Biotech Values

[DewDiligence]

…your opinion with regards to EXAS vs that of Citron.

The Citron report is way off-base, IMO, with respect to Cologuard’s medical value. Citron has twisted the stats by citing “what if” figures in the make-believe world where everybody got screened for colorectal cancer. This is patently silly because the whole point of Cologuard is that many people won’t undergo routine colonoscopies.

Citron’s write-up is better with respect to EXAS’s business metrics, which are undeniably challenging. The company acknowledges it probably won’t be profitable during the next five years, but Citron extrapolates that out to infinity and asserts that superior blood-based (“liquid biopsy”) tests will be available before EXAS has a chance to turn profitable. In so doing, Citron is grossly underestimating the difficulty of creating a blood-based test that surpasses or even matches Cologuard on detection of cancer and precancerous lesions.

Disclosure: No position in the stock; I consider the valuation somewhat inflated.