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Exact Sciences Corporation Message Board

  • luvcash2 luvcash2 Jan 24, 2009 6:18 PM Flag

    A Serious Look at EXAS.

     

    I have been a professional investor for over 20 years. I was recently attracted to look at EXAS by the SQNM buyout noise. As a rule, now that I've investing for so long, I generally don't like stocks under $10/share. I have learned my lesson from loosing way to much money in these kinds of stocks. However, I thought that I would take a look at EXAS anyway.

    After looking at EXAS's technology, it seems reasonable. There is definitely a market for Colon cancer testing. No question about that.

    However, after looking at EXAS's business....there is nothing there (sales) to speak of!!! OK, I can accept the idea that this is a growth company like SQNM and the revenue will ("may") come in the future. But, in my opinion, EXAS has run out of time and money. It will take another 2 to 3 years (min) for EXAS to develop their market to break-even and right now, it looks like they do not have the money to last to the end of this year.

    From a management perspective, the president of the company, Jeffrey Luber, is a lawyer...not a seasoned businessman with a depth of experience as a CEO, CFO or COO with a successful company. He may be a great attorney, but I'm not sure he is the right guy to inspire the right people to give him the cash that he needs.

    So as I look at EXAS, I feel that there is significant execution risk with this company and not worth any investment.

    To check my assessment of EXAS, I took a look at two totally independent metrics; 1) institutional buying and selling, and 2) insider buying and selling.

    On the institutional side, there is minimal breadth of ownership. The Sell to Buy ratio is 5 to 3. This is a warning sign.

    (For institutional holdings, check the following data source: http://www.mffais.com/exas.html. Contrast this to SQNM's statistics at http://www.mffais.com/sqnm.html.)

    On the insider side, it struck me how there has been no insider buying of EXAS in the past 6 months. (http://finance.yahoo.com/q/it?s=EXAS) Certainly a company with so much upside potential as indicated on this message board would warrant some insider buying! But there has been none...nada!!! This too is a serious warning sign.

    So to me, EXAS has extremely high execution risk and the market doesn't like it either.

    I'm not sure why there are those that have been pumpin', but EXAS is surely one stock that I would be dumpin'!

    Good Luck.

    This topic is deleted.
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    • You must be one of the worst investors of all time to recommend selling a company for less than the value of a buyout offer on the table.

      There is HUGE execution risk in SQNM owning to their $1.5 billion market cap. But, with EXAS it is clear that upside will come from a licensing or buyout, so your analysis is total crap.

      Nice try with all the unsolicited professional sounding garbage, but we can all see that you are just one of the large holders of SQNM trying to get a little dig in.

      Cramer the pumper gaveth and now he is taking away. SQNM is going down next week.

      But, EXAS will be going up!

      • 1 Reply to theonlypro4u
      • LOL,Pro,

        If this is such a great deal,why is nobody buying into this story. Forget insider and institutional play...... this stock is doing $70,000 in stock transactions a day. That's pretty much unheard of. This is less than the cost of a BMW. I mean c'mon...50k shares at $1.40 per share. Unreal....keep pumping and don't feel bad when all your followers get skinned in this debacle.

    • Thanks for sharing your thoughts about EXAS in a rational, courteous way, and for pointing out relevant facts. I agree with some of your points, to an extent, but remain hopeful about EXAS, despite past disappointments and undeniable risks.

      An awful lot of EXAS shareholders, including me, are dissatisfied with mistakes, sluggishness, and lack of communication of EXAS management, especially CEO Jeffrey Luber (former company attorney). That is a negative for EXAS, but the good news is that we recently got a new board member (Michael Singer) who's doing good things (pursuing the previously neglected prenatal area, for example), and apparently board member Kania is taking a more direct role lately. Also, since the intent is for EXAS to partner (via licensing or sale) with one or more diagnostic companies who will do the actual development and marketing, EXAS management will not really be directly executing much.

      I share your wish that there were more insider and institutional buying, another negative indication. The insiders certainly have acquired shares and options (both the board and senior management), often at no cost. Board member Kania controls a million or so shares, and director Singer owns hundreds of thousands of shares and options as well, some acquired recently.

