Investment scams are nothing new. But since the dot-com bust of 2000, most investors have been able to spot the most egregious, misleading of corporate pitches.
That’s what’s made the Theranos debacle such a shock. The blood-testing company looked, felt and sounded like the real deal. CEO Elizabeth Holmes seemed remarkably credible too… credible enough that insurers, pharmacies and grocery stores were all willing to partner with Theranos.
The whole thing, however, was an incredible scam. The company’s blood-based tests, as it turns out, couldn’t do what Holmes had for years claimed they could. Their results were misleading at best and dangerously wrong at worst. Theranos is no defunct.
Not surprisingly, Theranos’ scandal has made investors skeptical of many similar diagnostic companies.
That need not be the case, however. Theranos was the exception to the norm rather than the norm. There are many legitimate diagnostic companies, and one area that’s seeing a huge boom is genomic testing. Genomic testing stocks belong to companies that look a person’s — or cancer’s — specific gene sequence in order to diagnose and treat patients. Here’s a look at eight of the best of them.
Exact Sciences (EXAS)
Exact Sciences (NASDAQ:EXAS) is committed to treating cancer by spotting it before it forms. Through its partnership with the Mayo Clinic, the company has developed diagnostic tools that can spot concerning colon cancer biomarkers from even the smallest DNA samples, identifying how vulnerable a particular person may be to cancer.
In fact, you may be more familiar with the company than you realize. Exact Sciences is the name behind Cologuard, the colon-cancer screener that can be used at home rather than at a doctor’s office of medical lab.
Exact Sciences isn’t yet profitable, but it’s also not stopping at colon cancer. It’s also working on screening tests that could identify liver, lung, breast and pancreatic cancers. More marketable tests means more revenue, which pushes the company closer to profitability.
Genomic Health (GHDX)
Genomic Health (NASDAQ:GHDX) is arguably one of the quintessential genomic testing stocks. The company’s Oncotype IQ tests allow doctors and caregivers to look at the specific nuances of a particular patient’s cancer and tailor a specific treatment plan for that individual.
More important, it works. And the medical community believes in what the company brings to the table.
At this week’s Gallen International Breast Cancer Conference, Dr. Joseph Gligorov of the Breast Cancer Expert Center at the APHP-Tenon Hospital in Paris commented:
“The practice-changing precision made possible by such a test can lead to improved quality of care and survival among breast cancer patients, as well as reduced waste of healthcare resources by directing chemotherapy only to patients who have a high likelihood of deriving substantial benefit.”
So far the Oncotype battery is limited to breast, prostate and colon cancers, but more forms of cancer are on the radar. In the meantime, Genomic Health continues to refine its existing, proven tests.
Sarepta Therapeutics (SRPT)
Sarepta Therapeutics (NASDAQ:SRPT) isn’t exactly at home in a list of genomic testing stocks in that it’s actually the developer of a treatment for Duchenne muscular dystrophy. Its therapy is gene-based, however, making the company more than relevant to investors that believe in the power of gene therapy.
Its core product is Exondys 51 — an injection that can cause a cell to ‘skip’ a faulty exon in RNA when replicating itself, restoring dystrophin production to functional levels. Dystrophin is a protein needed to make muscles function properly.
Sarepta isn’t stopping there, however. It’s also working on an LGMD gene therapy that Janney analyst Yun Zhong has high hopes for. Zhong, in fact, believes Sarepta could double the size of the exon-skipping market by 2020.
Crispr Therapeutics (CRSP)
Fans and followers of biotech developments have almost certainly heard the term ‘CRISPR,’ which is short for ‘clustered regularly interspaced short palindromic repeats.’ It’s a family of DNA sequences that allow researchers and drug developers to manipulate longer spans of genetic material rather than repair one small segment of genetic material.
Crispr Therapeutics (NASDAQ:CRSP) is one of the names that helped usher in the new way of thinking about gene-editing. Like Sarepta Therapeutics, it’s arguably a little out of place in a look at genomic testing stocks to consider. But the biopharma outfit represents the best of the potential the industry sees for itself as it learns more about how DNA works (and doesn’t work).
Crispr Therapeutics has already put the idea to good use too. Its pipeline includes treatments for hemoglobinopathies, some cancers, diabetes and other genetic diseases.
InVitae (NYSE:NVTA) isn’t exactly a household name, but perhaps someday it will be. The company makes a variety of genomics-based tests that help patients pinpoint potential problem ranging from heart trouble to cancer risks to neurological issues, just to name a few.
And customers are buying them up, in spades. Last quarter’s top line was up a whopping 117% year-over-year, with unit sales growing more than 100%.
InVitae is still logging losses, but they’re shrinking, and they’re improving at an increasingly faster clip. This year’s projected loss of $1.78 per share is only modestly better than last year’s loss of $1.94 per share of NVTA stock. But, that loss is expected to be whittled down to only $1.15 per share next year — on strong double-digit sales growth.
InVitae is arguably the name investors are errantly looking past.
Whereas InVitae is the red-hot name few people have heard of, Illumina (NASDAQ:ILMN) is one of the genomic testing stocks most investors have heard of. The $45 billion behemoth is not only the name that’s impossible to avoid, it’s been largely deemed as the industry’s standard-bearer.
Illumina, in simplest terms, makes gene-sequencing and array technologies that can be utilized by drug developers or diagnostic companies. It’s powering the genomic-testing market forward by empowering others.
It’s also, unlike most of its genomic-focused peers, profitable. Last quarter’s revenue may have only grown 11% year-over-year. But, that top line of $867 million translated into earnings of $1.32 per share. For the full year, Illumina banked a profit of $5.72, which is expected to swell to $6.53 this year and $7.50 per share next year.
Veracyte (NASDAQ:VCYT) currently offers three genomic tests. Afirma helps pin down thyroid cancers, Percepta helps doctors take aim at lung cancer and Envisia aids in the diagnosis of idiopathic pulmonary fibrosis.
Like InVitae, Veracyte isn’t yet profitable. But, also like InVitae, strong sales growth is quickly chipping away at its losses. Last year’s loss of 62 cents per share is expected to shrink to a loss of only 41 cents per share of VCYT stock this year, and shrink to only 23 cents per share next year.
Real profits are in sight, even if only on the distant horizon.
Myriad Genetics (MYGN)
Finally, add Myriad Genetics (NASDAQ:MYGN) to a list of genomic testing stocks to consider.
Myriad Genetics appropriately offers a myriad of genomic tests that can help patients and doctors look for genetic markers for everything ranging from breast cancer to depression to arthritis and more.
And, like Illumina, Myriad Genetics is profitable. The $2.5 billion outfit turned $217 million worth of revenue last quarter, up 15%, into income of $6.1 million. Its hereditary cancer screener led the way.
Growth appears to be in the cards too… perhaps much more than most investors fully appreciate. The medical community is fast-becoming a believer in the power of genetic testing, with the American Society of Breast Surgeons now recommending genetic testing for all breast cancer patients. Meanwhile, Medicare now covers Myriad’s myPath(r) Melanoma test.
As of this writing, James Brumley did not hold a position in any of the aforementioned securities. You can learn more about James at his site, jamesbrumley.com, or follow him on Twitter, at @jbrumley.