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Biotech Stock Mailbag: Exact Sciences

BOSTON ( TheStreet) -- Friday's Biotech Stock Mailbag kicks off with an email from Ted S. concerning Exact Sciences (EXAS - Get Report) and its genetic screening test for colon cancer.

"Last Friday (July 16) on a conference call, Exact Sciences said it would release their external validation results for their genetic screening test for colon cancer by Oct. 29. What percent of pre-cancers and what percent of cancers do you believe need to be detected by the validation study for it to be perceived as a positive for Exact Sciences? Also, how big of an event do you believe this is for Exact Sciences?"


These study results are a very big deal for Exact because this will be the first validation data we see that measures the sensitivity of the company's colon cancer test, which is designed to detect small changes in DNA found in stool. These genetic mutations can be a warning sign of early-stage cancer or even of pre-cancerous polyps, in the colon.

Based on previous guidance, Exact is shooting for its test to be sensitive enough to detect about 85% of colon cancers and 50% of pre-cancerous lesions. That would put the company's test ahead of currently used fecal blood tests but less sensitive than colonoscopy -- by design.

Exact expects to announce data from the three validation studies on Oct. 29 at the American Association of Cancer Research meeting in Philadelphia. These data are very important, but they don't get Exact to the finish line. None of samples being tested are being tested prospectively, which means Exact will still need data from a large, pivotal phase III study before it can seek FDA approval. Exact plans to run that phase III study starting in the second half of 2011, with the FDA filing set for 2012.

I met with Exact's CEO Kevin Conroy at the J.P. Morgan Healthcare Conference in January and walked away impressed. At that time, I called Exact Sciences the "best small-cap story" at the conference during the busy week in San Francisco. The stock was trading just above $4 at that time. Today, shares can be bought for less than $3.50, so my hot stock pick hasn't exactly worked out that well.

I'm hoping that changes when the validation data are revealed on Oct. 29.

Mannkind (MNKD) announced Tuesday that the FDA accepted the company's resubmission of the approval application for its Afrezza inhaled insulin device. The agency's new approval decision deadline is Dec. 29.

The Afrezza update prompted @RJPeterson123 to tweet, "Hoping for a Christmas miracle for Mannkind."

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