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Exact Sciences Shares Drop on Potential Competitive Threat From Liquid Biopsy

NEW YORK (GenomeWeb) – Shares of Exact Sciences tumbled nearly 15 percent on Wednesday as investors were spooked by a study abstract that presented data suggesting a liquid biopsy test for colorectal cancer screening could rival the performance of Exact Science's Cologuard test.

Industry analysts, however, were not convinced that the new test should be considered a competitive threat yet, and many said the dip in Exact Sciences' stock price represented a buying opportunity.

The abstract from Taiwanese firm CellMax Life was made available in advance of the American Society for Clinical Oncology Gastrointestinal Cancers Symposium taking place later this week. Researchers said in the abstract that CellMax's circulating tumor-cell based colorectal cancer test was able to detect the disease at an early stage, in some cases a cancerous lesion, with an overall accuracy of 84 to 88 percent.

The test is currently available only in Taiwan, but CellMax plans to eventually market it in the US. CellMax Cofounder and CEO Atul Sharan also said that the test could be priced below $200.

The early glimpse at the data was enough to spark a sell-off of Exact Science's stock, with shares trading as low as $45.02 on Wednesday on the Nasdaq, though the share price rebounded somewhat to $47.68 at the close of the market. More than 14 million shares of the company's stock exchanged hands, more than seven times Exact Science's 30-day average volume. 

In early-afternoon trading today, the company's shares were up about 4 percent at $49.49.

While other blood-based tests are available or are being developed, what's noteworthy about CellMax's test, called CellMax-CRC, is its performance. According to the company, it has 77 percent sensitivity in detecting precancerous lesions. By comparison, Cologuard has roughly 92 percent sensitivity in detecting stage I-IV cancers, and 94 percent sensitivity in stages I and II only. In precancers, though, it has sensitivity of 42.4 percent overall and up to about 69 percent in high-grade dysplasia.

According to several Wall Street analysts, the seemingly improved performance of CellMax's test in early-stage detection rattled investors. Doug Schenkel at Cowen said in a research note that while the CellMax data "looks interesting" the study is relatively small and was conducted at a single site "that includes a disproportionate amount of diseased patients; there are also questions about study design. As such, we view the sell-off as overdone."

William Blair analyst Brian Weinstein added, "While liquid biopsy has always been a core part of the bear thesis on [Exact Sciences'] stock, we continue to believe this type of test is highly unlikely to produce results at a high enough sensitivity and specificity to be used as a front-line screening test for average-risk patients."

Canaccord Genuity's Mark Massaro called CellMax's study an apples-to-oranges comparison with Exact Sciences' Deep-C study, which was used to gain FDA approval for Cologuard. That study had more than 10,000 patients compared to 620 asymptomatic patients for the CellMax-CRC study.

Other assays that have shown early promise have ultimately failed, he said, because as the number of patients enrolled in early studies subsequently rise to the thousands, or tens of thousands, "oftentimes the data drops off." And while the CellMax-CRC test consisted of people in Taiwan, "[i]t hasn't been proven that the authors can get similar data from a larger number of Americans," Massaro said. 

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