According to the United States Centers for Disease Control and Prevention (CDC), cancer is the second leading cause of death in the United States (behind heart disease), claiming 599,601 lives in 2019. On the positive side, there has been remarkable progress in the multifaceted approach to fight this disease. One area where scientists are making substantial progress is in the field of cancer diagnosis.
This market was valued at $ 144.4 billion in 2018 and will continue to expand at a compound annual growth rate (CAGR) of 7% through 2026, according to research firm Grand View Research. Buying shares in leading companies in this field can yield juicy returns in the future. Two actions focused on cancer diagnoses that are worth buying are exact Sciences (NASDAQ: EXAS) and Guardant Health (NASDAQ: GH). This is where a $ 5,000 investment in one (or both) of these companies would be a big move.
GH data by YCharts
1. Exact Sciences
Some cancer diagnoses may have better results than others, especially if the disease is detected early. Any technology that allows us to do just that is likely to have some success. Helping to lower healthcare costs while saving lives is not a bad business model. That’s what Exact Sciences is doing with Cologuard, a non-invasive test for colorectal cancer, the second most deadly cancer in the United States. When diagnosed in stages 1 or 2, the five-year survival rate for the disease is 90%, however, when diagnosed in stage 4, the five-year survival rate drops to 10%.
Cologuard addresses this need and, with 227,000 tests ordered since its launch in 2014, has helped Exact Sciences to have excellent revenue growth in recent years. In the fourth quarter of fiscal 2020, which ended on December 31, the company recorded $ 466.3 million in revenue, an increase of 57.8% year on year. Exact Sciences’ screening revenue grew 9% year-over-year to $ 250 million, which was driven by the growth in Cologuard volume. Note that the company recorded $ 99 million in COVID test revenue in the fourth quarter, a segment in which it recorded no sales in 2019.
But Exact Sciences’ revenue growth predates the pandemic: the company’s quarterly revenue has increased 416.5% year over year over the past three years.
What’s next for Exact Sciences? First, it is still exploring the Cologuard addressable market. According to the company, about 46 million Americans eligible for colorectal cancer screening have not yet done so. As more patients decide to test their product, Exact Sciences revenue will continue to grow.
Exact Sciences is also working on a clinical trial for its multi-cancer liquid biopsy test. The company’s stock soared about 26% on September 24, after presenting preliminary data from the trial. Liquid biopsies are non-invasive tests that allow doctors to look for tumor cancer cells in blood samples. The Exact Sciences test demonstrated a sensitivity of 86% (the proportion of people with the disease who return a positive test) and specificity of 95% (the proportion of people without the disease who have a negative test) during the test.
The types of cancer that this test can help detect include lung, liver and stomach, among others. This multi-cancer test can help the company unlock a multi-billion dollar opportunity. Thanks to these perspectives, patient investors can profit from huge returns from these healthcare stocks over the next five years and beyond.
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2. Guardian health
Guardant Health’s best-known products, Guardant360 and GuardantOMNI, are liquid biopsy tests with many essential uses. Guardant360 helps healthcare professionals find the best treatment options for cancer patients. Meanwhile, GuardantOMNI helps pharmaceutical companies to identify patients with the right profile for their clinical studies.
The benefits of these products include faster diagnostics, lower health care costs and better health outcomes. Guardant Health’s liquid biopsy tests were successful in the market. In the past three years, the company’s quarterly revenue has grown at an incredible rate.
GH revenue data (quarterly) by YCharts
The growth of the Guardant Health frontline in recent years is largely due to the success of Guardant360 and GuardantOMNI. What’s more, the company has short- and long-term catalysts that investors can expect. First, Guardant360 sales are expected to continue showing an upward trend this year.
Guardant Health recently reported data from a study showing that this product fared better than tissue biopsy in the genomic profile of advanced non-small cell lung cancer. Tissue biopsies are invasive surgical procedures performed to detect cancer.
Lung cancer is the leading cause of cancer death in the United States, and non-small cell lung cancer is the most common type of lung cancer. These results will help Guardant360 to make further progress in its addressable market.
In addition, the company is currently developing two products, Lunar-1 and Lunar-2. The first is for the detection of residual and recurrent cancer. Lunar-2 will focus on early cancer detection. Guardant Health sees a $ 45 billion opportunity for both products if current studies validate its effectiveness.
The data will take some time to arrive, but patient investors would do well to monitor the progress of these programs. Thanks to these catalysts, Guardant Health looks like an excellent stock to buy and maintain until 2021 and beyond.