EXAS shares pull back gains despite bullish calls for Cologuard 2.0

Exact Sciences ( EXAS ) said its next-generation Cologuard outperformed its original colon cancer screening test in a study of 20,000 people, but EXAS shares retreated early at the close on Wednesday.

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In the study, the next-generation Cologuard – a stool-based test for colon cancer – showed 94% sensitivity and 91% specificity. Sensitivity refers to the ability of a test to find positive cases. Specificity is the test’s ability to exclude someone without the disease.

Both measures outperformed the original Cologuard, which received approval in 2014. The first Cologuard had a sensitivity of 92% in detecting all colon cancer cases. Its overall specificity was 87%. These results were based on a study of more than 10,000 people.

“At a high level, Cologuard 2.0 raised the bar across the board,” Evercore ISI analyst Vijay Kumar said in a report. “A 2% increase in overall sensitivity while raising the specificity limit by approximately 300 basis points was impressive.”

In today’s stock market, EXAS shares rose initially, but settled down 4.8% at the close, ending the regular session at 89.78. Shares had risen 222% at Tuesday’s close from a recent low in late October. As of Wednesday’s close, the stock has risen 207% since the same time.

Now, Exact Sciences shares are well above their 50-day and 200-day moving averages, and are rising.

EXAS stockpile: 60 million uncontrolled people

Exact Sciences plans to apply for approval of the next-generation Cologuard by the end of the year.

“Cologuard is a breakthrough innovation in non-invasive cancer detection,” CEO Kevin Conroy said in a written statement. “The next generation Cologuard will set a new performance standard.”

The approval comes at a critical time. There are more than 60 million people in the United States who are eligible for colon cancer screening but have not been screened, Conroy said. The American Cancer Society says people age 45 and older should be regularly screened for colon cancer.

Their options include Cologuard, other stool-based tests, and colonoscopies. There are also blood-based tests for colon cancer, but the ACA does not recommend them at this time.

“Based on these numbers, Cologuard 2.0 should remove any lingering concerns about cannibalization from blood-based tests,” said Evercore’s Kumar.

He noted Guardian Health‘s (GH) blood test for colon cancer had an overall sensitivity of 83% and a specificity of approx. 90%. The results from Exact make “a strong statement about the sustainability of Cologuard in the colon cancer screening landscape.”

Kumar maintained his outperform rating on the EXAS stock.

Highly rated — and extended — Stock

In particular, Cologuard can detect polyps at an early stage, so a doctor can remove them before they become cancerous. The next-generation Cologuard had a sensitivity of 43% for detecting precancerous polyps, compared to 42% for the original Cologuard. That’s below Exact’s target of 50%, Canaccord Genuity analyst Kyle Mikson said in a report.

But Mikson kept the buy rating on the EXAS share. The results of the new study support Exact Sciences’ goal of eventually winning half of the colon cancer screening market — or more, he said.

“Overall, we think Exact’s (study called) Blue-C top-line results for next-generation Cologuard are remarkable (and relatively solid),” he said. Still, “we believe the shares may offer upside from current levels.”

The EXAS share is highly rated, according to IBD Digital.

Shares have a near-perfect relative strength rating of 98. This means Exact stock ranks in the top 2% of all stocks when it comes to 12-month performance. Shares also have a strong Composite Rating of 95, a measure of fundamental and technical measures.

Exact Sciences stock broke out of a consolidation with a 72.19 buy point on May 10. The EXAS share was approx. 24% extended from that entry by Wednesday’s close, according to MarketSmith.com.

Follow Allison Gatlin on Twitter at @IBD_AGatlin.

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