How Exact Sciences Aims to Keep Its Lead in Cancer Tests

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Courtesy Exact Sciences

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The seller of Cologuard cancer tests grew that product’s revenue by 24% in the March quarter. Exact Sciences (ticker: EXAS) also raised sales guidance for 2022 and told investors on its late Tuesday call that the colon cancer test will prove more accurate than blood-based cancer DNA screens arriving from genomics-testing rivals.

Exact has expanded its business beyond the widely-advertised Cologuard stool-sample test, to include tests for various cancers and for Covid-19. Total sales for all its products rose 21% from the year-ago quarter, to $486.6 million. The Madison, Wisconsin-based firm’s losses grew, too, to $181 million, or $1.04 a share, which compares to a loss of 18 cents a share in March 2021.

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Exact shares have sunk from nearly $140 a year ago, to a Tuesday close of $58.63 as investors tired of biotech and unprofitable growth stocks. In premarket trading Wednesday, the stock was up 2% to $60.

If some investors were cheered by Tuesday’s financial results, it could be because Exact raised its guidance for 2022 sales. Revenue for the year could exceed $1.9 billion, said the company, compared with 2021 sales of $1.77 billion—mostly due to higher sales of Cologuard.

A number of rivals aim to compete against stool tests like Cologuard, with screens that look for signs of cancer in a blood sample—including the Grail unit of Illumina (ILMN), Guardant Health (GH) and the privately held Freenome.

But Exact told investors on the Tuesday call that blood tests won’t be as sensitive as Cologuard. Its stool test has 90% sensitivity for Stage 1 colon cancer, said the company, while blood tests will be lucky to show 70% sensitivity. Cologuard has 42% sensitivity for pre-cancers, said Exact, while blood tests might only have 15% sensitivity.

Exact has a pipeline of planned products itself. It will seek US Food and Drug Administration approval this year for a more sensitive Cologuard test. The company will also start clinical trials for a multi-cancer blood screen of its own.

Raymond James analyst Andrew Cooper says that study readouts will make 2022 an “action-packed” year for Exact. While he dropped his price target for the stock to $60 from $80 in a Wednesday note, Cooper rates the stock a Buy, noting that Exact now trades for less than six times his estimate for 2022 sales. That compares to a sales multiple that averaged in the double-digits over the past five years. The analyst thinks the stock should trade for 5.8-times his 2024 sales estimate.

At Canaccord Genuity, analyst Kyle Mikson is even more bullish on Exact, saying that the stock could nearly triple to $160. Sales of Cologuard will continue growing, says Mikson in a Wednesday note, while Exact’s other cancer tests will put the company in the black by 2027.

Write to Bill Alpert at [email protected]

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Credit: www.marketwatch.com /

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