Guardant Health stock hit a 13-month high Tuesday after Medicare officials agreed to pay for the company's colon cancer blood test.
The test, dubbed Guardant Reveal, looks for tumor DNA circulating in a patient's blood, allowing doctors to find recurrent cancer incredibly early. Patients whose cancer is detected and treated early tend to have better outcomes.
An earlier version of Reveal only won Centers for Medicare and Medicaid Services coverage for when doctors used it in patients undergoing adjuvant treatment. Adjuvant treatments are given after a primary treatment to ensure cancer doesn't return.
"We believe reimbursement for Reveal in the surveillance setting positions GH to address a larger portion of the MRD (minimum residual disease) market opportunity," Canaccord Genuity analyst Kyle Mikson said in a report. "Fewer than 3% of the 18 million total cancer patients in the U.S. who would benefit from MRD testing are being tested."
Guardant Health stock surged 23.1% to 45.13. Shares touched their highest point since December 2022 and topped a profit-taking zone. Guardant stock broke out of a cup-with-handle base with a buy point at 33.64 on Nov. 25, according to MarketSurge.
Guardant Health Stock: Expanding Market
The market for blood-based colon cancer tests is expanding rapidly.
Guardant's Shield is the first to gain approval to screen for the first signs of cancer. It's an alternative to a colonoscopy or stool-based tests like Exact Sciences' Cologuard. Guardant360 examines specific markers in some types of cancer to inform treatment decisions. And there are tests like Reveal that surveil for cancer's return.
Chief Executive Helmy Eltoukhy says the company's goal is to manage cancer for life.
"From beginning to end to hopefully new beginnings," he told Investor's Business Daily in a recent interview.
Guardant Health stock has a strong IBD Digital Relative Strength Rating of 96 out of a total 99. This puts shares in the leading 4% of all stocks when it comes to 12-month performance.
Guardant Faces Exact, Natera
But Guardant Health will have some competition. Exact Sciences is also working on a blood-based test for colon cancer. Last week, Natera launched a whole genome-based version of its test, Signatera. The genome is all the DNA in a person's body.
Signatera sequences DNA from a patient's tumor. Guardant Health estimates about 12 million cancer patients are more than five years out from having surgery, making it more difficult to get a tissue sample, Canaccord's Mikson said. But, Natera also announced it will launch a tissue-free test to look for minimum residual disease, or MRD, in patients with colon cancer.
"In our opinion, Guardant's extensive experience in blood-based cancer detection could provide a competitive advantage for the company," he said.
Mikson kept his buy rating and 42 price target on Guardant Health stock.
Follow Allison Gatlin on X/Twitter at @IBD_AGatlin.
