Exact Sciences - The Rotten Sniff Test (1 Of 5)

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Alpha Exposure

Exact Sciences (NASDAQ:EXAS) (EXAS or the "Company") is the Wisconsin-based company behind the overhyped soon to fail colon cancer screening test known as Cologuard. As such, we believe that the fair value for this persistently cash flow negative, value-destroying Company is at best equal to the value of the cash on its balance sheet, or less than $3 per share. We will demonstrate over the course of this series, why we feel that the stock should be aggressively sold or shorted. This article is the first in a five part series which will cover:

  1. Why the Cologuard test is actually worse than currently available tests
  2. Why the economics of the Cologuard test do not support reimbursement
  3. Why almost nobody will use the Cologuard test even if it gets approved
  4. Why the Cologuard test is no Pap Smear (the Bull case deconstructed)
  5. How Exact Sciences has misled investors (for the third time)

In order to be successful, Exact Sciences will need to show that Cologuard is an effective test, gain reimbursement, convince doctors to prescribe the test, and make a simple enough test that patients will use it. We believe that they will fail at each of these tasks. In this article, we will explain why we believe that the Cologuard test has a high probability of being rejected by the FDA and why, in the unlikely event that it is even approved, it will almost certainly be a commercial failure due to its lack of efficacy.

Exact Sciences would like investors to believe that Cologuard will revolutionize the detection of colon cancer. The Company believes that Cologuard will replace the colon cancer screening Fecal Immunochemical Test (FIT), just as the FIT has progressively replaced the Fecal Occult Blood Test (FOBT) in recent years. To support this contention, the Company has used a highly promotional slide deck

This article was written by

Alpha Exposure profile picture
Alpha Exposure is the pseudonym of an investor in individual stocks. He is a proponent in only investing in ideas which he can evaluate himself.

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