Bank on This Pair of Biotech Bargains

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tdp2664 InvestorPlace One of my favorite — and most profitable — areas to invest in is heath care, specifically biotech. New breakthroughs are happening all of the time, not just in drugs but in all aspects of health care, such as diagnostic devices, robotic surgery, titanium hips, cancer treatments and more. More times than not, these breakthrough discoveries come from newer, smaller companies whose stocks are low priced. Smaller biotech companies can push the curve in new research in ways that larger companies cannot. (In fact, they often are acquired by the larger companies or partner with them.) It only takes one new great drug or surgical device to send these stocks climbing quickly. Here are a couple of biotech bargains I have my eyes on right now: Exact Sciences Exact Sciences (NASDAQ: EXAS ) is a great example of a smaller company ($430 million market cap) with excellent potential in a fast-growing and high-priority area of oncology — screening and early detection. This trend of screening for cancers — especially breast and prostate cancers — has been a major contributor to a significant drop in the mortality rate of these dreaded diseases. EXAS is developing a noninvasive screening test to detect colorectal cancer early, sometimes before it even starts. Colorectal cancer claims more than 57,000 lives each year in the U.S. and is the second-leading cause of cancer-related deaths. The company's product is called Cologuard, and early data has been encouraging. In one study, Cologuard detected 85% of colon cancers and 64% of pre-cancerous polyps. The pre-cancer success was particularly noteworthy because colon cancer is much more treatable if discovered early. The five-year survival rate can be greater than 90%. The most common detection method right now is the colonoscopy, which is unpleasant, invasive and inconvenient, so the number of people who are screened is far below what it should be. Cologuard wouldn't replace colonoscopies, but it would be a much easier and more patient-friendly way to determine if further testing is needed. Cologuard still is in clinical trials. The current study started this summer and is expected to continue through next summer, so results probably would come in the fall. EXAS has traded between $9.45 and $4.91 in the past 52 weeks and currently is in the middle of that range around $7.80. In the most recent quarter, Exact Sciences ended the quarter with cash, cash equivalents and marketable securities of $75.4 million, which is down $95.4 million from the year before. This is because of higher expenses from increased research and development activity with the ongoing clinical trial of Cologuard. But ultimately, if Cologuard is approved, Exact Science should see sharp revenue acceleration and growth.