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With 8 Percent Revenue Bump in Q1, Genomic Health Focus on Expanding Oncotype DX Franchise

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Originally published May 7.

With a new publication supporting the use of its Oncotype DX in women with ductal carcinoma in situ and the upcoming launch of its prostate cancer test, Genomic Health is increasingly diversifying its diagnostic product portfolio.

For the three months ended March 31, Genomic Health reported an 8 percent increase in revenues from the same quarter in 2012, from $58.5 million to $63.1 million. The revenue jump was due to increased use of its Oncotype DX products and greater traction for its tests in markets outside of the US.

During the first quarter, Genomic Health reported product revenues of $62.7 million, compared to $57.9 million in the year-ago first quarter. International product revenues grew 69 percent to $8.5 million, comprising 14 percent of total product revenues.

The company said it delivered 20,350 Oncotype DX test results in the first quarter, an increase of 9 percent, compared to more than 18,630 test results delivered during the comparable period last year.

Genomic Health's most mature test, making up the majority of its product revenues, is its Oncotype DX test for breast cancer recurrence, which launched in 2004. The test, which gauges the risk of breast cancer recurrence in women with early stage, estrogen receptor-positive, node-positive or node-negative disease, comprises greater than 80 percent of Genomic Health's product revenues.

However, Genomic Health also launched an Oncotype DX test for colorectal cancer recurrence and is currently trying to bolster adoption of a test to gauge disease recurrence in women with DCIS, a non-invasive form of breast cancer that starts in the milk ducts but can later recur in the same breast or become invasive. COO Bradley Cole told analysts and investors during a quarterly earnings call last week that the Oncotype DX colon cancer and DCIS tests account for around 5 percent of Genomic Health's product revenues.

Even though the volume of Oncotype DX tests performed for invasive breast cancer grew 9 percent sequentially in the first quarter, suggesting there are opportunities to further penetrate this mainstay market, Genomic Health is making moves to ensure that its future product revenues aren't disproportionately dependent on the invasive breast cancer space. In the near term, the company appears to be focused on not just growing adoption and reimbursement of its colon cancer and DCIS tests, but also on launching a new test for prostate cancer.

Concurrently, the company has been working to get the backing of international guidelines for its breast cancer test, which will likely help drive its adoption in markets outside the US. Groups such as the American Society for Clinical Oncology, the National Comprehensive Cancer Network, the European Society for Medical Oncology, and the St. Gallen International Breast Cancer Expert Panel currently recommend the use of Oncotype DX to gauge which breast cancer patients' disease will recur and whether they will benefit from chemotherapy.

In February, the UK's National Institute for Health and Clinical Excellence issued a preliminary recommendation that the National Health Service cover breast cancer recurrence assessment by Genomic Health's Oncotype DX recurrence test for women with ER-positive, lymph node-negative, early stage breast cancer if they are deemed to be at "intermediate risk" of their cancer returning based on clinical factors (PGx Reporter 2/20/2013). Also during the quarter, an expert panel focused on gynecological cancers in Germany updated its recommendations to include the Oncotype DX breast cancer test, according to Genomic Health.

In the first quarter, Genomic Health registered a net loss of $883,000, compared to net income of $777,000 during the first quarter of 2012. Its R&D expenses in the quarter increased 14 percent to $13.7 million from $12 million, and its SG&A costs jumped 12 percent to $40.6 million from $36.3 million year over year.

Genomic Health CFO Dean Schorno noted that the company expects its operating expenses to increase in the second quarter due to the commercialization push behind the prostate cancer test and efforts to drive international use of its products. "As such, we currently expect a net loss of approximately $3 million in the second quarter as we seek to realize these opportunities," Schorno said.

As of March 31, the company had cash and cash equivalents of $17.1 million and short-term marketable securities of $79 million.

DCIS Validation Study

Last week, Genomic Health announced that the Journal of the National Cancer Institute published the first validation study for Oncotype DX in the DCIS population. There are approximately 50,000 women who are diagnosed with DCIS each year in the US. After a woman is diagnosed with DCIS, they can receive surgery to remove the lump and then get radiation therapy to further reduce the risk of a recurrence.

Although studies show that follow-on radiation can reduce the risk of local recurrence or of invasive cancer by 50 percent, many women with DCIS would not experience recurrence of breast cancer without radiation. With its DCIS test, Genomic Health is hoping to identify precisely those women who are at low risk of recurrence and can avoid unnecessary radiation.

The study published in JNCI tested tissue from more than 300 women using the Oncotype DX DCIS test. The RT-PCR test gauges the expression of seven cancer-linked genes and five reference genes and yields a low, intermediate, or high recurrences risk score. Researchers from Genomic Health, various cancer centers, and academic institutions tested tissue from women enrolled in the Eastern Cooperative Oncology Group E5194 study who had DCIS and received surgery without radiation.

