Exact Sciences Finds its Mojo

MADISON, Wis. (TheStreet) -- After years of stumbles, Exact Sciences(EXAS) looks to be on the right path towards developing a commercially successful, stool-based genetic screening test for colon cancer.

I spent some time with Exact's new CEO Kevin Conroy last week in San Francisco and walked away impressed. Exact was probably the best small-cap stock story I heard during four days of meetings and presentations tied to the J.P. Morgan Healthcare Conference.

Shares of Exact Sciences are up almost 70% since the middle of December, when analysts at Baird reinitiated research coverage with an outperform rating and a $5 price target. The stock closed Wednesday at $4.20.

Exact was limping along unnoticed for quite some time, but Conroy is putting the company back on the Wall Street's radar. Investors should have reason again to get excited about the company's commercial prospects for an easy-to-use, non-invasive molecular test that will help doctors screen more patients for early-stage colon cancer -- and perhaps save lives in the process.

Results from the first outside validation of Exact's new gene test for colon cancer are expected in the second half of the year. If this study confirms the accuracy of the test, Exact plans to start a pivotal clinical study in 2011.

Exact estimates that the commercial market opportunity for its new colon cancer test to be about $1.2 billion, based on a conservative 30% share of the overall colon cancer-screening market.

Colon cancer is the second-deadliest cancer in the U.S., causing almost 50,000 deaths annually. Yet it isn't particularly aggressive, and in fact, if diagnosed early, surgical removal of the tumor usually leads to very high long-term survival rates.