This Day On The Street
Continue to site
ADVERTISEMENT
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here

Biotech Stock Mailbag: Exact Sciences, Questcor, Biotech M&A, Celsion

BOSTON ( TheStreet) -- Welcome to this week's Biotech Stock Mailbag.

The results from the phase III study of Exact Sciences' (EXAS - Get Report) non-invasive colon cancer screening test were labeled disappointing by a lot of investors, analysts and biotech stock commentators (ahem) when released on April 17.

Here's a chart of Exact Sciences since the Cologuard data were announced: EXAS Chart EXAS data by YCharts

So much for conventional wisdom.

For an explanation, I sought out a hedge fund manager source who's been a stalwart Exact Sciences bull. He still owns the stock today. His fund's rules prohibit speaking on the record to the media.

The Cologuard study results -- 92% sensitivity to colon cancer, 42% sensitivity to pre-cancerous lesions and specificity of 87% -- fell below expectations set by the company, my investor source agrees. But that's an artificial perception issue important only to Wall Street and had nothing to do with how well Cologuard actually works or whether it will be used by doctors and patients to screen for colon cancer.

"The fact is Cologuard is an approvable colon cancer screening test that is superior to FIT," says my investor source. FIT is a currently approved stool-based screening test, which is less accurate than Cologuard.

"There are about 3 million FIT tests performed each year in the U.S. Conservatively, I believe Cologuard could take two-thirds of FIT's market share, or 2 million tests. At $500 per Cologuard test, that's $1 billion in revenue for Exact Sciences," he says.

Moreover, there's upside to these numbers if Exact Sciences can improve upon the historically low compliance rate of the FIT test, which my source believes the company can achieve.


Alan P. writes:

"With biotech companies doing so well and the stocks surging, I'm surprised that we're not seeing more acquisitions being announced. Is there a reason for this? The rumors about takeovers don't seem to come true very much and I wonder why. Thanks for your help."

Alan is correct about the relative dearth of healthcare mergers-and-acquisitions activity this year. Through the end of May, U.S.-based M&A healthcare deals totaled $34.1 billion, down 12% compared to the same time period last year, according to healthcare merchant bank Burrill & Co.

1 of 2

Check Out Our Best Services for Investors

Action Alerts PLUS

Portfolio Manager Jim Cramer and Director of Research Jack Mohr reveal their investment tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
Quant Ratings

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
Stocks Under $10

David Peltier uncovers low dollar stocks with serious upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
14-Days Free
Only $9.95
14-Days Free
Dividend Stock Advisor

David Peltier identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Updates with exact steps to take - BUY, HOLD, SELL
Trifecta Stocks

Every recommendation goes through 3 layers of intense scrutiny—quantitative, fundamental and technical analysis—to maximize profit potential and minimize risk.

Product Features:
  • Model Portfolio
  • Intra Day Trade alerts
  • Access to Quant Ratings
Options Profits

Our options trading pros provide over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.

Product Features:
  • Actionable options commentary and news
  • Real-time trading community
SYM TRADE IT LAST %CHG
BMY $68.30 -0.86%
CLSN $2.63 -6.08%
EXAS $26.20 4.34%
GILD $111.71 0.44%
QCOR $93.60 1.65%

Markets

DOW 18,232.02 -53.72 -0.29%
S&P 500 2,126.06 -4.76 -0.22%
NASDAQ 5,089.3620 -1.4320 -0.03%

Partners Compare Online Brokers

Free Reports

Top Rated Stocks Top Rated Funds Top Rated ETFs