But that is just part and parcel with running one of these studies. I think the thing that I'm most impressed with is how closely the team monitored this and they put plans in motion very quickly to increase the number of patients into the study to take away any risk. And at the end of the day, the impact on FDA submission is not material.

Jeffrey T. Elliott - Robert W. Baird & Co. Incorporated, Research Division

Okay. So it was really just random. There was no issues with the trials, just whomever walked in the door that day.

Kevin T. Conroy

No. That's right. It is totally -- we have no control over whether a patient who was scoped has cancer or not. And as expected, they don't happen in every week. You don't get one new patient if they tend to happen more in clumps.

Jeffrey T. Elliott - Robert W. Baird & Co. Incorporated, Research Division

Yes, okay. And just to follow on one of Brian's questions. You mentioned you were going to be prepared kind of to get go with Cologuard with your own lab. Can you talk about what kind of investments you'll have to make to prepare for that?

Maneesh K. Arora

Sure. At the end of the day, as Kevin said, this is not equipment, materials, CapEx that is out of the ordinary or unusual. So the investments required are going to be in the millions, a couple of million dollars, that we would need to invest during 2013. But it's not going to be a material departure in a massive facility or manufacturing. You're not going to see huge CapEx. We think that with a concentrated facility, along with lab partners, we'll be able to meet the demand at launch.

Jeffrey T. Elliott - Robert W. Baird & Co. Incorporated, Research Division

Got it. Okay. And then just one last, if I could. The commentary on IBD's very exciting here. I'm just curious about what kind of additional R&D work or additional cash expense would you require in 2013 to bring that to market?

Maneesh K. Arora

One of the things that's so exciting is this is the first extension and expansion of Cologuard and the IBD opportunity is really a product of the R&D efforts and investments that we have made. So the most significant investment is going to be in the clinical validation. We are beginning those clinical efforts now, but as you can see from the end of this study of 300, it's nowhere near what we have just completed. So we would anticipate the number at a couple of million dollars as opposed to the significant investment in the clinical studies for Cologuard, but no material other or investments in developing the product. This is a product that we think we have through our DeeP-C -- through our Cologuard development.

Operator

Our next question comes from Jon Wood of Jefferies.

Jon Davis Wood - Jefferies & Company, Inc., Research Division

So, Kevin, I guess it's not clear to me. Given the cancer patients you've already enrolled and then what's expected from the 1,700, why are you leaving the trial open through the 15th?

Kevin T. Conroy

Because every additional cancer patient that we enroll into the study increases the power of the study. And with the investment that we've made to date and the importance of the DeeP-C study, every one of these additional cancer patients matters, and we've just made this -- we actually made this decision a long time ago that if we had the opportunity to overpower, we would. We do now and we're just going to -- particularly with the sequential review requested by the FDA. It just makes sense to get in as many cancer patients as humanly possible.

Jon Davis Wood - Jefferies & Company, Inc., Research Division

Got it. Okay, so risk management. So can you give us any updated thoughts, it might be too early, but on the expected fee schedule placement here, what's preferred by the company? And then any qualitative guidance you can give us around expected value vis-a-vis that fee schedule placement?

Kevin T. Conroy

Sure. So there's a debate going on about where certain molecular tests are going to end up on the lab fee schedule or the physician fee schedule. We think that this product, in part because of the parallel review, is -- it doesn't fall into that category of typically tests that don't go through the FDA review process. And we think that this test most likely would fall onto the lab fee schedule rather than the physician fee schedule given that there's not a physician interpretation component to this test. We will continue to have those discussions with CMS and we'll provide as much clarity as we can to investors as we have those discussions. But right now, we would anticipate the lab fee schedule. And in terms of the value, we are doing all of the necessary work to provide CMS and private payers with the fact that this test is a rare product that adds value, both clinically and from a cost perspective. And the simple math around that is private payers are paying $2,500 roughly per colonoscopy, and 3 of these tests over a 10-year period would be significantly less than that. So you're actually taking cost out of the testing system, and over the long haul, you're taking test out of the treatment area, which is, obviously, very expensive. So we're not providing specific guidance on where we think this test will be reimbursed by CMS, but suffice it to say, it's in the hundreds, not thousands, and it will provide a significantly positive value.

Jon Davis Wood - Jefferies & Company, Inc., Research Division

Okay, good color. The follow-up to that is, what's your expectation around health economic studies, either in terms of getting them done or presenting them? And then can you have reimbursement discussions with private insurers earlier than approval? Just give us a sense of how you're going to pursue the private path vis-à-vis the expected approval and CMS coverage decision.

