Global Courant
Shares of American biotech company Exact Sciences are up nearly 90% this year. But according to fund manager Dani Saurymper, the run may not be over yet. The Nasdaq-listed company makes tests to detect colon cancer. Earlier this week, it said its next-generation screening test, Cologuard 2.0, showed a 30% lower false-positive rate for detecting the disease in a study compared to its already-approved test. The positive results of the study, dubbed BLUE-C, come at an important time for the company. According to Saurymper, who manages Pacific Asset Management’s Longevity and Social Change fund, millions of screenings have not taken place during the Covid-19 pandemic, which has now created significant demand for Exact Sciences’ testing technology. “It’s a huge opportunity. And someone like Exact is clearly capitalizing on that,” Saurymper told CNBC’s Pro Talks on Wednesday. EXAS 1Y line Saurymper’s fund focuses on identifying investment opportunities in companies with a high exposure to an aging demographic, which Saurymper calls ‘longevity industries’. Their screening method involves examining companies’ revenue streams and ranking them based on how much of their revenue is generated from these industries. Companies that derive more than half of their revenue from these sectors are considered to have a high exposure. A theme that Saurymper brought to the attention of investors is prevention and screening for diseases. He believes it is more beneficial to focus on companies that promote healthy living and disease prevention than those that offer treatments. This is where Exact Sciences fits in. The company, which was once loss-making, has seen a significant increase in screening volumes and is expected to be profitable this year. Last year, the company’s screening business brought in $1.4 billion in revenue, primarily from FDA-approved sales of colon cancer tests. Analysts are also pleased with the results of the new study. “Overall, we believe Exact’s BLUE-C top-line results for next-generation Cologuard are remarkable (and relatively solid),” said Kyle Mikson, an analyst at Canaccord Genuity, who has a buy rating on the stock. customers on June 20. In addition, Exact Sciences is also developing a “liquid biopsy”, which is designed to use a blood test to detect early signs of liver cancer that can be expanded in the future to detect other forms. While investors welcomed the run into equities this year, Exact’s stock has suffered losses over the past two years, along with other stocks in the technology sector. Saurymper believes the stock has corrected and has a significant runway ahead. “The fundamentals have caught up with the share price,” he told CNBC’s Arabile Gumede. “We certainly think it has significant growth ahead of it, and we wouldn’t back down just yet.”
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