Exact Sciences Corp said its molecular screening test for colorectal cancer met its goals in a large late-stage study, detecting the disease in more than 90 percent of patients, but its shares plummeted as much as 30 percent on Thursday 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 Sciences Chief Executive Kevin Conroy, speaking to investors on a conference call, acknowledged that the test's detection rates in the study were not as high as expected, even though they met the trial's main goals. The company had expected the test to detect 50 percent of pre-cancerous polyps.
But he said the data confirm the value of the test in detecting cancer and pre-cancerous conditions.
"We don't believe this will be an impediment in any way to the ultimate adoption of this test by physicians and patients," Conroy said. "I understand that people may be disappointed, but clinically, it just won't make that much difference."
Exact's non-invasive test, called Cologuard, was developed to be a more accurate alternative to currently available non-invasive screenings and an option for people who are not getting a recommended colonoscopy.
The study compared the performance of the test to colonoscopy and fecal immunochemical testing that looks for blood in a stool sample. The test met the study's primary goals for cancer detection rates. It also met its secondary goals of detecting larger polyps and demonstrating non-inferiority to the FIT screening.
While a colonoscopy is considered the most accurate method of detecting colon cancer and polyps, many people avoid the test, which involves inserting a flexible tube into the colon. Nearly half of those over age 50 have not been screened as recommended.
The trial was conducted on 10,000 patients between the ages of 50 and 84, 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.
Mizuho analyst Peter Lawson said the data met the thresholds needed for FDA approval. Cologuard's pre-cancer detection rate also was higher than those for other non-invastive tests on the market, Lawson said.
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 21 percent to $7.87 in morning trading on the Nasdaq.
(Editing by Roshni Menon, Maureen Bavdek and Andrew Hay)