Mike Cintolo is a leading growth stock expert and editor of Cabot Top Ten Trader. Here, he looks at two leading edge medical device companies involved in cancer detection and treatment.

We love companies with compelling stories and strong fundamentals, and this describes Guardant (GH) to a tee. If you’re not familiar with the company, Guardant is a precision oncology company that develops blood tests that detect cancer in high-risk populations and for those with previously removed tumors.

Its liquid biopsy tests are used in both biopharma (GuardantOMNI covers 500 genes) and clinical (Guardant360 covers 73 genes) use cases. It has an addressable market of around $10 billion today, but should adoption of liquid biopsy testing take off that could easily grow to $30 billion.

The company reported Q1 results on May 9 and basically every metric looked great. Revenue grew by 120% (to $36.7 million), accelerating in a big way from recent quarters, and beating estimates by a big $5 million. Meanwhile, EPS of -$0.30 (which actually included a one-time charge) beat by $0.06.

Outperformance came mostly from clinical testing with a little help from biopharma. Management says it’s still on track to complete FDA filings that could make a few testing panels eligible for Medicare coverage in 2020.

The firm is also advancing plans to launch a prospective colorectal cancer screening study, and while details were scarce, this is another big market opportunity.

It’s hard not to love the top line growth (analysts anticipate 50% revenue growth this year and next, both of which are likely conservative), even though Guardant won’t be profitable for at least a couple of years. It’s a good story.

Any treatment that can deliver a lasting blow to cancer cells is bound to have huge demand. That’s the big idea behind Novocure (NVCR), a commercial-state oncology company that developed a medical device called the Optune system, which treats cancer by mechanically disrupting cancer cell division with electric fields, called Tumor Treating Fields (TTF).

The treatment has already been approved for patients with newly diagnosed and recurrent glioblastoma multiforme (GBM), which is where all the current revenue is coming from — sales were up 41% to $73.3 million in Q1 (reported on May 2) while EPS of -$0.13 beat by $0.02.

Novocure had 2,631 active patients on Optune as of the end of March (up 31%). That’s exciting growth and there’s more to come from GBM treatments in part due to the recently proposed Medicare coverage for Optune, announced May 10 (there’s still a 45-day public comment period to get through).

But the biggest recent news (on May 23) is that the FDA has approved TTF treatment, in combination with Eli Lilly’s Alimta and platinum-based chemo, for the first-line treatment of locally advanced or metastatic malignant pleural mesothelioma (MPM).

This is the first treatment for MPM approved in the U.S. in 15 years (!) and marks another major milestone for a technology that continues to kick cancer in the teeth. Revenues should grow 35% to 40% both this year and next, with the bottom line reaching the black in 2020.

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