BOSTON ( TheStreet) -- Did you catch Jim Cramer's excellent Mad Money segment Wednesday on Exact Sciences ( EXAS)?

If not, a question from Paul P. on the colon cancer diagnostic stock kicks off this week's Biotech Stock Mailbag: "Have you followed and/or have any thoughts on Exact Sciences? I've been following it and am hearing that it may be overhyped. Your thoughts would be appreciated."

Exact Sciences has been one of my top small-cap picks for most of this year, ever since I met CEO Kevin Conroy in January and walked away very impressed by the way he was transforming the company. I spend nearly all my time writing about companies developing drugs to treat disease, including cancer. Exact is a great story because it's working on a non-invasive, genetic test that will help doctors discover and diagnose colon cancer at its earliest stages.

That's so important because colon cancer, when caught in the precancerous stage, is entirely treatable and curable. The problem today is that existing, noninvasive tests aren't sensitive enough to catch early-stage colon cancer. Colonoscopy can do the job well, but the procedure is painful, invasive and as a result, underutilized.

Only about 40% of the approximately 148,000 new cases of colon cancer diagnosed in 2008 were caught early. If Exact is successful developing its genetic test, the percentage of colon cancer cases diagnosed at an early-stage and treatable stage should rise dramatically. That's great for patients, of course, but because we talk about stocks and market value here, an accurate, noninvasive genetic test that catches precancerous lesions in the colon will be embraced by insurers that would rather pay a relatively small amount for a test than dole out wads of cash for expensive cancer treatments.

So, no, I don't believe Exact Sciences is being overhyped. I recognize the stock has had a great run from $4 to $8 in the past eight weeks, so I won't be surprised if we see a breather or profit-taking, especially once the independent (external) validation studies are presented on Oct. 29.

If the results from those validation studies are strong, however, Exact is going to garner even more attention from large institutional buyers who aren't necessarily price sensitive with the stock still under $10. Be mindful, also, that Exact will be looking to raise more money to fund the large clinical studies needed to get its colon cancer test approved and marketed, so a better entry point in the stock may be around the corner.

Regarding the Oct. 29 presentation, what we want to see Exact Sciences' test achieve is at least 85% sensitivity to cancers and 50% sensitivity to precancerous lesions. The latter number is especially important for the reasons stated above.

For those that did miss it, check out the Web replay of Jim Cramer's Mad Money segment on Exact Sciences from Wednesday night.

One more note: If Exact Sciences was valued the same way Sequenom ( SQNM) is today, it would already be a stock in the low teens. Sequenom and its Down's syndrome test get a lot of attention, but Exact Sciences is addressing a more important, unmet medical need and a larger commercial market. And Exact's colon cancer test is real, with validation data coming on Oct. 29 from the Mayo Clinic. Sequenom's Down's test, on the other hand, is still blue sky.

Thomas P. emails, "You may recall that Transcept Pharmaceuticals (TSPT) received a complete response letter last year for their insomnia drug Intermezzo. One of the things requested by the FDA was an automobile-driving test to see if there were any residual effects of the drug after taking it upon waking in the middle of the night. (If approved, Intermezzo would be the only insomnia drug taken at a time other than bedtime.) The CEO recently reported in a presentation that the driving test, at four and three hours after taking the drug, had been completed, and that the results would be released this quarter, prior to the anticipated refiling for approval in first quarter 2011. He remarked that driving three hours after taking the drug was not recommended, but that residual effects of the drug were not significant after two and a half hours. While this is not a major trial, it is certainly of importance for a timely and successful refiling. With so much else going on this month, I can understand why you haven't mentioned this to date."

I followed up with Transcept spokesman Greg Mann, who confirmed for me via email that the Intermezzo driving study was complete and that the company would release results in the fourth quarter.

"It's an interesting study design, to say the least. We believe this is the first time that highway driving results could serve as the basis of an FDA review," Mann said.

As Thomas points out, Intermezzo is unique in that the sleeping tablet is intended for people who have trouble falling back to sleep after waking up in the middle of the night. The FDA denied approval initially in part because of concerns that taking Intermezzo too late at night would cause people to be impaired the next day. That's problematic, of course, for people who may get into their car to drive to work.

I'm not familiar with the CEO comments about the results of the Intermezzo driving study mentioned by Thomas, but it will be important for Transcept to demonstrate that people can drive safely (no weaving) three or four hours after taking the sleeping tablet (which consists of a very low dose of zolpidem, the active ingredient in Ambien.)

If the driving study is positive, the next worry for Transcept investors will be guessing how the FDA reacts to the data. Will the study be enough to ease regulators' concerns about next-day impairment?

Transcept shares were trading in the $14 range before last October's FDA complete response letter. More recently, the stock's been trading between $6 and $7.

Hanne S. asks, "Can you please comment on the rumors/uptrend regarding Delcath Systems (DCTH)? What other catalysts are coming up besides the buyout rumor? Thanks for your feedback."

Last week's rumor that Bristol-Myers Squibb ( BMY) was interested in acquiring Delcath for $15 a share was nothing more than trading-room chatter designed to make someone a quick buck. Don't believe it.

