It's a battle of the diagnostic test makers: newcomer Exact Sciences (Nasdaq: EXAS) versus Sequenom (Nasdaq: SQNM), which is more-established but has a tarnished image.

Which one gets the nod? Let's see where the science leads us.

A more pleasant colorectal cancer test
Colorectal cancer is detected through colonoscopy, but some 40% of patients don't get one because they don't like the idea of having an instrument shoved up their rear. Enter Exact Sciences' Cologuard, which looks for altered DNA from cancer cells that shed into a patient's stool.

Initial results looked pretty good, but they were done on frozen samples from well-characterized patients. The true test will come from a clinical trial with real live patients, not poo pops.

Damaged goods?
Sequenom is farther along in that it has products to sell. The company sells mass spectrometry systems, but the market for such products is fairly limited. Sequenom shipped just 11 instruments last quarter. It's hard to get rich off $11.7 million in revenue every quarter. The future of Sequenom is its diagnostic tests.

So far, that hasn't gone all that well, though. The company has launched two tests: one for determining the RHD status of a fetus and another that looks for mutations that cause cystic fibrosis. It's still early in the launch, but neither has amounted to much, with combined sales of well under $1 million last quarter.

The big payoff could come from a test for Down syndrome. A maternal blood test for Down syndrome avoids an invasive amniocentesis, which can put the baby at risk.

Sequenom had a test that seemed to be working with near 100% accuracy, but former researchers are accused of knowing the answers, which helped them make the right calls on the test. Sequenom plans to start a clinical trial of the test this quarter.

The Down syndrome test uses the same technology as the already-marketed RHD status test. The tests look at minute amounts of fetal DNA in a blood sample from the mother. That should give investors a little hope that the Down syndrome test will also work.

But only a little. The RHD test looks for the presence or absence of a gene, while the Down syndrome test needs to determine if there are three copies of chromosome 21 rather than the normal two. Determining the difference two and three copies is likely to prove more difficult than the difference between zero and one.

The endgame
For both companies, the endgame is likely an acquisition. Pharma's appetite for diagnostics is too great and the synergies too plentiful to not expect them to be acquired long before they become a powerhouse.

The venture capital arms of Johnson & Johnson (NYSE: JNJ) and Google invested in 23andMe, which has a direct-to-consumer genetic test. Google was an investor in earlier rounds; 23andMe's CEO, Anne Wojcicki, is the wife of Google co-founder Sergey Brin. But the Johnson & Johnson investment is new. I'm not sure if it's a straight investment with the venture arm simply looking for returns, or if Johnson & Johnson is testing the waters before an outright purchase.

Eli Lilly (NYSE: LLY) recently purchased privately held Avid Radiopharmaceuticals for florbetapir, which detects plaques in the brains of patients with Alzheimer's disease. Abbott Labs (NYSE: ABT) and Roche both have diagnostic test divisions as well.

About the only pharma headed in the other direction is GlaxoSmithKline (NYSE: GSK), which shed some of its holdings of Quest Diagnostics (NYSE: DGX) last year. Glaxo still owns 18% of the company.

Of course, Exact Sciences and Sequenom will only be acquired if their diagnostic tests turn up positive.

Stop stalling, pick one
Both companies are fairly risky, so buying both to mitigate a potential drop might not be a bad idea, but of the two, I like Exact Sciences better. Sequenom might turn out just fine, but I think it's prudent to wait until after there's some non-tainted data supporting the Down syndrome test before jumping in. You'll miss a big run-up if the test turns out to work, but avoid a downdraft if developing the test proves difficult.

Which one do you like? Sound off in the comments box below.