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Buoyed by Growth in Oncotype DX Use in US, Genomic Health to Grow Overseas Play in ‘09

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With US physicians increasingly utilizing Genomic Health’s Oncotype DX breast cancer-recurrence test, and a growing number of health insurers covering it, the diagnostic shop is hoping to expand its flagship assay’s footprint in overseas markets.
 
“As clinical evidence continues to grow, our goal is to make Oncotype DX the standard of care,” Genomic Health President Kim Popovits said during the firm’s first-quarter earnings conference call last week. “We also believe that a similar opportunity exists in international markets and that our success in the United States supports expanding our international presence.”
 
Although Genomic Health does not plan to spend “a huge amount of time and effort” this year expanding Oncotype DX internationally, it intends to grow its “presence and investments” in Asia, Europe, South America, and Canada starting in 2009, according to Chief Financial Officer Brad Cole. 
 
The company said that over the last quarter it has expanded its relationship with pharmaceutical partners in Turkey and has established a partnership with GeneKor to distribute Oncotype DX in Greece.
 
“With these arrangements, we are now receiving samples for more than 30 countries,” Popovits said.
 
During the call, company officials added that rivals in the US will not have an easy time challenging the test because it took Genomic Health years to reach the current level of adoption and reimbursement for Oncotype DX.
 
These comments were made as Genomic Health reported that first-quarter revenue from sales of Oncotype DX increased 78 percent to $23.3 million from $13.1 million in the year-ago period.
 
“Progress in reimbursement” contributed to a 68 percent increase in adoption year over year, Cole said during the call.
 
The company did not break out overseas revenue for Oncotype DX because it still has “a pretty modest effort” in the international markets, Cole said.
 
“From a competitive standpoint, we always like to focus on what you can see as continued growth of Oncotype DX in the US,” he said. “We ... believe that the strong clinical evidence that we've generated over the years has supported incorporation into [American Society of Clinical Oncology] and [National Comprehensive Cancer Network] guidelines, [and] I guess that's a very substantial advantage in terms of the US market opportunity.”
 
For the three months ending March 31, Genomic Health delivered more than 9,100 tests, compared to more than 5,400 tests during the same period last year, an increase Popovits attributed to the test’s inclusion in ASCO and NCCN guidelines, which now recommend screening with Oncotype DX.
 
Also in the quarter, Genomic Health added to its reimbursement roster several Blue Cross and Blue Shield plans, including plans in Illinois, New Mexico, Oklahoma, Texas, Iowa, North Dakota, North Carolina, Tennessee, Kansas, and Rhode Island. It also brought on board the Health Alliance Plan of Michigan and WellPoint, a national payor, agreed to expand its coverage of Oncotype DX.
 

“I think we've never been in a stronger position with regard to the value proposition for Oncotype DX ... So we would plan in the future to continue to take appropriate price increases for our tests.”

Additionally, the company claims it has had a positive response from patients who have accessed its newly launched patient educational site, mytreatmentdecision.com. According to Popovits, since Genomic Health launched the website in January as the main component of its targeted direct-to-patient education effort, “the traffic to the site has definitely increased and we've gotten very positive reviews on the value that it's bringing to patients having that opportunity to interact and get questions answered.”
 
The company has also invested in building educational programs with partners in the advocacy community. Popovits did not elaborate on these programs, but said that these educational campaigns will be rolled out in the next quarter.
 
Since Genomic Health launched Oncotype DX in US in 2004, the company has presented at scientific conferences and published in peer-reviewed journals, data from multiple studies showing the clinical utility and validity of Oncotype DX in reliably predicting breast cancer recurrence and reducing unnecessary chemotherapy. 
 
“We're continuing to grow strongly in the US on the basis of that, and in fact we think that what was required of us to both achieve adoption and reimbursement is going to be required of many other groups as well,” Cole noted during the call.
 
Other than Oncotype DX, there is a variety of gene-based breast cancer tests that predict cancer recurrence, including products made by Agendia and Exagen. Agendia's MammaPrint assay is the first in vitro diagnostic multivariate index assay for breast cancer recurrence cleared by the US Food and Drug Administration, and Exagen has filed its eXagenBC test for 510(k) clearance with the agency. 
 
Oncotype DX's regulatory status remains in question as Genomic Health and the FDA continue discussions over whether the homebrew assay will need to be submitted for approval as an IVDMIA.
 
Despite the regulatory uncertainty surrounding Oncotype DX, among the players in the breast cancer diagnostics market, Oncotype Dx is currently the only marketed test that also predicts whether ER-positive, node-negative breast cancer patients will benefit from tamoxifen treatment.
 
This may not be for long, since Nuvera Biosciences and the University of Texas’s MD Anderson Cancer Center are developing a 200-gene assay that gauges the likelihood that patients will survive longer following treatment with adjuvant hormonal therapy. Nuvera officials claim that the test will predict tamoxifen benefit for patients who are ER-positive and either node positive or node negative. [see PGx Reporter 09-26-2007].
 
In the international market, Agendia will likely be Genomic Health's strongest competitor since the test is CE marked. Agendia CEO Bernard Sixt told Pharmacogenomics Reporter this week that the Netherlands is the company's largest market at this point.
 
However, Agendia's focus for expansion remains on the US. “Our top priority from a growth perspective is the US market,” Sixt said. “While we continue to build our US-based infrastructure, we are experiencing a great interest about MammaPrint by physicians and increased traction among centers that are increasingly using MammaPrint with breast cancer patients.”
 
Agendia does not disclose sales figures to the public.
 
The cost of having a breast cancer tumor analyzed by the 70-gene panel MammaPrint is $4,200 in the US. Agendia's US reimbursement efforts for MammaPrint began early this year.
 
“To date, we have encountered no challenges in this arena and activities are proceeding according to our sales and marketing plan,” Sixt said.
 
The current list price for Oncotype DX is around $3,600. However, the company is attempting to expand the indication for Oncotype DX into other cancer types and this quarter began providing measurements of quantitative gene expression for estrogen and progesterone receptors in addition to a recurrence score [see PGx Reporter 01-16-2008]. These efforts will increase the price of the test, company officials said.
 
“I think we've never been in a stronger position with regard to the value proposition for Oncotype DX,” Cole said. “So we would plan in the future to continue to take appropriate price increases for our tests.” He added that the average selling price for Oncotype DX increased last year but did not elaborate.
 
Currently, in international markets, the cost of Oncotype DX is based on the US price in US dollars. “As we moved towards reimbursement by national healthcare systems, that will be a value-based discussion on a country-by-country basis,” Cole said.
 
GHDX Financials
 
For the first quarter, Genomic Health reported total revenues of $23.4 million, up 65 percent from revenues of $14.1 million in the first quarter of 2007. Sales of Oncotype DX were $23.3 million versus $13.1 million in Q1 2007.
 
The Redwood City, Calif.-based firm said net loss declined around 4 percent year over year to $6.6 million from $6.9 million a year earlier.
 
R&D spending increased 23.1 percent to $6.4 million from $5.2 million, while SG&A costs rose 50 percent to $18.3 million from $12.2 million year over year.
 
Cole attributed some of the SG&A rise to costs of Genomic Health's online patient-education campaign. 
 

Genomic Health finished the quarter with $14.4 million in cash and cash equivalents.

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