Exact Sciences stock surged to a seven-month high Tuesday after the company's colon cancer-screening rival, Freenome, unveiled the results of a pivotal study.
Freenome is working on a blood-based test to detect colorectal cancer. Overall, Freenome's test proved roughly as specific as Exact Sciences' stool-based test, Cologuard. Highly specific tests can rule out more false positives. But the Freenome test paled when it comes to sensitivity — a test's ability to detect a person with the disease as positive.
Importantly, Freenome's test had a sensitivity of 12.5% for advanced adenomas. These are precursors to colorectal cancer. Evercore ISI analyst Vijay Kumar said that was roughly in line with Guardant Health's blood test, but fell short of Exact's Cologuard.
On today's stock market, Exact Sciences stock jumped 4.7%, pulling back from steeper gains to close at 73.74. Shares soared to their highest point since September, bounding above their 200-day moving average. Exact Sciences has long persisted on Cathie Wood's ARK Innovation exchange-traded fund.
Exact Sciences Stock: Battling With Blood Tests
Wall Street has long feared blood-based colon cancer tests would replace stool-based tests.
The results from Freenome and Guardant Health should put that worry to rest, Evercore's Kumar said.
"With two blood-based test results, the bear thesis around cannibalization (of stool-based tests) is finally laid to rest," he said in a report. "We would expect Exact Sciences shares to now start trading on a fundamental basis going forward."
He has an outperform rating and 90 price target on Exact Sciences stock.
Freenome's test proved to have a sensitivity of 79.2% and a specificity of 91.5%. In comparison, Exact Sciences recently said its next-generation Cologuard has an overall sensitivity of 94% and a specificity of 91%. Guardant's Shield test recently showed a sensitivity of 83% and a specificity of 90%.
But one of the biggest points for colon cancer tests is detecting precancerous markers. This is where Exact Sciences' Cologuard is 30% ahead of its blood-based rivals, Evercore's Kumar said. Freenome could still improve its sensitivity for advanced adenomas, he said.
Exact Sciences is making a comeback after falling to a recent low at 56.05 in late February. Shares have climbed almost 32% since then as of Tuesday's close.
Follow Allison Gatlin on X, the platform formerly known as Twitter, at @IBD_AGatlin.
