A New Strategy for EXACT Sciences

Despite a key endorsement by the American Cancer Society for EXACT Science's (EXAS) stool DNA-based colorectal cancer screening test earlier this year, the stock continues to languish at multi-year lows on light average volumes. EXACT is expected to finalize its FDA protocol for the V2 technology of its test to gain the agency's approval and also engaged Leerink Swan to explore strategic alternatives over three months ago. In April , the Company submitted its pre-IDE study protocol to the FDA for a de novo 510(k) filing of its V2 technology. I expect the FDA protocol to be finalized soon, resulting in the filing of a 510(k) application with the agency and the potential for a lucrative partnership deal for this test to alleviate funding concerns and bolster the dwindling cash reserves of $9.5 million.

Recent reports suggest that EXACT is now planning to make the latest version of its fecal DNA-based colorectal cancer screening test available to consumers on an over-the-counter [OTC] basis in 2009, pending successful FDA approval at that time. Meanwhile, partner LabCorp (LH) has stopped offering PreGen-Plus as of June 1, as it was previously the focus of a FDA warning letter in October 2007. LabCorp plans to launch a single-marker, lab-based fecal DNA screening test later this year to replace PreGen-Plus as a "homebrew" test that does not require FDA approval.

EXACT's partnership with LabCorp will continue for this new single-marker test as it existed previously for PreGen-Plus. However, the focus of EXACT for the future lies with its V2 technology, which reportedly will seek to obtain FDA approval for OTC sale to consumers. The LabCorp deal does not inlcude FDA-approved versions of EXACT's colorectal cancer screening tests; so the potential for a major licensing deal to fund this initiative is the hopeful outcome for investors of the strategic review by Leerink Swan.

Disclosure: Author holds long positions in EXAS, LH

Comments

[RealityCheck]

Do you try to find stocks that implode? You have one of the worst records I've ever seen. On average, anyone listening to your drivel would have lost 63% based on the date you touted the stock compared to the price today.

Loss
ACEL -82%
ISV -69%
ANSV -26%
ADLS -58%
BNVI -73%
KOOL -48%
AEZS -68%
SNUS -99%
JAV -53%
TGEN -68%
EXAS -63%
OSUR -55%
TPTX -55%
Average -63%

[mikehav]

Many blue chip and former large-caps are down huge amounts over the last year as well & the bear market has been especially tough for small/micro cap biotech stocks.

I have also written about stocks on the Motley Fool & other sites such as Sequenom (SQNM), Isis Pharma (ISIS), Alnylam (ALNY), Xenoport (XNPT), Vivus (VVUS), VisICU (EICU), North Pitt (NPSI), Savient Pharma (SVNT), Allos Therapeutics (ALTH) that have done much better than the examples you list. Sequenom alone is almost four-fold from last year.

[GCBG]

You state: "The LabCorp deal does not inlcude FDA-approved versions of EXACT's colorectal cancer screening tests; so the potential for a major licensing deal to fund this initiative is the hopeful outcome for investors of the strategic review by Leerink Swan."

I beleive you are incorrect.

See the press release from 7/10/07 at this link: phx.corporate-ir.net/p...=

which states : "EXACT and LabCorp remain committed to the launch of Version 2 of EXACT's stool-based DNA technology in the first half of 2008. "

The SEC filing that accompanied this press release is at phx.corporate-ir.net/p...

and says among other things: "The Amendment modified LabCorp’s exclusive rights to the Company’s DNA technology for colorectal cancer screening to permit the Company to license its technology to select third-party organizations and commercial service laboratories, subject to LabCorp’s preferential pricing terms, and to extend LabCorp’s modified exclusive period under the Agreement until December 31, 2010. Additionally, the Amendment clarifies the rights and obligations with respect to the Company’s Version 2 technology for colorectal cancer screening."

and

"The Amendment provides LabCorp with termination rights if stool-based colorectal cancer screening is not included in clinical practice guidelines in the near term, if the Company’s Version 2 technology is not commercially launched in the near term, or if the Company’s Version 2 technology does not attain certain sensitivity and specificity thresholds in connection with technical validation."

Uh. . . sounds like Labcorp is involved with "version 2" to me!

[RealityCheck]

The Nasdaq Biotech index is flat over the last year. Your stock picks are toxic.