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Genomic Health Updates Investors on Timeline for DCIS, Colon Cancer, Prostate Cancer Tests

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By Turna Ray

By the end of 2011, Genomic Health plans to launch a test for ductal carcinoma in situ and introduce treatment benefit indications for the Oncotype DX colorectal cancer test that it launched earlier this year, company officials told investors this month at two conferences.

Additionally, later this year, the company will present data from its ongoing studies to develop a prostate cancer detection test, which might just be Genomic Health's "next large platform if the data turns out to be as good as we hope," Chief Financial Officer Brad Cole said at a conference hosted by JMP Securities this week.

Keeping an eye on growing its global presence and test menu, Genomic Health does not plan to significantly grow its profits in future years, but will instead reinvest that money into research and development efforts.

After reporting its first quarterly profit of $865,000 in August, Genomic Health appears to be prepping investors to not expect substantial profit growth in future quarters. "We have said we want profitability. We want to be a self-sustaining company. But we have said that in the future we're going to not significantly grow profits," Dean Schorno, Genomic Health's VP of finance, told investors during the Stifel Nicolaus Healthcare conference

"We're going to keep reinvesting in the research and development pipeline, as well as international opportunities," Schorno added.

Genomic Health has previously said that it plans to keep growing its mainstay Oncotype DX breast cancer recurrence test in node-negative breast cancer patients, while targeting future growth areas through new tests, companion diagnostic collaborations with pharmaceutical companies, and expansion overseas (PGx Reporter 08/11/10).

The company is also investing in its plan to internally develop sequencing capabilities. As Genomic Health Executive Chairman Randy Scott recently told PGx Reporter sister publication In Sequence, the company has transformed its internal research group into a commercial cancer genome center that is working on developing a "universal cancer assay" (IS 08/31/10).

Genomic Health officials this month further described the company's growing focus in whole-genome sequencing, but emphasized that it will be several years before this research is translated into a commercial product.

Existing Tests, New Products

Genomic Health estimates that its flagship Oncotype DX breast cancer recurrence test has penetrated around 30 percent of the US breast cancer market, but officials believe that the company can grow its market share, particularly among node-negative patients, beyond 50 percent and closer to 80 percent of the market.

"We don't think this is 90-plus percent market like ER, PR, and HER2, which are in distributed labs," Cole explained. "This is a central clinical reference laboratory and it's going to require more physician education." Genomic Health currently employs 88 sales representatives, who call on oncologists and surgeons, he said.

In the first quarter, there was a slight decline in the adoption of Oncotype DX breast cancer tests in the node-negative market. According to company officials, this was partly due to the economic slowdown, as well as to its sales reps promoting its colon cancer test and the node-positive indication for the breast cancer recurrence test, which cut into node-negative test sales.

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"We did a territory-by-territory analysis and found that in areas with high unemployment there was actually a decrease in test volume in those areas, primarily in the node-negative business," Schorno explained.

He added that the launch of the colon cancer test in January and the new node-positive indication for Oncotype DX "allowed our reps to go out and talk about these new business opportunities … and we think this was to the detriment of our core node-negative business."

The company estimates that its node-positive business, the colon cancer test, and international sales of its tests currently comprise 25 percent of its business.

Having launched Oncotype DX to gauge the likelihood of colon cancer recurrence following surgery in stage II colon cancer patients, the company is now turning its R&D efforts to developing testing strategies that will help physicians make treatment decisions.

In stage II colon cancer, between 75 percent and 80 percent of patients will benefit from surgery alone, while between 20 percent and 25 percent will see their cancer recur. Meanwhile, between 3 percent and 4 percent will benefit from chemotherapy.

As part of the QUASAR trial, which was the validation study for the colon cancer test, "we identified and confirmed that about 15 percent of patients are mismatch repair deficient," Schorno said. "And those patients will be fine with surgery alone. Therefore, we're looking for mechanisms to deliver those tests to patients. It's a separate type of testing."

Deficiencies in DNA mismatch repair gene function cause DNA alterations that can lead to abnormal shortening or lengthening of microsatellite DNA sequences, or microsatellite instability (MSI). Studies suggest that patients with mismatch repair deficient colon tumors have a lower risk of colon cancer recurrence. As such, mismatch repair testing may be useful, in addition to the Oncotype DX colon cancer test, to inform treatment options.

Genomic Health is still working on identifying markers that will help doctors decide which colon cancer patients should receive oxalyplatin-based chemotherapy. "We're in the process of lining up the cohorts to do the work that would allow us to have a stage III and stage II oxalyplatin treatment benefit test," Schorno said, adding that the predictive aspects of the colon cancer test would likely be launched in the next three years.

Schorno acknowledged that driving adoption of the 12-gene panel colon cancer test will take some time. Although Genomic Health completed the QUASAR validation study last year, it has not yet published the findings. Schorno said that timing of the study's publication is a "bit uncertain," but estimated the results could be possibly published later this year or early next year. Also slowing adoption is the fact that the company has spent only a few months talking to payors regarding reimbursement for the test, he added.