The researchers, led by Lawrence Solin of Albert Einstein Medical Center, reported that the Oncotype DX DCIS Score was significantly associated with a woman's risk of developing local recurrence of DCIS after adjusting for patients' tamoxifen use and their risk of developing invasive cancer. Based on DCIS test results, patients with low scores had an 11 percent risk of experiencing a DCIS recurrence within 10 years, while those with intermediate and high scores had around a 26 percent risk of recurrence. For invasive breast cancer risk, those with a low DCIS score had around a 4 percent risk, while those with intermediate and high scores had a 12 percent and 19 percent risk, respectively.

"The risk of [local recurrence of invasive disease] was more than twofold higher for the 30 percent of patients with an intermediate or high DCIS Score compared with the 70 percent of patients with a low DCIS Score," Solin and colleagues wrote in the paper, adding that the DCIS risk score was more precise for lower-risk patients.

Multivariate analysis showed that that DCIS Score, tumor size, and menopausal status were all significantly associated with women's risk of DCIS local recurrence and invasive disease. "The hazard ratio for the DCIS Score was essentially unchanged when adjusted for tumor size and menopausal status, indicating that the DCIS Score provided independent information for IBE risk," the study authors reported in the paper.

Solin and colleagues identified several limitations of the validation study. For example, they relied on the 21-gene set for the original Oncotype DX breast cancer recurrence test to pick out the gene panel for the DCIS test. "This strategy was necessary because of a lack of DCIS studies with formalin-fixed paraffin-embedded tissue and documented negative surgical margins to allow for adequately powered discovery of genes associated with local recurrence," the study authors noted.

Additionally, patients in the parent ECOG E5194 study were not randomized to receive tamoxifen, and so the current DCIS validation study doesn't show whether the test can be used to gauge whether patients will benefit from tamoxifen treatment. "However, tamoxifen was not a confounder on multivariable analysis and, therefore, does not affect the conclusion regarding the association of the DCIS Score with [local recurrence or invasive cancer] risk," the investigators wrote.

Based on these data, the researchers concluded that the Oncotype DX DCIS score quantifies DCIS patients' risk of local DCIS recurrence and invasive cancer. The risk score complements traditional clinical and pathological factors of gauging recurrence risk in DCIS patients and "provides a new clinical tool to improve selecting individualized treatment" for women who are similar to those enrolled in the ECOG E5194 study.

The researchers noted that the DCIS test needs to be further studied in women who have clinical features not represented in the ECOG E5194 trial. Steven Shak, Genomic Health's chief medical officer, said during the earnings call that later this year the company will conduct another study in a broader DCIS population, including more patients with larger tumors and ER-negative disease. Data from this second DCIS trial is slated for next year.

Genomic Health believes that its DCIS test can improve patient outcomes and reduce unnecessary healthcare costs by identifying women who can do without radiation therapy after surgery. According to estimates, 75 percent of the 50,000 newly diagnosed DCIS patients each year who undergo a lumpectomy receive follow-on radiation.

In an analysis presented at the San Antonio Breast Cancer Symposium last year, researchers from the University of California, San Francisco, and the Albert Einstein Medical Center compared the cost-effectiveness of using the Oncotype DX DCIS test and standard clinical measures to determine whether DCIS patients should receive radiation.

"On average, the intervention (assay) strategy was less costly than the clinical assessment strategy by approximately $1000/patient, with similar life expectancies and quality-adjusted life-years," reported Michael Alvarado of UCSF and colleagues in a poster presented at SABCS. "The incremental cost-effectiveness ratio for changing strategy from the assay to clinical assessment was approximately $95,000/QALY," which the researchers noted is at the high end of the $100,000/QALY threshold most payors have for covering new medical interventions.

Genomic Health is hoping that this cost-effectiveness study and the publication of the first validation study will convince more doctors to use the Oncotype DX DCIS test. During the first quarter, Genomic Health established coverage for the DCIS test and for Oncotype DX in node-positive breast cancer patients for another 1.5 million lives through agreements with Blue Cross Blue Shield in New York and in Wyoming.

Genomic Health's Cole said on the earnings call that the company is expecting reimbursement coverage and test volume to increase in the second half of the year for the DCIS test, as well as for the Oncotype DX colon cancer recurrence test. In April, Genomic Health published the second validation study for its colon cancer test in the Journal of Clinical Oncology (PGx Reporter 4/17/2013).

New Test Launch

Genomic Health plans to launch its prostate cancer Oncotype Dx test on May 8, immediately after data from the first clinical validation study is presented at the American Urological Association annual meeting. The company is planning to market the test as a tool that doctors can use in conjunction with the Gleason grading system, the prostate specific antigen test, and patients' other clinical data to differentiate which patients have aggressive or indolent disease, and to personalize treatment decisions.

Matthew Cooperberg, assistant professor of urology, epidemiology and biostatistics at the University of California, San Francisco, will present data from the Oncotype DX prostate cancer validation study at the AUA annual meeting. After presentation of the data, Genomic Health will host another call with Wall Street analysts to discuss the commercialization strategy for the test.

With around 240,000 men diagnosed with prostate cancer annually, Genomic Health officials have presented the Oncotype DX prostate cancer test as the "largest opportunity to date" for the company.

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