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Genomic Health Reports 5 Percent Revenue Growth in Third Quarter

NEW YORK (GenomeWeb) ─ Genomic Health reported after the close of the market Tuesday that its third quarter revenues were up five percent year over year, falling slightly short of the Wall Street consensus estimate.

The company's revenue, made up entirely of product sales, was $69.1 million in the quarter, compared to $66 million in total sales for the same period last year. The Q3 2013 results included $258,000 in contract revenues. Analysts had predicted, on average, that the firm's revenue would be $71 million.

In the third quarter, Genomic Health delivered more than 23,700 Oncotype DX test results, up nine percent from the more than 21,790 test results delivered during the same period in 2013.

International product revenue grew by 12 percent to $11.3 million compared to $10.1 in the third quarter of 2013 and represented 16 percent of total revenue. International test volumes grew 17 percent compared to the previous year's third quarter, and represented 20 percent of the company's overall test volume.

Genomic Health reported a net loss for the quarter of $6.3 million, or $0.20 per share, compared with net income of $604,000, or $.02 per share, in the third quarter of 2013. Analysts, on average, expected the company to post a net loss of $.22 per share.

The company's R&D costs for the quarter were $14.7 million, flat with the year-ago quarter, and its SG&A spending increased year over year to $48.2 million from $40 million.

In a statement, Kim Popovits, CEO and president of Genomic Health, highlighted the company's core invasive breast cancer testing as a driver for the firm's increased revenues in the quarter, but also noted double-digit growth in the company's international test sales, as well as triple-digit growth in its prostate test volume.

Prostate tests more than doubled compared to the prior year and represented approximately 6 percent of total test volume in the quarter, according to the company.

Brad Cole, Genomic Health's CFO and COO said during the company's earnings call that daily order rates for the prostate cancer test have tripled since January and more than 1,300 urologists have ordered the test to date.

On the subject of international growth, Cole said the company is "well penetrated in certain countries with established coverage and growth still remaining," and sees opportunities for "significant future international growth as we work to expand coverage through guidelines inclusion and payment arrangements with both private, and most importantly, public payors."

During the quarter, the inclusion of Oncotype DX in the National Comprehensive Cancer Network's prostate cancer clinical practice guidelines update was important for Genomic Health in growing its prostate cancer testing business. The NCCN also mentioned Myriad Genetics' Prolaris in the guideline update.

Genomic Health highlighted several other milestones for the quarter, including the Centers for Medicare & Medicaid Services' announcement of its recommendation to use the gapfill process to price the Oncotype DX breast cancer test's unique CPT code through local Medicare Administrative Contractors using market-based prices.

Popovits said during the company's earnings call that the CMS methodology recommendation gives Genomic Health "continued confidence in our pricing, and further differentiates the value of Oncotype DX from prognostic-only tests."

Genomic Health also presented several studies during the quarter at the European Society for Medical Oncology 2014 Congress, including an independent clinical validation study of the Oncotype DX prostate cancer, showing the test was a strong predictor of both adverse pathology and biochemical recurrecence. The firm also shared data highlighting the impact of Oncotype DX breast on physician decision-making.

Executive VP of R&D Steve Shak said during the earnings call that Genomic Health is now looking forward to presenting results from the first two studies of its NGS-based liquid biopsy platform at upcoming medical meetings in December. The company is developing the platform initially in breast and bladder cancer, but Shak said that it is exploring other cancer types as well.

Genomic Health will also present additional validation data on the prostate and ductal carcinoma in situ versions of Oncotype DX at the upcoming San Antonio Breast Cancer Symposium and the Society of Urologic Oncology conference in December.

Popovits added that the company also plans to share positive interim results from the first large prospective study using Oncotype DX to stratify treatment for more than 3,000 patients.

The firm finished the quarter with cash and cash equivalents of $37.2 million and short-term marketable securities of $67.5 million.

In Wednesday morning trade on the Nasdaq, shares of Genomic Health were down nearly 3 percent at $34.25.