Guardant Health (NASDAQ:GH) stock dropped nearly 33% after a test of its colon-cancer screening system disappointed investors.
The company’s Shield blood test found 83% of cancers and 13% of pre-cancerous polyps in a trial called ECLIPSE. The results were good, but Cologuard, on the market since 2014, already identifies 92% of cancers and 42% of dangerous polyps. Cologuard uses stool samples, while Shield is a blood test. Exact Sciences (NASDAQ:EXAS), which sells Cologuard, rose 22% in pre-market trading.
Colon cancer is commonly found through an operation called a colonoscopy, which can cost an uninsured patient as much as $3,000. It should be done every five years after age 50. Cologuard costs about $600.
GH Stock: Good But Not Good Enough
Three months ago, analysts were very high on Guardant, believing its “liquid biopsy pipeline” would soon pay off. Guardant’s “liquid biopsies” are blood tests aimed at guiding cancer treatment. A successful study for ECLIPSE would have made Guardant a leader in the larger, pre-screening market.
Additionally, second-quarter results seemed positive. At the time it delivered those results, Guardant was trading for $56 per share. The latest news sent the stock below $30. The company’s market capitalization is now below $3 billion. So far in 2022, Guardant stock is down 58%.
This is the second hard fall for Guardant stock this year. The first came in May after it reported a loss of $123 million and revenue of $96 million for its March quarter.
Guardant revenues rose 30% in 2021, but it had losses of $405 million. Growth in the September quarter was only 7.5%. It lost nearly $162 million on revenue of $117 million in its most recent report.
What Happens Next?
Guardant is working with AstraZeneca (NYSE:AZN) on tests for advanced breast cancer. The concept of liquid biopsies continues to hold promise.
But given the costs of ECLIPSE and the results, Guardant management has some hard days ahead.
On the date of publication, Dana Blankenhorn held no positions in any securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.