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Genomic Health Posts 12 Percent Rise in Q3 Revenues, Secures Ireland Reimbursement

NEW YORK (GenomeWeb News) – Genomic Health today said that strong sales of its flagship Oncotype DX breast cancer recurrence test drove a 12 percent increase in third-quarter revenue to $52.1 million from $46.3 million in the comparable period of 2010.

The Redwood City, Calif.-based firm just missed analysts' consensus revenue estimate of $52.3 million for the quarter.

The company also said that it has secured a reimbursement contract with the Irish HSE National Cancer Control Programme, the country's public insurer, for the Oncotype DX test for lymph-node-negative, estrogen receptor-positive breast cancer patients.

The contract, which follows Medicare's decision to cover the Oncotype DX colon cancer test in the US, makes Ireland the first European country to provide full public reimbursement for Oncotype DX, the company said.

Genomic Health said it delivered more than 16,890 Oncotype DX test results during the quarter, a 15 percent increase over 14,730 test results delivered in the prior-year period. Corresponding product revenue rose 13 percent to $51.7 million from $45.8 million in the third quarter of 2010.

The company is planning on expanding its breast cancer franchise with an Oncotype DX test for ductal carcinoma in situ slated for launch before the end of the year.

Genomic Health CEO Kim Popovits said during a call to discuss the financial results that the firm will report the results of a validation study for the DCIS test at the San Antonio Breast Cancer Symposium in December. She added that the company is already in discussions with payors regarding reimbursement for the test.

The firm's R&D expenses increased 17 percent to $9.6 million from $8.9 million in the year-ago period. Its selling and marketing expenses rose 16 percent to $20.2 million from $17.3 million, and its general and administrative costs increased 13 percent to $9.7 million from $8.6 million.

Net income decreased 16 percent to $3.2 million, or $.10 per share, from $3.7 million, or $.12 per share, in the third quarter of 2010. Genomic Health easily beat Wall Street's EPS estimate of $.04.

Citing its strong sales and rising reimbursement levels, the company raised its full-year net income guidance to $8 million from a previous range of $3 million to $5 million.

A key factor in the improved guidance is an "amendment" to the company's PCR licensing agreement with Roche that will reduce its net license fee by approximately 2 percent. CFO Dean Schorno added during the call that the amended agreement should reduce the company's net license fee by about $2 million in the fourth quarter.

The company maintained its previous full-year revenue guidance of between $200 million and $210 million.

As of Sept. 30, Genomic Health held cash and cash equivalents of $38.3 million and short-term investments of $40.3 million.

COO Brad Cole said on the call that the company plans to increase its sales force in 2012 to accommodate its growing product portfolio, but he did not elaborate.

In early Wednesday trade on the Nasdaq, shares of Genomic Health jumped 15 percent to $24.

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