Investors punish Exact Sciences despite positive data

Exact Sciences ($EXAS) stock plunged more than 20% late Thursday morning based on what was ostensibly positive early news about a massive pivotal study for the company's colorectal cancer molecular diagnostic test. While the data met all endpoints, investors clearly wanted better, and they punished the company as a result. In other words, Exact's fecal test "hit the fan," despite mostly good data.

As Reuters reports, Exact's shares took a 30% nosedive in early trading before they recovered somewhat through the morning. They hovered around the $7.85 mark in trading shortly before noon.

Exact announced preliminary results from its 10,000-plus patient DeeP-C pivotal trial using its Cologuard DNA-based stool screening test for colorectal cancer and pre-cancerous polyps. The company disclosed that the test showed 92% sensitivity to detect colon cancer and 42% sensitivity to spot pre-cancerous polyps, with 66% sensitivity for polyps two centimeters in size or larger.  The lower sensitivity numbers for overall pre-cancerous polyp detection are the cause for investor turmoil. Wedbush Securities analyst Zarak Khurshid told Reuters that investors had hoped for a much higher sensitivity number, and he himself wanted to see that figure reach 55%.

In its announcement heralding the news, Exact noted the trial achieved every endpoint and emphasized the positive results. President and CEO Kevin Conroy said in a statement that the company is "extremely pleased with these results, which we believe strongly support the power and potential clinical use of the Cologuard screening test." In a conference call, as Reuters notes, he acknowledged the sensitivity number for pre-cancerous polyps weren't as high as expected. But, he said, the test still showed value in screening for colorectal cancer and as an alterative to colonoscopy.

Exact generated far better news last October, in a pivotal trial involving more than 1,000 patient stool samples, which picked up 98% of cancers and between 50% to 83% of precancers. The test's promise helped drive a $57.8 million IPO in August 2012. Meanwhile, Exact's premarket application for Cologuard is underway, divided into three modules. The FDA will likely be evaluating the final test results as part of the PMA process.

- read the release
- here's Reuters' story

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