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kirkydu (93.91)

Screening for steals...

Recs

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December 16, 2010 – Comments (0) | RELATED TICKERS: EXAS , PFE , GE

I regularly scan the market for biotechs and niche technology companies that are off of spikes to see what value might lie in the stock price while in a trough.  One that I keep coming back too is on the verge of taking over a multi-million dollar cancer screening market that will rival the pap smear as a money producer. 

(per Y!)

Exact Sciences Corporation, a molecular diagnostics company, focuses on the early detection and prevention of colorectal cancer. The company has exclusive intellectual property protecting its non-invasive, molecular screening technology for the detection of colorectal cancer. Its non-invasive stool-based DNA (sDNA) screening technology includes proprietary and patented methods that isolate and analyze human deoxyribonucleic acid (DNA) present in stool to screen for the presence of colorectal pre-cancer and cancer. The company’s principal product includes ColoSure, a non-invasive stool-based DNA testing service for the detection of colorectal cancer in the average-risk population. Exact Sciences Corporation has a strategic alliance with LabCorp; a collaboration, license, and purchase agreement with Genzyme Corporation; and a licensing and research agreement with the MAYO Foundation for Medical Education and Research. The company was founded in 1995 and is headquartered in Madison, Wisconsin.

I have now been invested in this company for several years and have made significant money to this point, having bought in the sub $3 price range repeatedly, as well as, selling puts that have expired.  The current batch of puts may or may not expire unexcercised, but if excercised I am very good with accumulating more shares as I believe that EXAS is one of the surest multi-baggers available.  

I have read the 10k, visited the company as well as a reseracher at John Hopkins.  My analysis is that EXAS has no significant competition in the market of screening for pre-cancers and stage 1 cancers, the most curable form of cancer, and the ones you would prefer to find.  There are some blood tests that will eventually be available for finding stage 2-4 cancers, but those will not be screening tests in all likelihood.  The blood tests will likely be used with recovering patients from cancer to seek recurrances.  

Given the nature of the compensation packages at EXAS and the likelihood that the President of the company may run for Wisconsin Governor in four years, the patent portfolio, need for further R&D on the patent portfolio for other applications, distribution needs for products and the need of big pharma to angle even futher into bio-tech EXAS is clearly a buy out candidate somewhere north of the analyst price estimates ranging into the upper teens.  EXAS currently trades a bit below a recent secondary offering price of $6 which was largely placed with private clients at Robert W. Baird.

While there is a lot to be said for the company, all of the information is out there.  Du the du diligence and you might be as convinced as me.  Currently I hold a long common stock position in EXAS,a cash secured put position and a long call position in several portfolio strategies that I manage.

 

Kirkydu

 

All traditional disclaimers apply.

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