Exact Sciences Corp said its molecular screening test for colorectal cancer met a late-stage trial goal of detecting the disease in more patients than other commonly used tests, but shares fell 28 percent as the results were not as robust as some were expecting.
Exact's test, which identifies abnormal DNA in cells shed in a patient's stool, detected 92 percent of colorectal cancers and 42 percent of pre-cancerous polyps in a large late-stage study.
"Pre-cancerous sensitivity, which was the key metric investors were looking at, was well below expectations," Wedbush Securities analyst Zarak Khurshid said, adding that "lower pre-cancer sensitivity may limit the eventual addressable opportunity for the test."
Khurshid was expecting a 55 percent detection rate for pre-cancerous polyps.
Exact's non-invasive test was developed to be a more accurate alternative to currently available non-invasive screenings.
The study compared the performance of its Cologuard test to colonoscopy and fecal immunochemical testing that looks for blood in a stool sample.
While a colonoscopy is considered the most accurate method of detecting colon cancer and polyps, many people avoid the recommended test as it involves inserting a flexible tube into the colon.
The trial was conducted on 10,000 patients between the ages of 50 and 84 years, who were at average risk for colorectal cancer.
Madison, Wisconsin-based Exact Sciences plans to submit the study data to the U.S. Food and Drug Administration as part of its approval application.
Colorectal cancer is the third most commonly diagnosed cancer in the United States, responsible for about 50,000 deaths a year.
The company's shares were down 28 percent to $7.16 before the bell. They closed at $9.97 on Wednesday on the Nasdaq.
(Reporting by Esha Dey in Bangalore, Additional reporting by Susan Kelly in Chicago; Editing by Roshni Menon)