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Equity outlook: The high cost of global fragmentation for US portfolios
Charu Chanana
Chief Investment Strategist
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Exact Sciences jump 27% on multi-cancer results in liquid biopsy test
Peter Garnry
Chief Investment Strategist
Summary: Cancer treatment is one of the most lucrative areas of disease treatment due to the global number of cancer cases yearly. Early detection of cancer is key in the treatment of cancer as it increases the effectiveness of cancer treatment. A new diagnosis method called liquid biopsy holds a lot of potential and Exact Sciences is leading the field with a commercial diagnosis test on colon cancer. Yesterday, the shares were up 27% on results presented at a conference showing that the company's liquid biopsy test can detect six difference cancer types in early stage from blood samples.
On the Cowen Liquid Biopsy Summit yesterday, Exact Sciences presented a breakthrough in its liquid biopsy test using blood samples to diagnose multiple cancer types (see slide from the company’s presentation) at an early stage. The company already has a commercial liquid biopsy test for detecting colon cancer and has been a true US biotechnology success story growing revenue from $39mn in 2015 to $1.13bn in 2019. The technology offers a lot of hope in cancer treatment as early detection increases the probability of successful treatment. Liquid biopsies are also much more scalable and effective than scanning of tumors or dysplasia (changes in body cells).
The share price jumped 27% on the news as the test results show the potential of this cancer diagnostics technology. Exact Sciences is leading in this new frontier of diagnosis and has 250+ R&D people working on finding cancer markers. The company has over 3,000 patents filed for these cancer markers providing a strong competitive advantage. While the company has grown revenue impressive over the past five years the company has invested heavily in R&D and production, and thus the company is still not profitable generating negative free cash flow of $240mn in the past 12 months.
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