      The reason to own EXAS is the IP is very good, and applicable to a huge market (CRC screening, both sexes, worldwide, every few years) which is currently under-served. An awful lot of people go unscreened, because colonoscopy is expensive, inconvenient, unpleasant, and somewhat dangerous, and current non-invasive methods are not very effective. The current product (Colosure, released several months ago) is not selling well because it is not yet FDA approved, and has been only very anemically promoted by Labcorp (which has only a short term license with no assurance of renewal). The hope is for the Version 2 CRC test, which can be automated and FDA tested for a modest investment, and should then be poised to take substantial market share (after some advertising).

      I agree it is not without risk, but I think the technology is too good for too large a need not to end up getting used and rewarding EXAS shareholders, who have had a very rocky road so far.

      • 1 Reply to chas1232123
      • A very sound intelligent and conscientious post. I am inclined to agree with your thinking. I still remain very nervous of the financing. I think I stopped believing in EXAS after the proposed delisting, new volume lows and PPS under $0.40. At that point like most investors even seasoned ones you start to realize (and this is in December) it might be time to sell and take the loss. Money is money and even if your initial investment has fallen to a few thousand well a few thousand dollars is worth something! Still like everyone who has to make a tough decision you drag your feet. Cutting your losses is tough to do. Then December was over.

        But since December we have had some good news. Both the states acceptance and this offer have been a boon to EXAS and slowly I am trying to rethink it. I am a pessimist but a GREEDY pessimist so I am trying to rationalize how this thing can still come up aces for us.

        The tech and IP. Thats the sell point. But lots of great tech and IP have been owned and mismanaged by crappy companies in the past.

        For me to have a renewed belief in EXAS I have to see them improve their financial position and soon. If they can raise $ we don't need another offer. There is good news that I think we all expect to follow in the next year. States acceptance and FDA approvals could pop the share price back up to a NASDAQ listable level. We need enough cash for the market to realize the company will be around to take advantage of the IP and tech.

        Is trying to get a loan against the IP and tech an impossible solution? With the SQNM offer out there it establishes a value for the IP (albeit the $41 million was for the whole company not partial IP) that could be collateralized for a loan of 10s of millions. A loan would be better than the $1.50 in my mind as it doesn't dilute our earnings and we are currently a zero debt. A little debt is healthy for a company. It keeps everyone honest knowing the bills must be paid.

        What are your thoughts on financing? How do we get the money we need without dilution?

    • Dumping I don't know. Some of us are in this for the long haul so selling out right now doesn't make much sense especially when all the news has been positive. The deal is on the table. Also there might be reason to believe EXAS management is smart enough to make an announcement regarding another deal given its strong rebuff of SQNM. (I don't know if I've convinced myself of this but a rationale management team would scramble to find a another way to raise cash and present it to shareholders. So I hope something comes up before the deadline of the offer.)

      either way dumping before the offer deadline isn't a smart idea. I def can see why you would shy away from investing in EXAS. It carries HUGE risk. HUGE! But thats investing. Finding a risk/reward ratio you can stomach. EXAS has given me indigestion for too long.

      Also institutional holdings and insider buying are just back of the envelope quick seat of the pants investing tools. They are not a good way to develop an investment thesis. Simply buying what is being bought is a terrible investment strategy. Yes it can reassure you in your investment. (And the case of EXAS it def does the opposite for me.) But sometimes insider buying is a ploy to mask a downturn. Sometimes it involves vesting of options or personal finance decisions. In and of itself neither should be the ultimate decider in making an investment.

      That being said I can see why you would walk away. Best of luck!

    • From the SEC:

      <<<Insider Trading
      The securities laws broadly prohibit fraudulent activities of any kind in connection with the offer, purchase, or sale of securities. These provisions are the basis for many types of disciplinary actions, including actions against fraudulent insider trading. Insider trading is illegal when a person trades a security while in possession of material nonpublic information in violation of a duty to withhold the information or refrain from trading.>>>

      I would consider M&A activities to be material nonpublic information!

 
EXAS
28.52+0.9200(+3.33%)Dec 26 4:00 PMEST

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