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One of the areas that has concerned me about Exact Sciences was that I perceived it to have a fairly narrow moat. Although acceptance and subsequent sales of Cologuard tests for colon cancer are growing at a reasonable pace, others could (and have) come up with competing tests, at least one of which is blood based and seems to be as effective. The development has not been brought to the FDA for approval yet, and being based outside of the United States, may still be years away from approval in this market. Still, knowing that the moat could be breached or limited is something to consider.

It was great to see that there have been promising results in the basic R&D being done through Exact Sciences. Their recent information update, , highlights that other test avenues being developed by Exact Sciences are showing promise. If that type of research can lead to commercialized tests then the future will be brighter. The percentage of company revenues that have been devoted to R&D seems to have remained steady as the rate of revenue has increased. This indicates to me that company leadership is taking an approach that the investment in R&D should be part of what makes Exact Sciences a success. Not all projects will deliver results, and there is a lot of competition in the test marketplace. Seeing an approach that uses a targeted percentage of revenues combined with investigations that are broader in the field is giving me more confidence that the company is moving in the right direction.


Full Disclosure: Exact Sciences has been my largest investment. I am considering selling a portion to trim that investment back in line with my overall portfolio objectives.
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