Is This Little-Known Health Innovation The Next Big Thing?

It’s hard to find the next big thing but Exact Sciences might be as close as any company is to it via its liquid biopsies, a transformative approach to diagnosing and monitoring various diseases by detecting signs of cancer, genetic anomalies, or other conditions in blood or other bodily fluids.

This technology has been particularly promising for cancer, where it has the potential to improve early detection and treatment monitoring through a simple blood draw.

These tests sample of blood for tiny bits of DNA that are shed by cancer cells and reveal whether someone has cancer, at what progression, and how they might best be treated. Advances in sequencing technology and reductions in cost have pushed this once niche technique to the forefront of preventive health care.

So what are the prospects for Exact Sciences shareholders?

Key Points

• Exact Sciences leads in liquid biopsy technology, which improves cancer detection and treatment monitoring through blood tests that identify DNA fragments from cancer cells.
• In 2023, Exact Sciences generated $2.5 billion in revenue, up 19.9% from 2022, primarily from its Cologuard and Oncotype DX tests, which accounted for over four million patient tests.
• Despite recent market dips and analyst downgrades, the long-term outlook for Exact Sciences is optimistic, with the potential for substantial stock appreciation based on its decade-long strong performance.

Exact Sciences Growing Fast

In 2023, Exact Sciences achieved a significant financial milestone, bringing in $2.5 billion, which marks a 19.9% increase from 2022.

A large portion of this revenue was generated from its leading products, such as the Cologuard test for colorectal cancer and the Oncotype DX test for breast cancer, collectively accounting for 4+ million patient tests.

The bulk of the screening revenue can be attributed to Cologuard, whereas Oncotype DX is primarily responsible for the revenue in Precision Oncology, which relies on more invasive tissue biopsies.

Currently, Exact Sciences earns a relatively small portion of its income from liquid biopsies, mainly from the assets acquired through its $190 million purchase of PreventionGenetics in 2022. This acquisition included a portfolio of over 5,000 genetic screening tests, such as tests for hereditary cancer.

But as the market expands, what does all this mean for the stock?

Will Exact Sciences Go Up?

If analysts are right, Exact Sciences has the potential to rise by as much as 40.2%. With that said, sentiment has dimmed somewhat with 7 downward revisions recently for the upcoming period. As a result, the share price has taken a big hit in recent weeks but that’s likely an opportunity for those with an eye on the long-term opportunity.

It’s noteworthy that the return generated by the firm over the past decade has been exceptionally strong so the recent dip is more likely a lull in a powerful long-term trend versus a downward inflection point.

According to ARK Invest Big Ideas report, the cost of multi-cancer screenings is expected to reduce to $250 each by 2025, potentially creating a $150 billion market in the U.S. alone.

This figure is notably double the current total addressable market for all oncology testing. Others forecast the near-term market potential for liquid biopsies used in cancer treatment and monitoring at $15 billion. If correct, the future for Exact Sciences could be very bright indeed.