This Day On The Street
Continue to site right-arrow
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
TheStreet Open House

Biotech Stock Mailbag: Dismantling The Exact Sciences Short Thesis

Stocks in this article: EXAS

BOSTON ( TheStreet) -- This week's Biotech Stock Mailbag fisks the recently published short thesis on Exact Sciences.

The backstory: On Wednesday, "Alpha Exposure" -- the pseudonym of a hedge fund -- published its short thesis of Exact Sciences on Seeking Alpha. The article -- Exact Sciences -- The Rotten Sniff Test -- is a very skeptical look at the company's Cologuard colon-cancer screening test. "Alpha Exposure" accuses Exact Sciences of hiding important data from Cologuard's pivotal phase III study and cherry-picking data that has been released in order to trick investors into believing the non-invasive colon cancer test is more accurate than it really is.

"Alpha Exposure" said it plans to publish four more articles about Exact Sciences on Seeking Alpha but as of Thursday mid-day, just the single article had been posted.

On June 14, I described the bull thesis on Exact Sciences, as explained to me by a different hedge fund investor who is long the stock. And yes, he also requested anonymity.

Here's what my hedge fund manager source had to say Thursday about the Exact Sciences' short thesis explained by "Alpha Exposure" in Wednesday's article:

"Well, it's just amazing that this guy is using the wrong numbers. His whole thesis is that Exact Sciences is cherry-picking data, but in fact, that's exactly what he did."

Two hedge funds battling over the future of Exact Sciences and its colon-cancer screening test! It's always good to know both sides of the story, but who's right? Based on what I've heard and read so far, I lean towards the bull thesis because I believe "Alpha Exposure" is actually being more manipulative with data than anything the fund accuses Exact Sciences of doing.

Let me explain. Two main points:

First, "Alpha Exposure" accuses Exact Sciences of misleading investors by setting up an easy and rigged comparison between Cologuard sensitivity and specificity and historical data on FIT sensitivity and specificity. The fund points to Exact Sciences' recent investor slides comparing Cologuard to older, previously published FIT data as proof the company is misrepresenting the accuracy of its screening test.

"Alpha Exposure" is wrong. In the pivotal "DEEP-C" study conducted by Exact Sciences, all patients underwent screening for colon cancer using Cologuard and FIT. Here's what Exact Sciences CEO Kevin Conroy said about the data comparing Cologuard to FIT. The quote comes from the company's May 1 conference call:

1 of 3

Select the service that is right for you!

COMPARE ALL SERVICES
Action Alerts PLUS
Try it NOW

Jim Cramer and Stephanie Link actively manage a real portfolio and reveal their money management tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
  • Weekly roundups
TheStreet Quant Ratings
Try it NOW
Only $49.95/yr

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
  • Upgrade/downgrade alerts
Stocks Under $10
Try it NOW

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

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
  • Weekly roundups
Dividend Stock Advisor
Try it NOW

Jim Cramer's protege, 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
  • Alerts when market news affect the portfolio
  • Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
Real Money Pro
Try it NOW

All of Real Money, plus 15 more of Wall Street's sharpest minds delivering actionable trading ideas, a comprehensive look at the market, and fundamental and technical analysis.

Product Features:
  • Real Money + Doug Kass Plus 15 more Wall Street Pros
  • Intraday commentary & news
  • Ultra-actionable trading ideas
Options Profits
Try it NOW

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

Product Features:
  • 100+ monthly options trading ideas
  • Actionable options commentary & news
  • Real-time trading community
  • Options TV
To begin commenting right away, you can log in below using your Disqus, Facebook, Twitter, OpenID or Yahoo login credentials. Alternatively, you can post a comment as a "guest" just by entering an email address. Your use of the commenting tool is subject to multiple terms of service/use and privacy policies - see here for more details.
Submit an article to us!
DOW 17,195.42 +221.11 1.30%
S&P 500 0.00 -2.75 -0.14%
NASDAQ 4,566.1380 +16.9120 0.37%

Brokerage Partners

Rates from Bankrate.com

  • Mortgage
  • Credit Cards
  • Auto

Free Newsletters from TheStreet

My Subscriptions:

After the Bell

Before the Bell

Booyah! Newsletter

Midday Bell

TheStreet Top 10 Stories

Winners & Losers

Register for Newsletters
Top Rated Stocks Top Rated Funds Top Rated ETFs