NEW YORK – Veracyte's leading tests, the Decipher Prostate Genomic Classifier and Afirma Genomic Sequencing Classifier for thyroid nodules, are continuing to fuel the bulk of its revenue growth as the firm gears up to advance additional tests into the global clinical market.
The company said Tuesday that its second quarter revenues were up 24 percent year over year, driven primarily by continued growth in testing volume.
For the three months ended June 30, the company posted $90.3 million in total revenues compared to $72.9 million in the second quarter of 2022, beating Wall Street analysts' average estimate of $83.1 million.
Based on the results, Veracyte said that it was raising its full-year 2023 revenue guidance to a range of $342 million to $350 million, up from prior guidance of $330 million to $340 million and representing year-over-year growth of 15 percent to 18 percent.
Although Veracyte has collected and developed a suite of tests across at least six tumor types, the firm's test volume and revenue growth remain driven mainly by its prostate and thyroid cancer stalwarts. Overall, testing revenue during Q2 was $81.7 million, an increase of 37 percent compared to $59.7 million in Q2 2022. Total test volume for the quarter was 31,809, an increase of 28 percent compared to the same period last year.
According to Veracyte CEO Marc Stapley, these revenue and test volume results both exceeded the company's expectations.
"We reported approximately 15,000 Decipher Prostate tests in the quarter with our level-one evidence announced in the most recent NCCN guidelines, we believe, now contributing to a meaningful step up in tests delivered to patients," Stapley said during a call discussing the firm's financial results.
This has led to Veracyte recording the highest number of new physicians receiving a Decipher test result in the company's history, he added. "Given the outperformance of our franchise this year to date, we now believe that the market for molecular diagnostics in prostate cancer is approximately 30 percent penetrated, with Decipher continuing to represent the majority of our penetration," Stapley said. Adding that despite its progress in adoption, the firm believes there is "ample opportunity for continued growth for many years to come."
He also highlighted the continued accrual of clinical data during the quarter on the impact of its tests in guiding patient care at pivotal moments for the diagnosis and treatment of cancer. These include 12 abstracts presented at major medical conferences advancing scientific understanding and providing evidence of Veracyte's tests' positive real-world impact.
Most recently, the firm published a real-world study that confirmed the ability of its Decipher Prostate Genomic Classifier to guide personalized treatment approaches for men with prostate cancer. Published in JNCI Cancer Spectrum, the study compared clinical data from 8,297 patients in the Surveillance, Epidemiology, and End Results (SEER) Program with matched Decipher test results.
Study author Daniel Spratt, chair of the department of radiation oncology at UH Cleveland Medical Center, said in a statement that data builds on previous validations of the Decipher Prostate assay and demonstrates how the field is moving toward the goal of personalized therapy.
"Patients with a low Decipher score, indicating a better prognosis, can be guided towards treatment de-escalation, and those with higher Decipher scores, indicating a worse prognosis, can be guided towards appropriate treatment," he said.
Within the SEER cohort, investigators observed that active surveillance and watchful waiting were used more frequently for patients with low-risk Decipher biopsy results compared to those who had intermediate-risk or high-risk scores. The use of prostatectomy and radiotherapy also increased with higher Decipher risk groups.
"This study is further evidence that the Decipher Prostate test provides valuable clinical information to physicians and their patients with prostate cancer. In contemporary practice, physicians treat patients with higher-risk Decipher scores more aggressively, and patients with lower-risk Decipher scores more conservatively," Elai Davicioni, Veracyte's medical director for urology, said in a statement.
Stapley said that Afirma tests represented about 13,000 of its total tests performed in Q2. "This outstanding performance is due in part to continued enhancements we've made to the test, including the addition of promoter mutation testing, as well as ongoing customer experience improvements to our online physician portal including online ordering," he added. The result included the addition of 70 new customer accounts during the quarter.
Looking to the future, Veracyte said that it has been facing some challenges in keeping pace with its expected trial recruitment for NIGHTINGALE, a clinical utility study of the firm's Percepta nasal swab lung cancer test. As such, the company now expects to complete enrollment during the second quarter of 2024. The holdup, Stapley said, is most likely related to staffing challenges at investigator sites, and he said that enthusiasm for the study remains high with the "vast majority of lung nodule patients who are offered the test choosing to participate."
According to Stapley, the company is also ramping up IVD development. A study presented during the quarter at the ESMO Breast Cancer Congress in May has helped advance adoption of its existing IVD, the Prosigna breast cancer test, he said, with results, from a prospective multiyear analysis in over 2,100 participants in Norway, confirming that test results alter physicians' treatment decisions "including significantly reducing the use of chemotherapy among patients with clinically high-risk disease." This has in turn led to adoption of the test for routine use in the Scandinavian country.
Stapley said Veracyte has already submitted an IVD version of its Envisia assay for non-cancer lung disease differentiation to European regulators and is making progress on similar applications for Decipher Prostate and the Percepta nasal swab assay, slated for 2024 and 2025, respectively.
He cautioned that the road ahead will still be complex. "Even once we get approval, that doesn't mean adoption by every country. That just means we've got approval in Europe. We then still have to go country by country to get reimbursement and drive adoption using the body of evidence that we've got."
Apart from testing revenue, Veracyte also reported Q2 product revenue of $4.0 million, up 29 percent from $3.1 million in the second quarter of 2022. Biopharmaceutical and other revenue were down 55 percent at $4.6 million compared to $10.0 million.
Veracyte's R&D spending during Q2 totaled $12.5 million, up about 33 percent from $9.4 million in the same quarter last year. Its SG&A costs rose 16 percent to $50.8 million from $43.8 million.
The company's net loss for the second quarter of 2023 was $8.4 million, or $.12 per share, compared to $9.5 million, or $.13 per share, in the same period last year. Analysts, on average, had expected a higher loss per share of $.15.
In morning trade on the Nasdaq, Veracyte's shares were up approximately 10 percent at $27.42.