Shares of Guardant Health and Exact Sciences skidded early Thursday after the companies unveiled updated test results for their colon cancer screening tools.
Both companies published their updated test results in the New England Journal of Medicine — an accomplishment, according to William Blair analyst Andrew Brackmann.
"Based on our initial review, much of the data published was consistent with what was shown previously and thus should not change much of the narrative for the performance of either test," he said in a report.
On today's stock market, Guardant Health shares fell 3.3% to 18.37. Exact Sciences stock also slumped 4.2% to 58.53. Cathie Wood holds the latter in her ARK Innovation ETF.
The Exact Sciences, Guardant Rivalry
Both companies make tests that screen for colorectal cancer. Exact Sciences' stool-based test is called Cologuard. Guardant Health makes a blood-based test called Shield. While a colonoscopy is a definitive test for colon cancer, these screening options can help patients avoid the invasive procedure. If the screening comes back positive, then doctors will use a colonoscopy to confirm the presence of cancer.
Exact ran its study, Blue-C, over four years in about 27,000 people. The company hoped to show its next-generation test, dubbed Cologuard Plus, showed fewer false positives — a metric known as specificity. While the original Cologuard has a specificity of 87%, the updated version showed a specificity of 91%.
"We have reduced the number of false positives," Dr. Paul Limburg, chief medical officer for Exact's screening division, told Investor's Business Daily. "The specificity is higher, so when the test is clinically available, this should translate into a reduced number of false positives and unnecessary colonoscopies when patients use this next-generation test."
Guardant said its Shield proved to have a specificity of 90%. The screening tool also had a sensitivity of 83% in detecting people with colorectal cancer, and an 88% sensitivity in detecting stages one through three of colon cancer. Sensitivity is a test's ability to detect someone with the disease as positive.
Shield isn't yet approved by the Food and Drug Administration. But the results pave the way for approval and Medicare coverage, Guardant said in a news release.
Cologuard Takes On FIT
Exact Sciences ran its Blue-C study from 2019 to 2023. Participants underwent a colonoscopy, a fecal immunochemical test — also called FIT — and the next-generation Cologuard. FIT is another screening tool that involves analyzing a patient's stool.
While FIT looks for presence of hemoglobin, a protein found in the blood, Cologuard Plus looks for that protein and three DNA markers of cancer.
Bullishly for Exact Sciences stock, Cologuard Plus outperformed FIT across four of six parameters measuring sensitivity. Next-generation Cologuard had a higher sensitivity for detecting all cancer, stages one through three cancers, pre-cancers and an aggressive form of pre-cancer called high-grade dysplasia. Overall, Cologuard Plus showed a sensitivity of 94%.
However, though Cologuard Plus improved on the original Cologuard's specificity, it fell slightly short of the specificity demonstrated by FIT. FIT had a specificity of 95% to 96%, whereas Cologuard Plus had a specificity of 91% to 93%.
But Limburg focused on the improvement over the original Cologuard.
"We know we can always do better," he said. "We wanted to increase specificity to reduce false positives."
A Huge Colon Cancer Screening Market
Though fourth-quarter sales easily beat forecasts, Exact Sciences stock has been under pressure recently. In addition to trading below its 50-day line, shares have remained below their 200-day moving average since September, according to MarketSurge.com.
But Exact shares land on Cathie Wood's famous exchange-traded fund. They rank No. 23 out of 38 holdings in terms of weight in the fund.
The market for colorectal cancer screening is huge. The American Cancer Society recommends people begin screening regularly after age 45. But some 60 million people in the U.S. aren't up to date with screening recommendations, Exact Sciences' Limburg says.
"Colorectal cancer is a highly preventable disease and we know that screening is a very effective way to find colorectal cancer early, but also to find pre-cancers so that they can be appropriately treated and truly prevent the pre-cancer from becoming more aggressive and turning into cancer," he said.
Blood-Based Tests Are In The Wings
Exact Sciences is also working on a blood test to detect colorectal cancer. Limburg says it could be some time before blood tests catch up to the sensitivity and specificity of stool-based screening tools. Guardant Health, on the other hand, says the results for its blood-based Shield are on par with the performance of other noninvasive screening tools, which show an overall sensitivity of 74% to 92%.
"Colorectal cancer is highly treatable if caught in the early stages, yet more than 50 million people in the U.S. are still not completing their recommended screening with the methods available today," Chris Evans said in a written statement. Evans is president of the Colon Cancer Coalition. "This publication gets us one step closer to having an additional option to offer patients — one that is both convenient and accessible — and will help us close the screening gap."
Exact's Limburg expects blood-based screening tools to be another option for patients unwilling or unable to undergo a colonoscopy or a stool-based screening. The company hopes the FDA will approve Cologuard Plus later this year, leading to a launch in 2025. William Blair's Brackmann expects Exact Sciences to unveil the results of its blood-based screening test sometime around midyear.
"What is hard to dispute, though, is that Cologuard Plus raises the bar for all players, something that we noted when data was initially released last summer," Brackmann said.
He has outperform ratings on Exact Sciences stock and Guardant Health shares.
This story has been updated to reflect the correct specificity demonstrated by FIT.
Follow Allison Gatlin on X, the platform formerly known as Twitter, at @IBD_AGatlin.
