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Exact Sciences Shares Crater After Disappointing Federal Decision

Xconomy Wisconsin — 

Exact Sciences is getting pummeled on Wall Street after an unexpected result in a long-awaited federal report that positions the company’s colorectal cancer diagnostic product as an “alternative” screening method—instead of putting it in a more coveted group of recommended tests.

Shares of Madison, WI-based Exact (NASDAQ: EXAS) sank below $11 per share this morning, down more than 40 percent from yesterday’s close of $18.53. The peak price over the past year is $32.85.

Exact scrambled to stop the bleeding this morning with a conference call to reassure investors that the draft guidelines released yesterday by the U.S. Preventive Services Task Force are not cause for “doom and gloom” for the company, as CEO Kevin Conroy put it.

The task force’s proposed guidelines update recommendations made in 2008. The final guidelines are important because they can play a role in insurers’ coverage decisions and doctors’ treatment plans for patients.

The new list of recommended colorectal cancer screening methods include the fecal occult blood test and fecal immunochemical test (FIT) annually; flexible sigmoidoscopy every 10 years, combined with an annual FIT; and a colonoscopy every 10 years.

The task force also created a new category of alternative tests. That’s where it placed Exact’s stool-based DNA test, Cologuard, along with computed tomography colonography.

Exact is “not pleased” with being excluded from the recommended group of tests, Conroy said in the conference call. “We think that is an approach that doesn’t make a lot of sense not to include a test that is as sensitive as Cologuard is and as highly specific as it is,” he said.

But Conroy argued that Cologuard is still in a better position today because it’s now included in the task force’s draft recommendations. Previously, Cologuard was given an “I” rating by the task force, meaning there was insufficient evidence to make a recommendation one way or the other.

It’s unclear how the “alternative” rating will impact insurers’ coverage decisions, Conroy said. “We tend to think that it is still a positive.”

The task force will now hold a 30-day public comment period, and Exact will lobby for a better position in the recommendation guidelines. The guidelines will likely be finalized next year, Exact said.

We’ll have more information on this story later today.