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Nick Zheng
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Biotech stock trading and investing for 25 years. PhD in biology, MS in computer science. Extensive experiences in biotech/pharmaceutical companies, in both USA and China, serving middle to senior executive positions. After 12 years of research at top institutions/universities and 10 years of... More
  • Why Cologuard Of Exact Sciences (Ticker: EXAS) May Be No Better Than Routine Fecal Occult Blood Test (FOBT)

    After waiting for much longer time than expected, top-line data of pivotal trial of Cologuard for colorectal cancer screening (Deep-C) was finally announced early morning of April 18. The data were short of expectation and stock dropped more than 30% to under 7 at pre-hour trading.

    Technologically, Cologuard is a sDNA (stool DNA) test on top of well established routine FOBT test. EXAS uses multiple markers found in stool DNA in combination of a FOBT test to determine the likelihood of colorectal cancer and advanced adenoma (pre-cancerous tumor that may develop into cancer in later years) using a complicated algorithm. In the recent presentation by the company, slide 16 states Cologuard requires 2 multiplex DNA assays and 1 ELISA essay for fecal hemoglobin. But cross examination of top-line data seems to suggest that Cologuard is not better than routine fecal occult blood test (FOBT).

    Let's take a look at the limited data for cancer and advanced adenoma, respectively.

    1. Primary target for cancer detection is only partially achieved.

    The primary performance is targeted for >=85% cancer sensitivity and >=90% specificity, while Deep-C top-line data demonstrated 92% cancer sensitivity and 87% specificity.

    Cancer

    Primary Target

    Deep-C

    Target Met?

    Sensitivity(%)

    >=85

    92

    Yes

    Specificity(%)

    >=90

    87

    No

    Specificity tells the accuracy of the positive tests. Lower specificity means that more false positive cases have to be confirmed by invasive colonoscopy.

    1. Cancer detection is not better than routine FOBT.

    In 2007, National Cancer Institute (NYSE:NCI) published a paper on improved FOBT tests that were later adopted as routine simple screening for colorectal neoplasm. NCI also accompanies that paper with a bulletin.

    Following is the table comparing the performance of cancer detection by Cologuard and FOBT methods.

    Cancer

    Cologuard

    FOBT(FIT)

    FOBT(NASDAQ:GT)

    Better than FOBT?

    Sensitivity(%)

    92

    81.8

    64.3

    Yes

    Specificity(%)

    87

    96.9

    90.1

    No

    In the clinical trial involving 5841 subjects, NCI used two FOBT methods. One is unrehydrated guaiac fecal occult blood test, and another is called fecal immunochemical test (FIT). Both use ELISA essays to detect hemoglobin (occult blood) in stool.

    While Cologuard detects more cancer cases (higher sensitivity) than FOBT, but it is at expense of accuracy (specificity). The results may be expected considering that Cologuard is DNA essays in addition to FIT. The additional DNA assays appear to pull out more cancer cases, but also many more false positive cases who will have to go through unnecessary colonoscopy to confirm. The colonoscopy procedure is costly (about $2500) and uncomfortable. In another words, the additional stool DNA assays have performed much worse than FOBT if we could separate the additional cancer cases and analyze them independently.

    1. Detection of advanced adenoma is worse than routine FOBT.

    Management claims that the key differentiating performance of Cologuard is its significantly higher ability to detect pre-cancerous (advanced adenoma) in comparison to currently available non-invasive methods. Let's compare Cologuard and FOBT performance for advanced adnoma in the following table.

    Advanced Adenoma

    Cologuard

    FOBT(FIT)

    FOBT

    Better Than FOBT?

    Sensitivity(%)

    42

    29.5

    41.3

    No

    Specificity(%)

    87

    97.3

    90.6

    No

    EXAS did not release detailed statistical analysis of its top-line data, but it is clear from above table that Cologuard is no better than GT in term of sensitivity, and worse than either FOBT method (FIT or GT) in term of specificity.

    One secondary endpoint of Deep-C trial is to demonstrate that Cologuard is superior to FIT for advanced adenoma detection. While the press release did not provide any data, this comparison analysis shows Cologuard performs no better than FOBT overally, and worse than sensitive GT method.

    In summary, I believe Cologuard did not perform better than routine FOBT that costs only $15-35 per test. The commercial success will rely on its ability to detect pre-cancer better, but Deep-C shows otherwise. Not only is its sensitivity at 42% lower than earlier trials (>57%), but no better than simple FOBT. For cancer detection, Cologuard achieved higher sensitivity at cost of lower accuracy. The much hyper generated for Cologuard may end as a commercial flop even FDA approves it next year. I also think that the advisory committee and FDA will scrutinize Cologuard performance and question the real benefit on background of many competing screening methods. Will men over 50 love to poo over the white plastic bowl, cover it, and mail it back to EXAS as the CEO displayed the stool collecting tool at CNBC right after the conference call on the top-line data announcement? The cost of FedEx will be higher than a simple routine FOBT test.

    Disclosure: I am short EXAS. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it. I have no business relationship with any company whose stock is mentioned in this article.

    Tags: short-ideas
    Apr 21 4:13 AM | Link | 3 Comments
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