Analysts stay bullish on Exact Sciences after ASCO abstract prompts pullback

Shares of Exact Sciences (EXAS), the maker of the Cologuard test for the early detection and prevention of some forms of cancer, are dropping after the release on the site of the American Society of Clinical Oncology of an abstract regarding a new study assessing a liquid biopsy test for colorectal cancer, CRC, that showed up to 88% accuracy. Several Wall Street analysts have since commented on the news saying the selloff in the shares is overdone. Canaccord's Mark Massaro told investors that he sees this as a "golden buying opportunity." COMPETITOR DATA: According to an abstract entitled "Liquid Biopsy Test Shows Promise for Detecting Early-Stage Colorectal Cancer" that was released on the site of the American Society of Clinical Oncology, a new study has found that a test that identifies circulating tumor cells present in the bloodstream can detect colorectal cancer at an early stage, with accuracy ranging from 84 to 88%. The blood samples were processed using CMx, an assay that captures rare CTCs - such as those found in early-stage cancer - on a lipid-coated chip that mimics human tissue, the abstract read. SELLOFF OVERDONE: Following news of the ASCO abstract, Baird analyst Catherine Ramsey argued that the selloff in Exact Sciences' shares is overdone based on some seemingly large issues with this study's design. While several companies are working on blood-based CRC screening tests such as VolitionRx (VNRX), which is planning near-term interim data releases, Ramsey still believes a potential U.S. blood test is many years away. Her peer at Cowen voiced a similar opinion, saying he also sees the selloff in Exact shares as overdone. While analyst Doug Schenkel acknowledged that the data looks "interesting," he noted that it is a relatively small, single-site study that includes a disproportionate number of diseased patients. Additionally, the analyst pointed out that there are also questions about study design, which looks to be biased by disease state and it is unclear if FDA-level standards were applied. Schenkel reiterated an Outperform rating and $65 price target on Exact Sciences' shares. Meanwhile, William Blair analyst Brian Weinstein also told investors that he believes the blood-based CRC screening test highlighted by ASCO has large issues with its study design. Of the 620 subjects in the study, 18% had pre-cancer and another 53% had cancer, which likely skews the specificity much higher than if the study were done on the typical U.S. population, Weinstein contended. The analyst reiterated an Outperform rating on Exact Sciences' stock. 'GOLDEN' BUYING OPPORTUNITY: In a research note of his own, Canaccord's Massaro told investors that the selloff today in shares of Exact Sciences presents a "golden buying opportunity," particularly for investors who have been on the sidelines. The analyst believes there are "fundamental issues" to this study and reasons to be skeptical of it. Further, Massaro argued that this study is "apples-and-oranges" different than Exact Sciences' Deep-C Study, which got Cologuard approved by the FDA and into guidelines. The latter had about 10,000 patients who were asymptomatic, while the former enrolled 182 healthy and 438 who were symptomatic, he pointed out, adding that to conclude that this study is a meaningful competitor to Cologuard does not make sense to him. The analyst reiterated a Buy rating and $60 price target on the shares, and said Exact Sciences remains a top pick for 2018. PRICE ACTION: In afternoon trading, shares of Exact Sciences have dropped over 8% to $48.50.