Delcath is expected to seek approval for its liver cancer drug delivery system with the FDA in the current quarter. Figure a six-month review period from the filing date, which translates roughly into a mid-2011 approval decision. You can also expect the FDA to convene an advisory panel to review the Delcath system, date to be determined.

I continue to believe that the data from the pivotal phase III study raises questions about the approvability of the Delcath system, and even if approved, the commercial market for the device is very small. Delcath is fully valued in the mid-to-high-single digits.

Bob P. writes, "Thanks for your short but to-the-point outlook on Vanda Pharmaceuticals (VNDA). But you have to admit something is going on. With the stock trading at cash, the last couple of weeks have added about 33% to the stock's value. Any chance you would talk to management and reconsider? If investor relations doesn't want to speak with you, don't feel bad, I can't get through either."

Bob's referring to my sarcastic remark last week that the slow launch of Somaxon Pharmaceuticals' ( SOMX) sleeping pill was making the combined Novartis-Vanda marketing effort for the schizophrenia drug Fanapt look absolutely rocket like.

Vanda shares have moved from $6.50 to 8 in the past two weeks, but that's nothing more than overly optimistic buying from retail investors desperate for an improvement in third-quarter Fanapt sales.

Fanapt precscriptions are growing week over week, according to data collected by IMS Health, but the overall scripts and market-share figures are still tiny compared with the competition and do nothing to reverse the reality of Fanapt's underperforming commercial launch.

At the end of the third quarter, Fanapt captured just 0.2% of total market share for all atypical anti-psychotics, according to IMS data. A lot of Vanda bulls compare Fanapt's slow start to the similar slow start experienced by Pfizer's ( PFE) Geodon, but c'mon, Fanapt is getting beat by Saphris and Invega, two other recently launched antipsychotics. The question Vanda followers should be asking is if Fanapt can beat Saphris, which has just 0.4% market share.

Scott R. hacks at me for "being totally wrong about Vanda. You've missed this big move and will never admit you're wrong."

Well, I called Vanda fully valued at $12 one year ago and that was giving the company credit for about $200 million in Fanapt sales. I threw more cold water on the stock when the initial Fanapt scripts came up lame and Vanda shares fell to $6, so I haven't missed a thing.

One more item for Vanda fans to ponder as we wait for third-quarter results: What's the status of the Internal Revenue Service ruling on the tax implications of Novartis' $197 million licensing payment? Back in August, Vanda said it expected a decision in two months, which is right about now. A negative IRS ruling will force Vanda to write a big check to the government, cutting its cash cushion considerably.

Ira P. emails, I follow you every day, both on RealMoney and Twitter. I think you are the most objective, bar none! Can you please write about Cadence Pharmaceuticals (CADX)?

Cadence is hoping that FDA approves Ofirmev, an intravenous formulation of acetaminophen, on Nov. 4. For that to happen, FDA inspectors need to give the all clear to a Baxter ( BAX) manufacturing plant where Ofirmev is made. "Market chatter" says FDA completed its plant re-inspection but Cadence, to date, hasn't confirmed publicly.

My sense is that investors largely expect the FDA to be assuaged by Baxter's remediation efforts at the Ofirmev manufacturing plant and that the drug will be approved on the Nov. 4 approval decision date. After that, I think opinions on mixed on the drug's commercial success.

Fan mail from Bob M.: "Your job is to write biased articles. You comment on stocks because it's fun. You have zero background in biotechnology, you have no medical or scientific credentials. Talk about leading lemmings over the cliff. Why would anyone believe a word that you say? TheStreet is certainly getting what they payed sic for, if they hired a stooge."

More fan mail from Shantanu: "Aren't you a big fat lair sic ? You lied before Vivus meeting and 85% of your lair sic hedge fund friends lied. How could you live with this type of unethical life?? Shame on you."

One more fan letter, for fun. Asif A. gets creative, although he's punctuationally challenged: "You BLEEP can't see anybody else make money. And you are pretty ugly too. How is the woman situation with you?, probably not good. thats why you are writing stupid articles. O, lets do this. if Silenor becomes very successful, can we all come BLEEP you BLEEP BLEEP BLEEP. put your money where your mouth is, or should I say BLEEP . LOL"

LOL, indeed.

Lastly, Adrian S. emails, "Really enjoy your articles. I sent you one email on this already and surprised you haven't jumped in on this yet. Labopharm (DDSS) looks to have a lot of promise at this juncture, having just launched Oleptro in the U.S. with their partner Angelini. With Canadian Oleptro approval and tramadol/acetaminophen combo approval in Europe by year's end I think it makes for an exciting near term story. What are your thoughts?"

Not so fast, Adrian. Oleptro's U.S. launch isn't going well, even slower than expectations, which weren't all that high to begin with. And while the positive opinion from European regulators for the tramadol/acetaminophen combo is encouraging, launch is probably a year away and may be met with the same indifference there as tramadol.

Labopharm is still a show-me stock.

--Written by Adam Feuerstein in Boston.

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Adam Feuerstein writes regularly for In keeping with TSC's editorial policy, he doesn't own or short individual stocks, although he owns stock in He also doesn't invest in hedge funds or other private investment partnerships. Feuerstein appreciates your feedback; click here to send him an email.

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