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Genomic Health Q1 Revenues Up 17 Percent

NEW YORK (GenomeWeb) – Genomic Health reported after the close of the market Tuesday that its first quarter revenues increased 17 percent year over year, exceeding Wall Street expectations on the top and bottom lines.

The company's total revenue for the three months ended March 31 was $108.8 million compared to $92.6 million in the first quarter of 2018. Analysts had predicted revenues of $106.7 million on average.

Genomic Health's total US product revenue during the quarter was $91.0 million compared with $78.9 million in Q1 2018. The company's invasive breast cancer testing in the US increased 12 percent to $79.8 million from $71.0 million in the year-ago quarter, while revenue for the company's prostate cancer test increased 47 percent to $8.5 million from $5.8 million in the same period last year.

Genomic Health said that it delivered more than 37,580 test results during the quarter, up about 16 percent from the 32,440 results it delivered in the same period last year. The firm's US Oncotype DX breast cancer test volume rose 9 percent, while prostate cancer tests were up more than 24 percent compared to the prior-year quarter.

International test revenue rose 29 percent to $17.8 million from $13.8 million in Q1 2018, reflecting a 28 percent increase in volume. On a non-GAAP constant-currency basis the increase was about 33 percent. International testing made up approximately 25 percent of overall test volume compared to 22 percent in the same quarter last year.

In a statement, Genomic Health President, CEO, and Chairman Kim Popovits attributed the quarterly performance, in part, to continuing impact from the results reported last June from the TAILORx trial. 

The trial data are "continuing to drive increased … test usage both in the United States and globally," she added, leading Genomic Health to expect double-digit revenue growth for the year.

Among recent highlights, Popovits cited company presentations at the 16th St. Gallen International Breast Cancer Conference, including real-world evidence reinforcing the treatment paradigm established by TAILORx, and decision impact studies from the UK and the Czech Republic.

The quarter saw the first decision by a private insurer to cover the Oncotype DX AR-V7 Nucleus Detect test, while coverage decisions for the firm's Oncotype DX Genomic Prostate Score assay brought the total number of US covered lives to 114 million for that test.

In a call discussing the firm's earnings, Popovits added that the company's work to grow the AR-V7 market was bolstered in April, by a strengthening of National Comprehensive Cancer Network's guidelines, which now "recommend the consideration of AR-V7  testing in metastatic castration resistant prostate cancer patients following initial treatment ... to help guide the selection of further therapy."

In regard to the company's hopes for future payor decisions in the AR-V7 space, Popovits highlighted the unique utility of the assay compared to some of Genomic Health's earlier products.

"If you look at just the nature of what this test does, it really acts more like a companion diagnostic to two very expensive treatments in a situation where men have a critical decision to make," she said. "So it is a compelling story with a really solid health economic benefit behind it. The conversations that we're having with private payers seem to be going very well but the timing in which they'll make decisions is always really difficult to predict."

According to Fred Pla, Genomic Health's chief operating officer, plans for IVD development with Biocartis are still on track as discussed in previous announcements. He clarified that the first product that will come out of the partnership will be a kit version of the Oncotype DX breast cancer test aimed at the European market, with clinical validation beginning in France and Germany later this year and a launch slated for late 2020.

For prostate cancer, the firm is still in "feasibility stages," he said, with a plan to focus first on the US, seeking FDA approval with a timeline of 2022.

Genomic Health's Q1 net income was $13.0 million or $.34 per share, compared with a net loss of $3.8 million, or $.11 per share, for the first quarter of 2018. Analysts had expected EPS of $0.28.

The company's R&D costs shrank 10 percent to $15.1 million from $16.8 million the prior year, while SG&A costs rose 3 percent to $65.2 million from $61.5 million in Q1 2018.

The firm ended the quarter with cash and cash equivalents totaling $101.4 million and short-term marketable securities of $104.6 million.

In Wednesday morning trade on the Nasdaq, shares of Genomic Health were down around 10 percent at $58.96.