Investing in Colon Cancer Screening

A couple of weeks ago, a guy in my hometown died of rectal cancer. 

He was thirty-six years old, just like me, and was married to a girl I went to high school with. He played music in bands with some of my friends.

I didn’t know him personally, but his departure has caused major despair in my extended peer group. He was an elementary school teacher and a jazz saxophonist. He inspired hundreds of kids to get into jazz and was loved by many.

In short, he was a great guy who was taken way too soon.

He was diagnosed with rectal cancer in December 2012. Just two years later…

The point is that colorectal cancer is one of the five most dangerous cancers for both men and women in the United States. If we’d never had cigarettes and industrial air pollution to send lung cancer rates to the top, colorectal cancer would easily be the second-largest killer behind prostate and breast cancers.

Even though the risk of developing such a cancer is about 5%, regular screening could prevent certain types of cancer altogether. Early detection ups the survival rate to a whopping 90%.

But again, that requires early detection, and presently only four out of 10 cases are diagnosed at an early stage. When colorectal cancer spreads, survival rates are dramatically lower.

The problem is that screening is pretty invasive. It usually requires a colonoscopy, sigmoidoscopy, colon biopsy, or fecal occult blood tests. This means it’s time- and labor-intensive and not exactly the most convenient screening to receive.

Patient compliance to these tests, therefore, is pretty low.

A more convenient, less-invasive test could vastly increase the frequency of screening and diminish the mortality rate of colorectal cancer.

German-American company Epigenomics (OTC: EPGNY) has a product called Epi proColon, which claims to be the solution: a simple blood-draw screening. The company announced today that it has begun enrolling patients into an FDA-requested test study of the treatment to see if it can actually increase patient compliance.

The Study

This study is interesting because it’s more a psychological test than anything. It’s not your usual clinical trial that we end up talking about when discussing biotech and such.

The test simply brings patients into a clinic and randomly assigns them either a fecal immunochemical test (FIT) to do at home (which involves collecting/handling your own stool) or a blood draw for the Epi proColon test.

The FDA wants to see if the convenience of the Epigenomics test really will have an overall impact on colorectal cancer detection and treatment.

If patients receive positive test readings, the next stage is a colonoscopy. This test is also measuring if patients more actively move onto that next step with the Epi proColon test.

According to Epigenomics, there are more than 35 million eligible Americans who haven’t been screened and could stand to benefit from such a simple test.

The Company

Epigenomics is a diagnostics company that is working solely on developing and selling products for screening cancer. Epi proColon is its banner product so far, and it’s only available in Europe.

It’s a small company with a small footprint. With just 38 employees, its gross profit was a mere 185,000 EUR in the third quarter of 2014. It has net assets of 7.8 million EUR, but it ended up working at a net loss of 1.8 million EUR. Earnings per share were -0.14.

However, the company is optimistic about Epi proColon joining the U.S. market soon. In its quarterly report, it said:

“After various discussions with the FDA, we are convinced that generating the additional data requested by the agency will be just a matter of time and that the approval of our patient-friendly blood-based test is very likely and within reach… Together with our joined U.S. commercialization partner Polymedco, we further drive launch procedures and gear up manufacturing capabilities to be ready and prepared to market and supply the product once the test is approved.”

It so happens that Polymedco is a private company that makes FIT tests, so even if the FIT test “loses” in the FDA study, the company making them will come out on top.

It has good reason to be optimistic, too. A similar study was done in China with Epigenomics and Chinese company BioChain. In October, BioChain invested a further 4.2 million EUR into Epigenomics with the goal of launching Epi proColon in China.

So right now, we’re looking at a company on the verge of entering two massive markets with a product that banks on convenience.

While we aren’t exactly bullish on biotech stocks moving forward, this product hits so close to home that I can’t help but share some of Epigenomics’ optimism. If colorectal cancer screening were less invasive, think of the lives that could be saved.

Good Investing,

Tim Conneally

 @TimConneally on Twitter

For the last seven years, Tim Conneally has covered the world of mobile and wireless technology, enterprise software, network hardware, and next generation consumer technology. Tim has previously written for long-running software news outlet Betanews and for financial media powerhouse Forbes.