Why Exact Sciences Corporation Burst Today

Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our investing thesis.

What: Shares in Exact Sciences Corporation fell by more than 10% earlier today after the company reported fourth quarter financial results this morning.

Source: Exact Sciences

So what: Exact Sciences is a molecular diagnostics company that is focusing on colorectal cancer. The FDA approved Exact Sciences' Cologuard cancer screening test in August 2014.

Since Cologuard has only recently reached the market, Exact Sciences sales totaled just $1.5 million during the fourth quarter. Due to higher expenses tied to preparation for the Cologuard launch, the company also reported that it lost $32.4 million during the final quarter of the year.

The company's full year results were equally unimpressive, with Exact Sciences' sales totaling just $1.8 million and its loss reaching $100 million.

Now what: During clinical testing, Exact Sciences' Cologuard found 92% of colorectal cancers in 10,000 patients. Since the test is non-invasive, it could appeal to doctors and patients as a pre-screening tool to determine whether or not a diagnostic colonoscopy should be conducted.

How much demand for Cologuard develops and how many patients will follow through with taking the test at home and mailing it to Exact Sciences labs for evaluation; however, remains uncertain. Cologuard hasn't had much time on the market in the U.S. and only launched in Europe last month. Since there's not much of a track record to bank on, and the company is posting significant losses, Exact Sciences remains a highly speculative stock. For that reason, I'm content to avoid this one, at least until we see that Cologuard gets more traction.

The article Why Exact Sciences Corporation Burst Today originally appeared on Fool.com.

Todd Campbell has no position in any stocks mentioned. Todd owns E.B. Capital Markets, LLC. E.B. Capital's clients may or may not have positions in the companies mentioned. The Motley Fool has no position in any of the stocks mentioned. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

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