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Genomic Health Reports 12 Percent Revenue Growth in Third Quarter

NEW YORK (GenomeWeb News) ─ For the third quarter ended Sept. 30, Genomic Health reported revenues of $66 million, compared to $58.6 million during the same period last year, a 12 percent increase.

The firm beat Wall Street's estimates for the top and bottom line.

Of the total revenues, the company had $65.7 million from product revenues, compared to $58.4 million from the same quarter last year. Contract revenues for the quarter were $258,000, compared to $277,000 from the year-ago period. International product revenue jumped by 25 percent to $10.1 million compared to the third quarter in 2012, representing 15 percent of product revenues.

Genomic Health beat analysts' consensus estimate of $65 million for total revenues during the quarter.

The company reported $604,000 in net income for the quarter, or $.02 per share, compared with net income of $3.7 million in the third quarter of 2012, or $.11 per share. Wall Street estimated a net loss per share of $.04.

In a conference call following the release of the third quarter results, Genomic Health CEO Kim Popovits highlighted as key growth drivers the continued penetration of the Oncotype DX test in the invasive breast cancer market, international growth, and continued adoption of its prostate cancer test within the urology community.

During the quarter, UK's National Institute for Health and Care Excellence issued a positive recommendation for Oncotype DX as a tool to help guide chemotherapy treatment decisions for certain patients with early-stage, hormone receptor-positive, invasive breast cancer. Genomic Health also established a contract for its Oncotype DX test in patients with node-positive disease and ductal carcinoma in situ with a Blue Cross Blue Shield state plan that covers 1.3 million lives.

Oncotype DX in the DCIS setting already has Medicare coverage. However, Genomic Health is awaiting publication of a second validation study in the DCIS population, which the firm believes will help drive private payor coverage.

Popovits noted that there is "growing enthusiasm" for the Oncotype DX prostate cancer test among urologists. Researchers published results from an analytical validation study demonstrating the accuracy and precision of the prostate cancer Oncotype DX test in BMC Genomics.

According to Brad Cole, Genomic Health's COO, during the quarter nearly 70 percent of the firm's targeted urology accounts and more than 300 physicians have ordered the prostate cancer test. "Furthermore, 40 percent of these physicians have placed repeat orders," Cole noted during the call. Genomic Health launched the Oncotype DX prostate cancer test in May of this year.

Revenue for the colon cancer Oncotype DX test grew by 25 percent year over year in the US, representing nearly 3 percent of total product revenue. "We're now approximately 17 percent penetrated in this market," Dean Schorno, Genomic Health's CFO, said during the call.

Separate from its prognostic colon cancer test, Genomic Health has decided to delay a study it was planning for a test that can predict whether Stage III colon cancer patients will benefit from oxaliplatin treatment. However, before moving this test into the validation phase, the company determined that certain markers it was studying weren't as promising a previously thought.

As such, the company has decided to not launch this test next year as planned. Steve Shak, Genomic Health's executive VP of R&D, said that the company and its research collaborators expect they will have to identify new genes associated with oxaliplatin benefit in colon cancer patients and it may be more than a year before a new validation study is launched.

Genomic Health's R&D costs for the quarter were $14.7 million, compared to $12.3 million in the year-ago quarter, and its SG&A spending increased year over year to $40 million from $33.6 million.

The firm finished the quarter with cash and cash equivalents of $39.8 million and short-term marketable securities of $74.3 million.

In the third quarter, Genomic Health delivered more than 21,790 Oncotype DX test results, up 21 percent from more than 18,030 test results delivered during the same period in 2012.

Genomic Health's stock jumped 14 percent to $33.70 in Wednesday morning trade on the Nasdaq.

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