Natera stock broke definitively above its 200-day line Thursday after the Centers for Medicare and Medicaid Services opted to reimburse for its breast cancer test.
The reimbursement decision will likely expand usage of the test to monitor patients for cancer recurrence following treatment. Canaccord Genuity analyst Kyle Mikson notes the market is large. More than 3.8 million women in the U.S. have a history of breast cancer.
"Roughly 290,000 patients are diagnosed with breast cancer each year," he said in a note. "Natera estimates about 1 million tests could be performed annually for breast cancer."
On the stock market today, Natera stock launched 16.9% higher, closing at 49.51. It was the best-performing stock in the Medical-Research Equipment/Services industry group.
Natera Stock: Big Cancer Test Market
Natera calls its blood-based cancer test Signatera. The company personalizes it to each patient, as it searches for residual cancer cells in the blood following treatment. Medicare will now reimburse the cost of Signatera for patients with stage 2 or higher breast cancer following surgery or treatment.
The test has a sensitivity of 89%. Sensitivity is a test's ability to identify positive cases of disease. It also has a 100% specificity. This means it didn't report any false positives in clinical studies.
Importantly for Natera stock, the cancer test has proved a key indicator in whether someone will relapse, Mikson said. In the final-phase study, Signatera identified cancer in the blood of a patient up to two years before that cancer showed up on a radiographic scan.
Signatera Coverage Extends
Signatera already has Medicare coverage for colon cancer and muscle-invasive bladder cancer. It also reimburses the cost of the cancer test for patients receiving immunotherapy in any type of cancer.
"We believe extending Medicare coverage for Signatera to patients with breast cancer, regardless of subtype, is also notable," Mikson said.
He kept his buy rating and 97 price target on Natera stock. The cancer test news Thursday sent Natera shares to a five-month high above their 200-day moving average, according to MarketSmith.com.
Follow Allison Gatlin on Twitter at @IBD_AGatlin.
