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Genomic Health's Revenues Increase 11 Percent in Q2

NEW YORK (GenomeWeb News) – For the second quarter ended June 30, Genomic Health reported revenues of $63.7 million, compared to $57.6 million during the same period last year, marking an 11 percent increase.

However, the firm fell short of Wall Street's estimates for the top and bottom line.

All of Genomic Health's revenues in the quarter came from product sales. In comparison, in the second quarter of last year, Genomic Health reported $57.2 million in product revenues and $446,000 in contract revenues. International product revenues shot up by 58 percent year over year to $9.2 million, comprising 14 percent of total product revenues, the company said.

Analysts' consensus estimate for total revenues during the quarter was $63.9 million.

Genomic Health CEO Kim Popovits said revenue growth was due to higher penetration of the firm's Oncotype DX test in the US invasive breast cancer market and expansion of its international business. During the quarter, Genomic Health also achieved "two major milestones," according to Popovits, by launching its Oncotype DX prostate cancer tests, the firm's third product franchise, and by garnering Medicare coverage for its DCIS Oncotype DX score.

On a conference call following the release of the results, Brad Cole, Genomic Health's chief operating officer, said that Medicare contractor Palmetto GBA's coverage decision will have a "positive impact on future revenues" of DCIS test.

The firm also is continuing research on the Oncotype DX DCIS score and is in the process of "finalizing sample collection for another large clinical study," Genomic Health Chief Medical Officer Steve Shak noted on the call. The new study, which is slated for completion early next year, will look at a broader DCIS population, including more women with larger tumors and patients with estrogen receptor-negative disease.

During the quarter, Genomic Health began processing samples for a renal cell carcinoma validation study that the company is conducting in partnership with Pfizer. "The goal of this program is to develop a prognostic test that can assist drug manufacturers in the development and potential commercialization of renal cancer therapies in the adjuvant setting," Shak said. "The commercial delivery of a test will be dependent on the outcomes of these ongoing drug studies."

In addition, Genomic Health is working with OncoMed to investigate cancer stem cell biology. This collaboration is "aimed at the development of a companion diagnostic," Shack noted.

Genomic Health's net loss for the quarter was $3.0 million, or $.10 per share, compared with net income of $1.8 million in the second quarter of 2012, or $.06 per share. Wall Street estimated a net loss per share of $.08.

Its R&D costs for the quarter were $13.8 million, compared to $11.6 million in the year-ago quarter, and its SG&A spending declined 9 percent year over year to $32 million from $35.2 million.

The firm finished the quarter with cash and cash equivalents of $32.8 million and short-term marketable securities of $74.4 million.

Genomic Health delivered more than 20,640 Oncotype DX test results in the second quarter, a 9 percent bump compared to more than 19,020 test results delivered in the year-ago Q2.

In early Thursday trade on the Nasdaq, shares of Genomic Health were down a fraction of 1 percent at $35.51.