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August 23, 2023
This was a good month to be an Exact Sciences shareholder. Already a Wall Street darling, the genetic cancer screening innovator further buoyed investors by not only releasing data showing the strong performance of its second-generation Cologuard test, but also entering into a pair of strategic research collaborations to bolster its future position in two other key segments of the cancer testing market.
The Potential of Cologuard 2.0
Though it offers a full portfolio of DNA tests for early cancer screening, Exact Sciences’ flagship is Cologuard. Cleared by the FDA in August 2014, the noninvasive, stool-based test is recommended by clinical testing guidelines and covered by Medicare and most other major payers in the US.1 Last month, Exact Sciences announced new study data suggesting that the next generation of Cologuard may be even more effective than the highly respected original, with a lower risk of false positives.2
The data come from BLUE-C, a multicenter clinical trial whose more than 20,000 participants make it one of the largest clinical trials ever performed to assess a colorectal cancer screening test. Study participants, all adults over age 40, received either the updated Cologuard test or a fecal immunity test (FIT) that detects blood in stool. After comparing the results to participants’ colonoscopies, the researchers found that the new Cologuard test had a specificity of 91 percent and sensitivities of 94 percent for cancer and 75 percent for high-grade dysplasia. These results compare favorably to those of the 2014 DeeP-C study assessing the original Cologuard, which ultimately led the American Cancer Society (2018) and US Preventive Services Task Force (2021) to include stool DNA testing in their colorectal cancer screening guidelines.3,4,5
The Business Impact
Although the scientific community will likely want to see more data, the reported high specificity and sensitivity of next-generation Cologuard dazzled some in the financial industry. “In our view, the next-generation Cologuard results should support the company’s long-term path to 50 percent market share (or above),” noted Canaccord Genuity financial analyst Kyle Mikson in a report quoted in Investor’s Business Daily. However, others in the sector take a more conservative view.6 “The strength of these results has made investors hopeful that Cologuard will be able to fend off upcoming competition in the colorectal cancer screening market, but we still believe blood-based liquid biopsies hold significant promise versus the stool-based options,” wrote Julie Utterback, a senior equity analyst for financial services firm Morningstar. She adds that, due to the potential for increased competition in the colorectal cancer screening market, Exact Sciences shares “remain moderately overvalued.”7
Exact Sciences stock has been on a steady climb since October.8 In May, it received a further boost when the company announced a 24 percent increase in year-over-year Q1 revenues and raised its full-year guidance.9 The BLUE-C study report added even more momentum, with next-generation Cologuard expected to launch in 2024.
More Strategic Moves
On the same day it released the next-generation Cologuard data, Exact Sciences announced that it had entered into strategic research agreements to boost its position in two of the cancer market’s most dynamic sectors: molecular residual disease and multi-cancer early detection (MCED).
The first deal is a five-year sponsored research agreement with the Broad Institute of MIT and Harvard giving Exact Sciences an exclusive license to MAESTRO (Minor Allele Enriched Sequencing Through Recognition Oligonucleotides), Broad’s circulating tumor DNA detection technology. MAESTRO uses minimal sequencing and advanced biometrics capable of detecting thousands of different patient-specific mutations.
The company also advanced its nascent MCED test by partnering with Texas healthcare system Baylor Scott & White (BSW). Together, they agreed to establish the Texas Multicancer Early Detection Registry program, under which BSW will offer the test to thousands of patients, enabling Exact Sciences to gather real-world evidence to support its efforts to win acceptance for the test from regulatory agencies, payers, and organizations like the American Cancer Society that develop testing guidelines.10
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A version of this article originally appeared in G2 Intelligence, Laboratory Industry Report, August 2023.
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