NEW YORK (GenomeWeb) – Genomic Health reported today that its fourth quarter revenues rose 6 percent year over year, with sharper growth in international sales and prostate cancer testing than in the company's core US breast cancer market.
For the three months ended Dec. 31, 2017, Genomic Health's total revenues were $87.5 million compared to $82.7 million in the same period last year, missing the consensus Wall Street estimate of $88.9 million.
In the US, Genomic Health's product revenues were $73.5 million in Q4 2017, 5 percent more than the $70.0 million it saw in the same period in 2016. Invasive breast revenue was $66.2 million compared with $63.9 million a year ago, and prostate cancer test revenue totaled $5.0 million during the quarter, a 39 percent increase of $3.6 million in Q4 2016.
International revenues rose 14 percent year over year to $13.7 million in the fourth quarter of 2017, compared to $12.0 million a year ago. On a constant currency basis, this translates to a 12 percent increase, the company added.
Overall, the firm said that it delivered more than 31,990 Oncotype test results in the fourth quarter of 2017 compared to 30,020 results delivered in Q4 2016.
The company's R&D costs in Q4 2017 were essentially flat at $14.9 million, and its SG&A spending climbed about 7 percent to $56.5 million from $52.7 million.
The company reported a net income of $1.9 million, or $.05 per share, in Q4 2017, compared to $1.4 million, or $.04 per share, in Q4 2016, but fell short of consensus Wall Street estimate of $.07 per share income.
"In 2017, we delivered improved profitability, which included a $1.9 million profit in the fourth quarter, our strongest quarter of US invasive breast cancer revenue and test growth in the year," Genomic Health President, CEO, and Chairman Kim Popovits said in a statement.
For full-year 2017, Genomic Health posted $340.8 million in revenues, a 4 percent increase over $327.9 million during the previous year, but short of the analysts' average estimate of $342.2 million.
The company's full-year US product revenues rose 3 percent to $287.4 million in 2017 from about $280.1 million in 2016. Within the total US product revenues, $259.7 million came from invasive breast cancer testing, compared with $257.0 million in 2016. Prostate tests contributed $17.9 million, a 66 percent increase from $10.8 million a year ago.
International product revenue increased 13 percent to $53.1 million from $46.8 million the prior year. This translates to a 15 percent increase on a constant currency basis, the company said.
Overall, the firm delivered more than 126,740 Oncotype DX test results in 2017, a 7 percent increase over the 118,570 results in 2016. Breast cancer test volume in the US grew 3 percent year over year and prostate tests in the US rose 37 percent compared to the prior year, representing about 20 percent of total test volume in 2017, the company said.
The firm's R&D spending for the full year rose 4 percent to $62.8 million from $60.2 million in 2016, and its SG&A costs were $229.7 million, about 2 percent more than $224.3 million in 2016.
The company saw a net loss of $3.9 million, or $.11 per share, for full year 2017, compared with $13.9 million, or $.42 per share, in 2016. Analysts had expected on average a loss of $.10 per share for the year.
Genomic Health ended the year with cash and cash equivalents of $45.5 million and short-term marketable securities of $84.1 million.
The company provided guidance for full year 2018 of total revenues between $366 million and $382 million, representing growth of between 10 percent and 15 percent compared to 2017. EPS is expected to be in the range of between $016 and $.22. Adjusted EPS is expected to be $.32 to $.50.
It also said it plans to make some big changes in 2018, as it moves to direct resources to expand its Oncotype DX offering through the development of in vitro diagnostic (IVD) test solutions, including on the Biocartis Idylla platform, which it hopes will increase global access in markets where localized testing is critical for adoption and reimbursement.
As it shifts its focus in this direction, the company is no longer going to provide its liquid biopsy test Oncotype SEQ, or invest further in non-proprietary NGS-based panels, Genomic health said.
The firm will also reduce positions by approximately 10 percent and take a charge of approximately $10 million in the first quarter for costs associated with personnel reductions and the write-off of certain assets associated with NGS-based panels.
"We believe this strategic direction to maximize profitable growth in the short term will result in approximately $3 million saved per quarter, enabling us to enhance operational efficiency and deliver operating leverage above 50 percent, improved over our 40 percent leverage target of the past few years," Genomic Health COO and CFO Brad Cole said in a statement.
In a conference call discussing the firm's results, Popovits highlighted anticipated events for the coming year, as well as recent milestones that Genomic Health believes will contribute to success in growing adoption of its existing tests, once the company refocuses and jettisons its liquid biopsy sequencing and other NGS efforts.
She reiterated that the firm expects the anticipated reporting of long-delayed data on intermediate risk patients from the TAILORx trial to drive breast cancer test adoption.
"As a reference point, when the secondary endpoint of TAILORx, looking at patients with risk scores less than 11, was reported in The New England Journal of Medicine in 2015, we saw a 5 percent increase in tests delivered," Popovits said on the call.
The company has said that the expected report on the 7,000 patients in the trial, with risk scores between 11 and 25 randomized to hormonal therapy with or without added chemo, will come out before the end of the first half of this year.
In prostate cancer, Popovits highlighted recent milestones, including updated guidelines from the National Comprehensive Cancer Network that recommend considering molecular testing using assays like Genomic Health Oncotype DX Genomic Prostate Score or GPS.
That, coupled with the fact that 2018 will be the first full year that the company receives coverage from Medicare for the test, will drive revenue up in the upcoming year, the company said.
Cole added that Genomic Health expects growth to start in the low single digits for breast cancer testing in the US, and then accelerate after the TAILORx report. Overall, he said, the firm believes breast cancer test growth over the year will be about 8 to 10 percent, contributing to about 40 percent of the higher end of the firm's projected revenue growth.
Increasing reimbursement in prostate cancer testing should contribute another 20 percent to the higher end of the company's guidance, he added. The firm's recently launched AR-V7 test — which is anticipated to receive CMS coverage by the middle of this year — would make up about 15 percent of total projected revenues, and international test growth another 20 percent overall.