Key Takeaways
- Freenome shares rose 11% today after it launched SimpleScreen Lung, a lung cancer blood test that can run with its FDA-approved colon cancer test from one blood draw.
- About half of people without lung cancer would test positive and be sent for a low-dose CT scan, so who pays for the test and the scans will decide whether health systems use it.
- Abbott holds exclusive U.S. rights to the colon test when it’s ordered alone, so the lung-plus-colon pairing is a product Freenome sells itself.
- Analysts expect revenue to reach $208 million in 2028, and the thing to watch is whether payers cover the lung test.
Freenome (FRNM) shares are up 11% today after it launched SimpleScreen Lung, a lung cancer blood test that can run alone or with its FDA-approved SimpleScreen CRC colon test from the same draw.
That’s a welcome bounce for a stock that sank 11% last week on data for its next-generation colon test.
What exactly happened
CEO Aaron Elliott’s pitch is convenience: “By coupling indication-specific screens together, we make it vastly easier for patients to say yes to screening.”
Fewer than 20% of eligible people are up to date on lung cancer screening with low-dose CT, the release says. In an independent validation group, the test showed:
- 85% sensitivity (82% for stage I)
- 50% specificity
- A 99.8% negative predictive value
The catch: lots of CT scans
A negative result is reassuring: Freenome expects about two in 1,000 people who test negative to have lung cancer.
But 50% specificity means about half of people without lung cancer will still test positive, and every positive gets a follow-up low-dose CT.
So the real question is who pays. SimpleScreen CRC meets Medicare coverage criteria; the release says nothing about coverage for the lung test, which the FDA hasn’t reviewed. Until payers cover it, health systems have every reason to go slow.
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A sales channel of its own
The pairing also matters. Abbott (ABT) holds exclusive U.S. rights to SimpleScreen CRC ordered on its own, so lung plus colon is a product Freenome sells itself.
Analysts expect revenue of $102 million this year, $114 million in 2027 and $208 million in 2028.
Selling isn’t cheap. Freenome had $102.0 million of cash and short-term investments at June 30, before its SPAC merger added $295.5 million in July. It burned $97.1 million in operations in the first half, and management expects the cash to last at least 12 months.
(I wouldn’t be surprised to see it raise more, though. Launches are expensive!)
Who pays decides it
One blood draw for two cancers does make screening easier. But the launch pays off only once someone covers the test and the scans that follow.
My take: this is Freenome’s best shot at revenue Abbott doesn’t control, and I’d want to see a payer sign on before getting excited.
Of course, that could come faster than I expect: the lung test won FDA breakthrough device designation in August, and Freenome is working toward an FDA submission.
So what is Freenome stock actually worth?
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Disclaimer:
Please note that the articles on TIKR are not intended to serve as investment or financial advice from TIKR or our content team, nor are they recommendations to buy or sell any stocks. We create our content based on TIKR Terminal’s investment data and analysts’ estimates. Our analysis might not include recent company news or important updates. TIKR has no position in any of the stocks mentioned. Thank you for reading, and happy investing!
