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After Profitable Year, Genomic Health to Invest in New Products, Overseas Market, Next-Gen Sequencing


By Turna Ray

A decade after its launch, Genomic Health has achieved what many molecular diagnostics companies only dream of by reporting its first profitable year.

Genomic Health last week reported a net income of $4.3 million for the 12 months ended Dec. 31, 2010, compared with a net loss of $9.4 million in 2009. Full-year revenues increased 19 percent to $178 million from $150 million in 2009, while product revenue also rose 19 percent to $175 million from $146.6 million in the year-ago period.

Genomic Health CEO Kim Popovits called 2010 a "transformative year" for the company. In addition to netting a profit, in 2010 the company launched its second Oncotype DX test, in colon cancer; started a next-generation sequencing program for biomarker discovery; and advanced the development of its third test, for prostate cancer.

According to Dean Schorno, Genomic Health's chief financial officer, revenue increases last year were mainly due to continued adoption of its flagship Oncotype DX breast cancer test, as well as international sales, which grew 65 percent over 2009.

As Genomic Health looks to 2011 and beyond, it plans to continue to invest in growing its test menu, expanding its business overseas, and advancing sequencing efforts to ultimately develop the next generation of Oncotype DX tests. This year, Genomic Health expects to generate total revenues of between $200 million and $210 million, achieve a yearly net income of between $3 million and $5 million; and deliver between 63,000 and 66,000 Oncotype DX results.

Product Growth

In the fourth quarter, Genomic Health secured reimbursement for its Oncotype DX colon cancer test from a payor in Israel covering 65 percent of the population, as well as from Kaiser Permanente in the US covering 11 million lives and Group Health Cooperative covering 600,000 lives.

The company is still waiting to publish the QUASAR validation study for its colon cancer test, which it launched last year. Genomic Health officials said that they expect improved reimbursement for the colon cancer test after the study is published.

During the earnings call last week, Popovits would not guess when the study might be published but said she hoped it would happen this year.

For the Oncotype DX breast cancer test, Genomic Health initiated breast cancer decision impact studies with clinical researchers in the UK and France. Results from these studies will facilitate discussions with payors in these regions, the company said.

Additionally Genomic Health established a contract for Oncotype DX in estrogen-receptor positive breast cancer patients with Aviva Health Insurance Ireland Limited, a private payor covering 300,000 lives in Ireland. The company inked several contracts for the breast cancer test with hospitals in Germany. US insurer Cigna also expanded coverage of the breast cancer test to include international enrollees with micrometastatses.

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In its bid to expand the Oncotype DX franchise overseas, Genomic Health has run up against difficulties in some territories, particularly Japan. Brad Cole, Genomic Health's chief operating officer, acknowledged the tough reimbursement environment in Japan. He noted, however, the publication of a study in Breast Cancer Research and Treatment showing that reimbursement by the Japanese government for testing breast cancer patients with node-positive and -negative breast cancer patients is cost effective.

This study should help Genomic Health with its reimbursement discussions in Japan, Cole said. To further aid education about its breast cancer test, the company also launched a Japanese language website for Oncotype DX.

In 2011, Genomic Health is hoping to complete its study on ductal carcinoma in situ. If these results are positive, then the Oncotype DX breast cancer test's indication may be extended to include as many as 60,000 DCIS patients.

Officials reiterated recently announced plans to launch a prostate cancer test in 2013, a year earlier than previously planned. The company decided to accelerate the development program after a large gene-identification study found 295 genes "strongly associated" with cancer recurrence in patients previously treated with radical prostatectomy.

Finally, although Genomic Health has primarily been a cancer diagnostics firm, it is not opposed to expanding into other disease markets. Genomic Health officials noted that the firm is "looking at other areas we can expand into," but did not elaborate. According to company officials, Genomic Health is considering partnering with other companies outside of the cancer space and "looking at M&A activity as well."

Next-Gen Sequencing

In 2010, one of Genomic Health's major milestones was launching a next-generation sequencing research program. According to the company, although downstream clinical applications are still several years away, data from next-generation sequencing technologies will inform all its biomarker discovery efforts. Ultimately, Genomic Health plans to develop a "Universal Cancer Assay" with the help of next-gen sequencing technologies.

"Over the past year we transitioned our entire research program to next-generation sequencing technology for all discovery projects and made significant investments in our IT infrastructure to support the large data volumes and computing needs associated with this expansion," Popovits said. "By optimizing this technology for use with very small amounts of RNA contained in formalin-fixed, paraffin-embedded tumor tissue, we are already generating a 60,000-fold increase in the amount of information screened for our use in biomarker discovery.

Earlier this month, Genomic Health announced at the Advances in Genome Biology and Technology conference that it had used next-generation sequencing to survey the human transcriptome and identify an undisclosed number of candidate biomarkers linked to breast cancer recurrence (PGx Reporter 2/9/2011). This is the third sequencing study the company has done.

"Opportunities that next-gen sequencing provides are really diverse in multiple domains. They can bring value in terms of the quantity of data and the number of alterations we can look at," Steve Shak, Genomic Health's chief medical officer, said during the earnings call. The technology also allows researchers look at individual genes with "incredible quality," he added.

In addition to providing deeper insights into the molecular mechanisms driving various cancers, next-generation sequencing will also allow Genomic Health to develop tests that require smaller amounts of tissue. "We said that for several years we've been focusing on technologies that can further miniaturize our assay to use smaller amounts of tissue," Shak said. "Clearly that's going to be very important for prostate cancer and we believe across many of our future clinical applications."

Following Genomic Health's biomarker discovery efforts via sequencing, the company will eventually roll out next-generation tests on a sequencing platform.

"In the next two years you'll see next-gen sequencing itself become a platform that we begin to move into clinical development and begin moving to market," said Genomic Health Executive Chairman Randy Scott. "There is still a lot of work to do to bring it into the clinical laboratory. But every year that goes by, the technology improvements are just amazing and we think this is truly going to redefine cancer and really have an impact on healthcare."

Scott estimated that the company will settle on a next-generation sequencing platform in the next 24 months to take into commercial development. So far, the company has used Illumina's Genome Analyzer in its studies but has maintained that it is platform agnostic. Additionally, Scott believes that a commercial product, such as a next-generation Oncotype DX, based on sequencing data, is at least three years away.

"Our typical product development cycle is between three to four years. So you'll see next-generation sequencing not so different from the classical clinical perspective," Scott said. "Next-gen sequencing is already starting to identify a bevy of clinical markers and in research we have begun to do clinical studies in breast cancer, and we'll be expanding across areas in colon and prostate cancer.

"So, almost immediately next-gen technology is beginning to really identify novel biomarkers that we can begin to put into our development process, which is currently built around quantitative RT-PCR," Scott said.

Joffre Baker, Genomic Health's chief scientific officer, added that the company has more than half a dozen positions open in the area of bioinformatics. "In the world of next-gen sequencing the top of the iceberg is generating the data and the analysis of the data is the other 90 percent of the iceberg," Baker said. "We're investing heavily in that aspect of our business."

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