In DCIS, meantime, Genomic Health is investigating whether its 21-gene panel for Oncotype DX in breast cancer recurrence will work in this setting. If the genes — or a subset of the genes — work, then the company plans to launch a test for this indication in late 2011, Schorno said.

Genomic Health is currently in the process of collecting samples for a large validation study in DCIS that will "wrap up" in the first part of 2011. The test, which will be based on genes in the Oncotype DX 21-gene panel, is being designed to determine whether DCIS will progress to local cancer. Studies suggest that this occurs in fewer than 10 percent of women who have DCIS.

Cole predicts that Genomic Health's next "big" test opportunity after the Oncotype DX breast cancer recurrence test will be in prostate cancer. As many as 1 million men have biopsies each year, and 200,000 men are diagnosed with prostate cancer annually.

So far, Genomic Health has concluded gene identification and lab processing for a prostate cancer test, and plans to present data from a study later this year.

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Another product in the development pipeline, a companion diagnostic program with Pfizer to develop a test for a renal cancer drug, is slated for launch in 2013.

International Growth

Over the past year, Genomic Health has been pushing ahead with its strategy to grow its testing franchise to international markets.

Cole said at the JMP Securities conference this week that although around 1,000 physicians have ordered Oncotype DX outside of the US, the barrier to entry is reimbursement. As in the US, Cole estimated that it will take the company up to four years to significantly penetrate the international market for its breast cancer recurrence test, by working with each individual country's payor system.

During the company's earnings announcement for the three months ending June 30, Genomic Health reported that as many as 27 million lives outside the US were now covered for Oncotype DX through reimbursement agreements with payors in Canada, Germany, Israel, Greece, and the UK.

Earlier this month, Schorno told investors that more than 10 percent of Genomic Health's testing volume is now coming from European markets.

In January 2009, Genomic Health set up an outpost in Geneva, Switzerland, which will manage the company's European expansion. When it comes to driving adoption of its test, Genomic Health is taking an approach very similar to the one it took in the US, by talking to key opinion leaders country-by-country, through publishing studies on its tests, and through physician interactions.

Now with testing volumes of around 10 percent coming from Europe, "this is creating our ability to now go to the payors" in each country, Schorno said.

The company said during its second-quarter earnings call that it had initiated studies for its tests in Germany, Spain, and Canada that might impact treatment decisions in these regions.

Of the international markets where payors recently began reimbursing for the test, the company is currently seeing the most adoption in Greece, Germany, Israel, and the UK.
In recent months, "we see an acceleration of small wins, and ultimately, if we look 12 months out, we could see some of the large payors starting to join in," Schorno said.

Genomic Health officials see huge commercial potential for its products internationally. Specifically, company officials estimated that the market opportunity in the non-US breast cancer market alone is two times that of the US.

Sequencing on the Horizon

According to Schorno, Genomic Health is "so excited" about the impact that sequencing technologies can have on the advancement of its tests "that we've taken the majority of our research team and focus, and are putting that on next-generation sequencing."

While he told investors that the company can "envision a day when Genomic Health has a universal cancer assay," he cautioned that this day will not be any time soon, due to the complexities of reproducibility, genomic annotation, and clinical validation involved with using sequencing techniques in the clinical setting.

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More granular genome analysis could provide a competitive advantage for Genomic Health, which is increasingly facing competition in the breast cancer recurrence testing space.

"As we look at the … promise of looking at 20,000 genes, and thousands of non-coding biomarkers, and thousands of mutations, it certainly allows companies like ours, who are developing products, to have a much higher likelihood of clinical success, because our lens is that much broader," Schorno said.

When Genomic Health began to develop the first Oncotype DX product in breast cancer in the early part of this decade, the company was looking at 96 genes in a couple of hundred patients, Schorno recalled. But over the years, the company has rapidly grown its research capacity and now Oncotype DX has been studied in more than 4,000 patients. Currently the company's tests run on a real-time PCR platform.

"As we think about competitive advantage and we think about where we've been over the last ten years, we know that the combination of medical, clinical, biostatistics, laboratory IT systems, to harness all of this new information, to move it through the identification process, through clinical validation and ultimately commercialize it, is a tremendous opportunity, but a difficult process and one that we think we're uniquely capable of handling," he added.

Cole, during his presentation at the JMP Securities conference, discussed a paper the company had presented in February on its sequencing efforts at the Advances in Genome Biology and Technology meeting in Marco Island, Fla. In this paper, Genomic Health researchers used next-generation sequencing techniques to look at tumor cells and non-tumor cells in the same patient.

"We were able to see significant differences even along the ER gene itself," Cole said, without elaborating further on the findings of this preliminary study. However, upon reflecting on the company's strategy to eventually move to sequencing technologies, Cole added: "We're going to use this as a gene-identification tool in the next few years but you likely won't see it in commercialization for several years to come."

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