NEW YORK (GenomeWeb News) – Shares of Exact Sciences climbed almost 16 percent today after investment firm Rodman & Renshaw upgraded its stock to Market Outperform from Perform.
Rodman & Renshaw also increased the 18-month price target on Exact Sciences' shares to $12 from $7. Shares of the company on Nasdaq closed at $7.46.
In a research note, Elemer Piros cited the potential of Exact Sciences' Cologuard test for colorectal cancer, which is currently in a validation study and its final biomarker panel, consisting of NDRG4, BMP3, KRAS gene point mutations, beta-actin, and hemoglobin FIT.
Exact Sciences has exclusive access to NDRG4 from MDx Health and BMP3 through the Mayo Clinic. It also has developed its own version of the hemoglobin FIT assay. Piros said that the combination of its markers offers a "non-obvious" method for detecting colorectal cancer.
"Coupled with an improved, patentable method to extract DNA from the stool with higher than previously seen yield, Exact Sciences is in an enviable position to have a protected method for the next 20 years and beyond," Piros said.
He added that the potential ability of Cologuard to detect precancerous adenomas could be a "key advantage" for the test. While a number of firms such as Epigenomics are developing blood-based tests for colorectal cancer, such tests cannot detect precancerous adenomas effectively "because vascular invasion is absent in adenomas and increasingly evolves according to the cancer stage," Piros said.
DNA from cells shed into the colon from adenomas, however, or cancerous lesions can be detected in stool. As a result, stool-based tests, such as Cologuard, have "a greater potential to find precursor lesions and early cancers."
Piros' upgrade is an about-face from a downgrade he placed on Exact Sciences two weeks ago, when he noted that earlier versions of the company's stool-based DNA colorectal tests were not commercially successful and Cologuard could face reimbursement and adoption challenges with Cologuard, as well as other risk factors.
Exact Sciences reported a 23-percent decline in its second-quarter revenues earlier in the month.