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Genomic Health's Q3 Revenues Climb 12 Percent

NEW YORK (GenomeWeb) – Genomic Health reported after the close of the market Tuesday that its third quarter revenues rose 12 percent year over year, driven by an 8 percent increase in tests delivered during the quarter.

For the three months ended Sept. 30, the molecular diagnostics firm reported total revenues of $82.3 million, compared to $73.6 million in the year-ago quarter. This fell slightly short of the consensus Wall Street estimate of $83.2 million for Q3 2016.

Genomic Health's US product revenues rose 11 percent to $70 million from $63.1 million year over year. Prostate cancer test revenue, which totaled $2.3 million during the quarter, made up 3 percent of this year-over-year increase, the company said.

Meanwhile, sales outside the US jumped 15 percent to $12.1 million from $10.5 million.

Overall, the firm said that it delivered more than 29,990 test results in the third quarter of 2016 compared to 27,820 results delivered in Q3 2015.

US invasive breast tests delivered grew 5 percent and prostate tests delivered grew 6 percent compared with the prior year's quarter. International tests delivered rose 15 percent and made up about 24 percent of the firm's total test volume during the quarter.

As of Sept. 30, Genomic Health said that its flagship line of Oncotype DX gene expression tests had been used to guide treatment decisions for more than 700,000 cancer patients worldwide.

Genomic Health COO and CFO Brad Cole said during a call discussing the results that the company is pleased with its progress in continuing to advance its core breast cancer testing business, especially given a strong comparator in the year-ago quarter, which he said represented the company's highest level of test growth in two years.

Kim Popovits, the company's chairman, President, and CEO, said that with prospective outcomes for more than 63,000 patients "we have proven that oncotype DX is the only test that can identify women who benefit from chemotherapy and those that can avoid a toxic therapy that provides no benefit."

Chief Medical Officer Phil Febbo said that Genomic Health has continued to amass — and hopes to soon report — more data supporting its prostate cancer business.

Simultaneous to its earnings report, Genomic Health announced that it had collected positive top line validation data supporting the ability of its prostate cancer assay to predict a full range of both short- and long-term endpoints, including the development of metastases and prostate cancer-specific mortality.

The company did not share any details about this data, but Febbo said that Genomic Health plans to submit the results for presentation at scientific meetings in 2017. Cole added that the firm believes that these new results "provide a competitive advantage to support increased adoption and reimbursement in coming quarters."

The company also recently highlighted an economic analysis published in Reviews in Urology demonstrating that the use of Oncotype DX in low-risk prostate cancer patients was associated with an increase in use of active surveillance. This was also linked to a net savings of $2,286 per patient, including the cost of the test, due to decreases in unnecessary invasive treatment. The study, however, is not yet available online.

Finally, Febbo said, Genomic Health is conducting a large prospective observational trial of 1,200 patients at 22 sites, and it hopes to share interim results next year on the impact of testing on men's longer term adoption of active surveillance that it believes will support reimbursement efforts.

Cole said during the earnings call that Genomic Health "experienced a summer slowdown in July and August," in its prostate testing. However, he added, "We are pleased to see September return to record levels with continued momentum here in the fourth quarter."

Cole also said that Genomic Health has made steps to optimize its prostate cancer sales structure to focus on two large accounts, and has also introduced a new test report for easier test interpretation and communication.

Overall, the company's year-over-year growth is in line with the guidance Genomic Health put out in February, Popovits said during the call.

"We are inspired by these significant clinical achievements … and are confident in delivering double-digit growth for the year and breaking even in the fourth quarter," she said.

Genomic Health posted a net loss of $2.8 million, or $.08 per share, for the quarter compared to a loss of $11.8 million, or $.36 per share, in Q3 2015. Analysts, on average, had expected a loss per share of $.09.

The company's R&D spending rose about 12 percent to $15.1 million from $13.5 million, and its SG&A expenses rose approximately 10 percent to $57.1 million from $51.8 million a year ago.

The firm finished the quarter with $34.0 million in cash and cash equivalents, and $64.6 million in short-term marketable securities excluding the fair value of the company's investment in Q3 2015 in a marketable security of $15.0 million.

In Wednesday morning trade, shares of Genomic Health were up about 0.7 percent at $29.47.