Kevin T. Conroy

So we've already completed the first round of our health economics work. We spent a lot of time over the last 12 to 18 months on that. And that work has heightened over the last several months. We do not expect to disclose that or publish that in the near-term. We continue to do additional work to refine the models, which have basically been somewhat out of date. And the new cost of treatment and the like need to be updated in those models. So we're working on those and we plan to submit that to payers, potentially including CMS, and the raw format before publication. And then we expect that there, over time, will be multiple health economic studies conducted and published by the company or key opinion leaders over time. In terms of our reach into private payers, those discussions have already started. It's an important discussion to make sure that we have in place. We will target the narrow universe of private payers based upon size and by, also, those private payers that cover the patients that are served by the large hospital systems and group practices that we focus on at launch. So initially at launch, we will have a much smaller universe of private payers that we'll have to negotiate with. Over time, that will obviously expand.

Jon Davis Wood - Jefferies & Company, Inc., Research Division

Okay, great. One last one for Maneesh. Any sense on how to think about just kind of the market, in the sales and marketing expense line item through 2013? I mean anything you're willing to kind of talk about at this point in terms of the ramp of that line item throughout '13 would be great.

Maneesh K. Arora

Yes, so we're going to be ready to talk about that more on our next call as those plans and commercialization plans are being formalized. One way to think about it is we've -- you've seen this huge R&D line that's going to obviously drop and the significant expense increase you'll see at sales and marketing. We don't anticipate that those -- that the sales and marketing increase will exceed the R&D line. So you won't see a massive hockey stick in '13. We want to be prudent about making significant investment in advance of both data and approval. So the way to think about it is we'll be able to make decisions on the S&M line after the top line data. And so we'll provide more clarity on our year-end call, but then much more after we see that data. And you'll see it increase probably in the Q3, Q4 timeframe.

Jon Davis Wood - Jefferies & Company, Inc., Research Division

Okay. So what I'm hearing is if I look at the overall P&L, it's unlikely in kind of the current plan that the overall operating burn would increase materially, correct? Because that basically says S&M would offset the decline in R&D.

Maneesh K. Arora

That's pretty straightforward. That's probably a good way to look at it. The overall operating burn would not materially change.

Operator

Our next question comes from Raymond Myers with Benchmark.

Raymond A. Myers - The Benchmark Company, LLC, Research Division

My first question is the IBD study. How long do you think that will take to complete enrollment?

Kevin T. Conroy

That started currently. We anticipate being started and completed within 2013, and we'll have a better read on that as we get through the first quarter.

Raymond A. Myers - The Benchmark Company, LLC, Research Division

Will that be the same sites or some subset of the sites that you're currently using now?

Kevin T. Conroy

There's some overlap, but not 100% overlap.

Raymond A. Myers - The Benchmark Company, LLC, Research Division

The focus on this study are the IBD -- the centers that focus on seeing and treating IBD patients.

Raymond A. Myers - The Benchmark Company, LLC, Research Division

Okay, makes sense. How many total patients do we now expect to enroll in the pivotal study? Is it 12,000 goes to 14,000? Is that the right way to think about it?

Kevin T. Conroy

Well, approximately 12,500.

Raymond A. Myers - The Benchmark Company, LLC, Research Division

What will be the total number that you expect to enroll as of...

Kevin T. Conroy

So we've enrolled just over 12,000 to date and we expect another 500-or-so patients over the next couple of weeks.

Operator

Our next question comes from Zarak Khurshid with Wedbush Securities.

Zarak Khurshid - Wedbush Securities Inc., Research Division

My phone cut off midway. Just have kind of a simple logistical question. So at this point, have any of the DeeP-C samples been processed on the instrument or is everything still kind of sitting in a freezer?

Kevin T. Conroy

No, good question. There will be 3 clinical trial sites, our lab being one of them. We actually already have a lab facility within our facility. And all of those samples will be assigned randomly by a biostatistician to those 3 sites. And they will be processed starting in December. And it will take a few months, couple -- 3 months to process all that samples. And then there will be about a week of data analysis before the statisticians, after unblinding and then we will release the data to the public.

Zarak Khurshid - Wedbush Securities Inc., Research Division

Great. And then just as a follow-up, thanks for the color on the 8% of docs or high-volume docs that represent a large fraction of the market. Just curious, where do they live or exist? Is it sort of -- are they within specific large networks or HMOs?

Kevin T. Conroy

Laura?

Laura S. Stoltenberg

This is Laura Stoltenberg. They are both within the large health care systems, as well as we have identified them by zip code.

Operator

I'm not showing any other questions in the queue. I'd like to turn it back over for Kevin Conroy for closing comments.

Kevin T. Conroy

Well, again, I'd like to end this as we started. There is a much bigger issue out there in the world right now, or at least in this country in the Northeast, and our concern for all of our friends and colleagues is deep. And if there's anything that the people here on dry land can do to help out, please reach out to us directly. Thank you.

Operator

Thank you, ladies and gentlemen, thank you for your participating in today's conference. This does conclude the conference. You may now disconnect. Good day.

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