Cancer is the second leading cause of death in the US after heart disease, according to the US Centers for Disease Control and Prevention (CDC), claiming 599,601 lives in 2019. On the bright side, remarkable progress has been made in the multi-faceted approach fight this disease. One area in which scientists are making significant progress is cancer diagnostics.
This market was estimated at $ 144.4 billion in 2018 and will continue to grow at a compound annual growth rate (CAGR) of 7% through 2026, according to the research firm Grand View Research. yield a juicy return. Two cancer-focused stocks worth buying Exact Sciences (NASDAQ: EXAS) and Guardant Health (NASDAQ: GH)This is why an investment of $ 5,000 in one (or both) of these companies would be a good move.
GH data by YCharts
1. Exact sciences
Some cancer diagnoses may have better results than others, especially if the disease is caught early. Any technology that allows us to do just that is likely to have some success. Helping lower healthcare costs while saving lives isn’t a bad business model. That’s what Exact Sciences is doing with Cologuard, a non-invasive test for colorectal cancer, the second deadliest cancer in the US. When diagnosed at stage 1 or 2, the five-year survival rate for this disease is 90%, when diagnosed at stage 4, the five-year survival rate drops to 10%.
Cologuard responds to this need and with 227,000 tests ordered since its launch in 2014, it has helped Exact Sciences’ excellent sales growth in recent years. In the fourth quarter of fiscal 2020, which ended December 31, the company posted $ 466.3 million in revenue, up 57.8% year-over-year. Exact Sciences’ screening revenue grew 9% year over year to $ 250 million, reportedly driven by Cologuard’s volume growth. Note that the company posted $ 99 million in COVID testing revenue in the fourth quarter, a segment in which it posted no revenue in 2019.
But Exact Sciences’ sales growth predates the pandemic, with the company’s quarterly sales up 416.5% year-on-year over the past three years.
What’s next for Exact Sciences? First, it is still tapping into Cologuard’s addressable market. According to the company, about 46 million Americans who are eligible for colorectal cancer screening have yet to undergo it. As more patients decide to get tested with the product, Exact Sciences sales will continue to grow.
Exact Sciences is also working on a clinical trial for its multi-cancer liquid biopsy test. Shares of the company were up about 26% on Sept. 24 after it presented preliminary data from the trial. Liquid biopsies are non-invasive tests that allow doctors to look for cancer cells from tumors in blood samples. The Exact Sciences test showed 86% sensitivity (the percentage of people with the disease who returned a positive test) and 95% specificity (the percentage of people without the disease who had a negative test) during the study.
The types of cancers this test can help detect include lung, liver, and stomach. This multi-cancer test could help the company unlock a multi-billion dollar opportunity. Thanks to this outlook, patient investors can generate huge profits from these healthcare stocks over the next five years and beyond.
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2. Guardant Health
Guardant Health’s best-known products, Guardant360 and GuardantOMNI, are liquid biopsy tests with many essential applications. Guardant360 helps healthcare professionals match cancer patients with the best treatment options. Meanwhile, GuardantOMNI helps pharmaceutical companies identify patients with the right profile for their clinical studies.
The benefits of these products include faster diagnostics, lower healthcare costs and better health outcomes. Guardant Health’s liquid biopsy tests have found market success. Over the past three years, the company’s quarterly sales have skyrocketed.
GH Revenue (Quarterly) data by YCharts
Guardant Health’s revenue growth in recent years is largely due to the success of Guardant360 and GuardantOMNI. Additionally, the company has both short and long-term catalysts that investors look forward to. First, sales of the Guardant360 should continue to rise this year.
Guardant Health recently reported data from a study showing that this product outperformed tissue biopsy in genomic profiling 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 US, and non-small cell lung cancer is the most common form of lung cancer. These results will help the Guardant360 make even more 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 the early detection of cancer. Guardant Health sees a $ 45 billion opportunity for both products if current studies confirm their effectiveness.
It will take time for the data to come in, but patient investors would do well to monitor the progress of these programs. Thanks to these catalysts, Guardant Health appears to be an excellent stock to buy and hold until 2021 and beyond.