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Genomic Health's Q1 Revenues Climb 17 Percent, Net Loss Turns to Profit

NEW YORK (GenomeWeb News) – Genomic Health's first-quarter revenues rose 17 percent year over year, the company reported after the close of the market on Wednesday.

For the three months ended March 31, total revenues increased to $58.5 million, compared to $49.8 million for Q1 2011 and exceeding consensus analyst estimates of $56.3 million.

Product revenues, which make up most of the revenues, also increased 17 percent year over year to $57.9 million from $49.5 million, while contract revenues rose 60 percent to $563,000 from $352,000.

During the first quarter, the number of Oncotype DX test results delivered increased 15 percent to 18,630, compared to 16,230 in the year-ago period.

"During the quarter we invested to expand our global commercial reach in both breast and colon cancer, while continuing to invest in key pipeline programs including next-generation products and additional indications for our colon cancer test," Genomic Health Chairman, President, and CEO Kim Popovits said in a statement. "Further, we continued to advance our prostate cancer program and look forward to reporting top line results from our clinical validation study in the second half of this year."

Recent company highlights include commercial progress related to the company's Oncotype DX test for breast cancer, such as approval from New York to offer the Oncotype DX DCIS Score, distribution deals in Mexico and Russia, and the establishment of new node-positive policies covering an additional 8.5 million lives in the US.

Also, for its Oncotype DX colon cancer test, Genomic Health established contracts covering an additional 3.9 million lives with two state Blue Cross Blue Shield plans, and it signed its first Veterans Affairs contract, providing access to colon cancer patients in the southwest region.

Genomic Health COO Brad Cole said on a conference call following the release of the results that the firm has expanded its US sales force by 20 percent, which "we believe will have a positive impact on sales beginning late this year.

"In breast cancer, we are encouraged by the initial demand for the DCIS Oncotype DX score," he added. "We've heard from customers that having a reliable method to select DCIS patients for treatment with surgery alone is a significant advance."

During the quarter, the company also established a wholly owned clinical genetics subsidiary called InVitae.

Today, Genomic Health separately announced an alliance with OncoMed Pharmaceuticals to use next-generation sequencing to identify biomarkers for use in the development of the drug firm's antibody cancer therapeutics.

The Redwood City, Calif.-based firm's R&D spending increased 18 percent year over year to $11.9 million from $10.1 million, while SG&A costs grew 17 percent to $36.3 million from $30.9 million.

The company posted a profit of $777,000, or $.02 per share, in the first quarter, compared to a net loss of $286,000, or $.01 per share, a year ago. Wall Street had estimated a loss per share of $.03.

Genomic Health said that InVitae had an immaterial net loss during the quarter, and added that it expects the subsidiary's full-year 2012 net loss to be as much as $8 million.

Company CFO Dean Schorno said in the company's statement that the profit in the quarter resulted from better than expected revenue, due partly to Medicare payments for colon tests performed before coverage was established. In the second quarter, a net loss is expected resulting from historical seasonal patterns that affect test volumes and revenues, and planned operational expense increases to build out worldwide commercialization and pipeline efforts, he added.

Genomic Health closed out the quarter with $37 million in cash and cash equivalents and $64.9 million in short-term marketable securities.

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