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Exact Sciences shares lose 1/5 of their value

NEW YORK (AP) -- Shares of Exact Sciences Corp. lost nearly one-fifth of their value Friday after some results from a study of its DNA-based colon cancer test, Cologuard, disappointed investors.

THE SPARK: Exact Sciences said the test met its main goals in the study. But Cologuard's detection of pre-cancerous polyps fell slightly short of the company's expectations.

Results showed that when Cologuard test determined a patient had cancer, it was right 92 percent of the time. The test was correct 87 percent of the time when it said patients did not have cancer. But the test detected pre-cancerous polyps 42 percent of the time.

THE BIG PICTURE: Cologuard would be the Madison, Wis., company's first product. It is a noninvasive test, meant to be widely used, that uses DNA technology to find possible signs of cancer and pre-cancer in a person's stool. It could indicate that more sophisticated follow-up diagnostic testing is needed. That could catch cancer in earlier stages, when it is more easily treatable.

The study enrolled 10,000 patients between the ages of 50 and 84. They were at average risk for developing colorectal, or colon, cancer. Results of the tests were confirmed by colonoscopies.

THE ANALYSIS: Wedbush analyst Zarak Khurshid said he had understood that at least a 50-percent success rate for pre-cancer detection was needed for approval by the Food and Drug Administration for that use. The sales potential of Cologuard is more limited if it's only approved to detect cancer and not pre-cancer, he said.

The company defended its product, saying it didn't think sales would be hurt. "I understand that people may be disappointed that the pre-cancer detection rate didn't come in at 50 percent, but clinically it just won't make much of a difference. And we're excited about the impact that the test can have," said CEO Kevin Conroy on a conference call with analysts.

Khurshid rates Exact Sciences shares "Neutral" with a price target of $11.

SHARE ACTION: Exact Sciences stock fell $1.90, or 19 percent, to $8.07 in afternoon trading. Earlier the shares sank to $6.93, their lowest price since October 2011.