With the surprise announcement last week by Geron (GERN) that the FDA would allow human clinical trials for embryonic stem cells, all companies in the underlying
ETF Innovators Index to track the space are screaming higher again today – led by the company with the biggest gains over the past year, StemCells (STEM).
Below are three additional areas and associated companies for investors to consider in the search of the next hot spots in the healthcare sector, including a focus on small/mid-cap companies which have the added potential to be acquired as part of renewed M&A in the sector this year.
Molecular Diagnostics
EXACT Sciences (EXAS) has rejected the hostile $1.50 all-stock offer from Sequenom (SQNM) as the Board pursues a more lucrative deal for shareholders. While EXAS also holds patents in the prenatal diagnostic space; its strongest IP position and commercial potential lies with non-invasive stool DNA (sDNA) screening for colorectal cancer (CRC).
A
NY Times report summarizes the results of a study published in the medical journal,
Annals of Internal Medicine, which concluded that colonoscopies may actually prevent 60%-70% of CRC, rather than previously quoted rate of 90% for the test. While colonoscopies are still effective at preventing CRC and will continue to be widely recommended and used; the study highlights limitations of the procedure – especially in the detection of flat and right-sided lesions, with the latter accounting for about 40% of all CRC cases.
Sensitivity results of 82% were already published last summer for EXACT's
V2 sDNA technology, while the next-generation sDNA test (V3) boasts 92% sensitivity and has shown the potential to detect 86% of precancerous adenomas. Currently, only 24% of the 90M eligible patients in the U.S. are compliant with CRC screening recommendations and there is clearly an unmet medical need for an effective, non-invasive CRC screening test for the average-risk population which people will actually use.
A deal for EXAS with a global diagnostics company such as Abbott Labs (ABT) or Roche (RHHBY) would be ideal to expand outside the U.S.
