A looming revolution in oncology could help the 18 million cancer survivors in the U.S. and bolster biotech stocks like Guardant Health, Natera and Exact Sciences.
And all it takes is a little blood.
Cancer rates are on the rise, particularly in young people. And when it comes to cancer, it's a no brainer that the earlier a patient undergoes treatment the better the chance they have of surviving. Guardant, Natera and Exact are blazing trails in the use of blood tests to detect cancer relapses months sooner than traditional technology. They do this by looking for tumor DNA in the blood.
Even a low level of tumor DNA in the blood is dangerous, says Richard Chen, chief medical officer for Personalis, a small biotech company that sells a minimal residual disease, or MRD, test called NeXT Personal.
"It means that the cancer is there, it's festering and there's a good chance it's going to expand and recur for the patient," he told Investor's Business Daily. "Yes, I think it is a five-alarm fire in the sense that if you don't do anything about it and leave it alone, (immune system) surveillance is not necessarily going to take care of it."
The market is massive and growing. The MRD test market could be worth between $4.45 billion and $6.7 billion in the early 2030s, according to market estimates. That's up from $2.2 billion in 2023, according to Grand View Research. What's driving the opportunity? A sharp increase in the number of cancer diagnoses and, in turn, survivors. By 2040, the National Cancer Institute expects there will be 26 million cancer survivors in the U.S.
A Massive Market For Guardant Health, Rivals
Cancer emerges from cellular mutations. MRD tests seek to find those mutations as quickly as possible.
After a patient is diagnosed with cancer, the most common route is to attack it with surgery. Guardant Health, Exact Sciences and Natera can run that sample through their systems and come up with a set of mutations — or biomarkers — consistent with that cancer, but not the patient's own DNA.
Guardant sells Reveal, while Natera has its Signatera test. Exact is angling to launch its rival, Oncodetect, in the second quarter. These blood tests screen for a small handful of cancers today. But the companies are vying to prove their merit in a growing number of cancers. Notably, fellow biotech company Veracyte is planning to launch an MRD test for muscle-invasive bladder cancer in the first half of 2026.
Traditionally, doctors monitor for cancer recurrence through a variety of imaging tests. If a patient had breast cancer, they might undergo routine mammograms. Lung cancer patients will often receive semi-regular CT scans to look for new tumors. Other patients might undergo PET scans.
"If you're in remission from your cancer, obviously the No. 1 concern that you have is your cancer is going to come back," Mike Brophy, chief financial officer of Natera, told IBD. "There's already a whole architecture of care for you to monitor that."
But cancer can be unpredictable.
"The majority of breast cancer survivors who've had their cancer return, it's not going to return to the breast," Brophy said. "It's probably going to return to the liver or the lungs. And you're not going to catch that if you're doing radiology — an image of the breast."
Months Of Lead Time For Blood Tests
Depending on the cancer type, blood tests can detect a relapse an average of 15 months before imagining scans, Guardant Health Chief Executive Helmy Eltoukhy told IBD.
Guardant's Reveal detects minimal residual disease associated with early-stage colorectal, breast and lung cancers. This group accounts for 40% of all cancer survivors, Eltoukhy estimates. Medicare pays for the cost of colon cancer monitoring. Guardant is working to receive reimbursement for breast and lung cancer patients.
According to data released in late 2023, Guardant Reveal has detected a breast cancer relapse up to 28.6 months before it would show up with imaging, but with a median lead time of 7.9 months. The latter time also detected a relapse with high specificity, meaning it's more likely to rule out patients who don't have cancer.
Natera's Brophy says Signatera can detect recurrent cancer around nine months before standard scans.
NeXT from Personalis has a six- to 11-month lead time in early-stage lung cancer and can detect breast cancer relapse a median of 15 months ahead of traditional imaging. Chen, the company's CMO, describes NeXT as an ultrasensitive test. That means it's 10 to 100 times more sensitive, analytically, than the first generation of blood tests from companies like Guardant Health and Natera, he said.
In a recent study called Alpha-Correct, Exact Sciences followed colorectal cancer patients for five years. Oncodetect was able to detect cancer recurrence about 10.4 months earlier than imaging, Chief Science Officer Jorge Garces told IBD.
"That is critical," he said. "Weeks and months are critical in terms of being able to manage the disease."
Escalating Or De-Escalating?
But relapse monitoring isn't the only use for MRD testing.
These blood tests can also determine the success of a surgery and how to proceed from there.
While a patient is recovering from surgery at home, companies like Guardant Health and Natera build their bespoke test. Then, after a month or so, patients get a blood draw. That blood carries the answer to the most common question for cancer patients following surgery: Did they get it all?
Take colorectal cancer. Roughly two-thirds of patients undergo surgery and that's it. They're cured. The remaining third have micro metastases — meaning the cancer has spread to other areas of the body. But the tumors aren't visible yet.
"Postsurgery, both the two-thirds of people who are cured by surgery and the one-third that need to follow up with chemo, they present the same way," Natera's Brophy said. "It's hard to tell who is who, even though doctors and patients know full well a ton of people are going to get the chemo and don't need it."
It's a better-safe-than-sorry mentality. But these blood tests could change that.
Natera has published data comparing patients who received chemotherapy after having their tumor surgically removed. Those who tested positive for circulating tumor DNA had a statistically significant benefit from chemo. Those who tested negative experienced no benefits from chemo.
