According to the US Centers for Disease Control and Prevention (CDC), cancer is the second leading cause of death in the US (behind heart disease), claiming 599,601 lives in 2019. On the bright side, there is noticeable progress in the versatile approach to fighting this disease. One area where scientists are making strong progress is in the field of cancer diagnostics.
According to research firm Grand View Research, this market is valued at $ 144.4 billion in 2018 and will expand to 2026 with a compound annual growth rate (CAGR) of 7%. Buying shares of leading companies within this field can yield juicy returns. Two stocks targeted at cancer are worth buying Exact Sciences (NASDAQ: EXAS) and Guardant Health (NASDAQ: GH). That’s why investing $ 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 outcomes than others, especially if the disease is contracted early. Any technology that enables us to do just that is likely to succeed. It’s not a bad business model to help lower healthcare costs while saving lives. This is what Exact Sciences is doing with Cologuard, a non-invasive test for colorectal cancer, the second deadliest cancer in the US. However, when diagnosed in stage 1 or 2, the five-year survival rate for this disease is 90% when it is 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, it has helped the excellent growth in Exact Sciences over the past few years. In the fourth quarter of its 2020 financial year, which ended December 31, the company generated $ 466.3 million in revenue, an increase of 57.8% year-on-year. Exact Sciences’ screening revenue grew 9% year-on-year to $ 250 million, driven by Cologuard’s volume growth. Note that the company did record $ 99 million in COVID testing revenue in the fourth quarter, a segment in which it did not record any sales in 2019.
But Exact Sciences’ revenue growth is ahead of the pandemic: the company’s quarterly revenue has risen 416.5% over the past three years.
What’s Next for Exact Sciences? In the first place, it is still exploiting Cologuard’s addressable market. According to the company, about 46 million Americans should be eligible for the colorectal cancer screening. As more patients decide to have their product tested, Exact Sciences’ revenue will continue to grow.
Exact Sciences is also working on a clinical trial for its multicancer liquid biopsy test. The company’s shares rose about 26% on September 24 after offering preliminary data from the trial. Liquid biopsies are non-invasive tests that allow doctors to search for cancer cells from tumors in blood samples. Exact Sciences’ test shows 86% sensitivity (the percentage of people with the disease who pass a positive test) and 95% specificity (the percentage of people without the disease who have a negative test) during the trial.
The types of cancers that can help detect this test include lung, liver and stomach. This multi-cancer test could help the company unlock a million-billion-dollar opportunity. Thanks to these prospects, patient investors can earn tremendous returns with this health stock 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 uses. 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 trials.
The benefits of these products include faster diagnostics, lower healthcare costs and better health outcomes. Guardant Health’s liquid biopsy tests have found success in the market. Over the past three years, the company’s quarterly revenue has grown tremendously.
GH revenue (quarterly) data by YCharts
Guardant Health’s leading growth over the past few 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 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 performed better than 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 type of lung cancer. These results will help the Guardant360 make even more progress within its responsible market.
Furthermore, the company is currently developing two products, Lunar-1 and Lunar-2. The former 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 of these products if current studies confirm their effectiveness.
The data will take a while to come in, but it will be good with patient investors to monitor the progress of these programs. Thanks to these catalysts, Guardant Health looks to be an excellent stock to buy and hold until 2021 and beyond.