Guardant Health (GH) unveiled pivotal results for its colon cancer-detecting blood test that lagged rival Exact Sciences (EXAS) — leading GH stock to crash Friday. Meanwhile, EXAS stock skyrocketed.
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In the final-phase study, Guardant Health said its blood test had an 83% sensitivity in detecting colon cancer. A highly sensitive test is less likely to miss positive cases. In comparison, Exact Sciences says its already approved test, Cologuard, has a sensitivity of 92%. Cologuard looks for colon cancer cells in a stool sample.
Investors were looking for Guardant’s test to have a sensitivity of at least 85%, Canaccord Genuity analyst Kyle Mikson said in a note to clients. Still, he doesn’t view the results as a failure. This was a first-of-its-kind study. Further, Guardant’s colon cancer test, dubbed Shield, appears to be a “lock” for Medicare reimbursement. That should help stoke sales.
“We think (the stock) reactions were a touch aggressive, recognizing that Guardant missed the mark and these results should lift a meaningful overhang for Exact,” he said. “We have lowered our Shield revenue estimates to reflect modestly slower adoption.”
On the stock market today, GH stock plummeted 27.1% to close at 30.06. EXAS stock, on the other hand, ended the regular session at 51.92, up 16.4%.
GH Stock: Slower Uptake Expected
Guardant screened 13,000 people to evaluate its Shield blood test for colon cancer. In addition to having an 83% sensitivity overall, Shield had a specificity of 90%. Tests with higher specificity are less likely to report false positives. Cologuard’s overall specificity is lower at 87%. In an email to Investor’s Business Daily, Exact spokesman Jack Hirschfield emphasized Cologuard has a specificity of 90% in patients whose cancer didn’t show up in a colonoscopy.
“We view the results as mixed with a modest skew to the downside,” Mikson said.
He cut his price target on GH stock to 65 from 99, but kept his buy rating. The overall sensitivity is within his views for 82%-87% and above the 74% required by the Food and Drug Administration for…
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