Chemotherapy is expensive and often causes painful side effects, Brophy said.
"Now, you have this ability to triage these patients after surgery to see who really needs chemotherapy and who doesn't," he said.
MRD Testing Takes On Pseudo-Progression
The third use case is in monitoring patients who are actively receiving treatment.
Some patients don't automatically undergo surgery. In breast cancer, for example, somewhere around half of patients first receive progressive rounds of chemotherapy in the hopes of shrinking the tumor. This will eventually allow them to receive a lumpectomy instead of a full mastectomy — removing a lump is generally preferable to removing the entire breast.
But when it comes to imaging, cancer often responds to aggressive treatment by appearing bigger.
The phenomenon is called pseudo-progression. The tumor isn't getting bigger because the cancer is worsening, says Personalis' Chen. It's enlarging because immune cells are going into the tumor to fight it. This is often the case when patients receive immuno-oncology drugs that help uncover camouflaged cancer cells.
"The blood-based tests don't have that issue," Susan Tousi, chief executive of DELFI Diagnostics, said in an interview. DELFI makes blood tests that screen people for cancer, a space closely tied to MRD testing. "I think there are some benefits that allow for earlier detection and more robust detection of treatment response."
Challenges Ahead For Guardant, Natera, Exact
There are challenges facing Guardant Health, Exact Sciences and Natera, however.
And it already hasn't been easy for the trio.
Guardant stock had an impressive run from October to January, surging almost 105%. Since then, shares have pulled back somewhat. They're still nowhere near their record high above 181 in early 2021. But Guardant stock has climbed more than 47% this year, as of the close on Thursday, outperforming Investor's Business Daily's Medical-Services industry group, which has risen a more moderate 2.5%. The group ranks 13th out of 197 groups IBD tracks.
Guardant Health shares rank No. 21 on the IBD 50 list of elite growth stocks.
Natera belongs to the Medical-Research Equipment/Services industry group. Veracyte ranks first, leading Natera as the second top seed. Natera shares mostly fell from late 2021 to early 2022. But shares more than quadrupled through January of this year. On a year-to-date basis, Natera shares have fallen about 6.5%. The industry group, which ranks a poor No. 162, has tumbled a more precipitous 21%.
Exact Sciences stock has mostly fallen over the last few years, peaking in January 2021 above 159. Today, shares of the MRD testing company trade around 42. Exact shares dropped dramatically last November after the company missed third-quarter sales expectations and enacted an "alarming" guidance cut. This January, shares took a hit on competitive concerns facing its stool-based colorectal cancer test, Cologuard.
It's important to note that all three companies work in tangential testing markets. Guardant is well known for its Shield test, which uses blood to screen for colorectal cancer in asymptomatic people. Exact sells Cologuard and is developing a multicancer early detect test called CancerGuard. Natera has numerous tests for cancer, women's health and organ health.
Notably, none of these companies are profitable — which isn't exactly a rarity for companies in the biopharma space. But it's also not preferable for savvy investors. According to FactSet, analysts don't expect Exact Sciences to notch its first profits until 2026. Natera is expected to follow in 2027. But analysts don't expect earnings, on a strict, as-reported basis, for Guardant until 2030.
Targeting New Cancer Types
Guardant Health estimates 12 million cancer survivors are more than five years out from their surgery. About 3 million of them don't have tissue samples available on which to build a personalized blood test.
For that reason, Natera just announced its new tissue-free MRD test. This test would scan for common mutations found in specific cancer types. So, it's not bespoke to a patient's individual cancer. The idea is to help patients who had surgery long ago, or those who can't undergo surgery.
It's less exact than Signatera, Natera's Brophy said. The tissue-free blood test catches about 86% of the cancers that Signatera finds.
Other challenges include tumors that don't spill as much DNA into the bloodstream. Lung cancer has been a difficult target. These tumors are known as low-shedders. There are also cancers that have fewer mutations. Personalis' Chen says this is where the ultrasensitive approach pays off.
NeXT screens for up to 1,800 mutations associated with cancer, compared with first-generation blood tests which look for 16 to 50 mutations, he said.
But Eltoukhy, Guardant Health's CEO, says the technology is only getting better.
"As the technology gets more sensitive, you get better at all of them," he said. "You'll get really, really good at the high-shedding ones and, then, better at the low-shedding ones. You'll still have that differential, but you'll get better at all of them over time."
The Growing Market For Blood Tests
There's a huge market for blood tests to monitor for cancer relapse, says Eltoukhy. Though there are tools in place to monitor cancer survivors, it can be tricky to navigate the Byzantine health care system for which tool to use and when.
"There are some diseases where they may scan every six months, every three months in the first year, first two years. Others where it may be annual. It's been a sort of mishmash of different available tools, whatever seems to work best for that specific cancer type," he said. "But the follow-on hasn't been, I would say, as set in stone and standardized as maybe treatment guidelines are for metastatic patients."
Investors should take into account the newness of the technology, combined with the growing rates of cancer diagnoses.
"It's huge and growing," Personalis' Chen said of the MRD testing market. "I think we're only scratching the surface. It's still early days for MRD. It's a new technology. People are still getting used to what it can do."
Follow Allison Gatlin on X/Twitter at @AGatlin_IBD.
