Genomic Health officials this week said the company intends to leverage the continued success of its Oncotype Dx franchise in the US market in order to add new tests and expand internationally.
In addition, the company disclosed that it has invested a total of $2.8 million over the last two quarters in two startups that are developing technology related to next-generation sequencing — Locus Development and Station X. Both investments "are intended to complement our internal research and development programs," said CEO Kim Popovits during a call to discuss the company's first-quarter financial results.
Genomic Health reported a 21 percent increase in revenues for the first quarter, to $49.8 million from $41.2 million in the first quarter of 2010. Product sales increased 23 percent to $49.5 million from $40.3 million in the year-ago-period, in line with a 22 percent increase in Oncotype Dx test results delivered during the quarter.
International product revenue increased to $4 million, or 8 percent of product revenue, compared with $1.9 million, or 4 percent of product revenue, in the first quarter of 2010, said CFO Dean Schorno during the call.
During the quarter, Schorno said, "we made key investments across all operating segments of the business into growing our US and international presence and advancing our breast, colon, prostate, and next-generation sequencing programs."
Specifically, he noted, "we increased our R&D investment by 30 percent to support our growing pipeline and ongoing work in next-generation sequencing, and further increased our international commercial spending levels."
The company spent $10.1 million on R&D during the quarter, compared to $7.8 million in the year-ago period.
Brad Cole, Genomic Health's chief operating officer, said that the company plans to take advantage of the double-digit growth rates it is seeing in the US market "to fund higher levels of investment in our international business, where market development activities are focused on physician education and payor reimbursement programs."
He said that the firm has made "significant progress" in gaining coverage for its Oncotype Dx breast cancer test overseas, and currently has reimbursement arrangements with payors and institutions in Canada, Germany, Greece, Ireland, Israel, Mexico, Spain, Venezuela, and the UK.
Most recently, German health insurance provider AOK Rheinland/Hamburg agreed to reimburse the Oncotype Dx breast cancer test as part of a treatment study being conducted by the West German Study Group, Cole said. He noted that the pilot phase of the study will be conducted at 11 study centers, and AOK will reimburse Oncotype Dx for 400 patients.
"We believe this program will provide additional physicians and patients in Germany with the opportunity to individualize breast cancer treatment and expect it to pave the way for broader access in Germany," he said.
During the quarter, the company also established offices in the UK and Germany, and hired additional personnel to support its European operations, Cole said.
The company is also looking to expand its test menu — in terms of new tests as well as additional applications for its existing breast cancer and colon cancer tests.
Popovits said that the company expects to report in the second quarter top-line results for an ongoing study in ductal in situ carcinoma and remains "on track to finalize analytical methods in support of a clinical validation study in prostate cancer biopsy specimens next year."
In addition, the company plans later this year to kick off a study that will look at the use of its colon cancer test in determining oxaliplatin benefit in stage 2 and stage 3 colon cancer patients
"Our target is to hopefully launch of an assay that would include additional genes to understand who benefits from oxaliplatin sometime in 2013," said Steve Shak, Genomic Health's chief medical officer.
RxPONDER and QUASAR
While it proceeds with the development of new tests, Genomic Health is also looking to expand the reach of its Oncotype Dx test in breast cancer. Last week, the company announced that a clinical trial led by the Southwest Oncology Group will determine the effect of chemotherapy in breast cancer patients with one to three positive nodes who have an Oncotype recurrence score equal to or less than 25.
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The trial, Rx for Positive Node, Endocrine Responsive Breast Cancer, or RxPONDER, will use Oncotype Dx to screen approximately 9,000 breast cancer patients with the goal of identifying approximately 4,000 with a recurrence score equal to or less than 25.
In the RxPONDER trial, women who have tumors with a recurrence score equal to or less than 25 will be randomized to receive hormonal therapy with or without chemotherapy. Women who have tumors with a recurrence score greater than 25 will be offered chemotherapy plus hormonal therapy as standard of care.
Genomic Health hopes that the trial will help identify "a more precise recurrence score cutoff that can be used to determine when chemotherapy may not be beneficial for certain patients with node-positive disease," Popovits said during this week's call.
The company is still waiting to publish the QUASAR (Quick and Simple and Reliable) validation study for its colon cancer test, which it launched last year. Genomic Health officials have said in the past that they expect improved reimbursement for the colon cancer test after the study is published, but were unable to provide an expected publication date this week, though they said they do expect acceptance this year.
Cole said during the call that the company estimates that about half the US patients for whom the test is appropriate are eligible for Medicare, "making Medicare the key payor in the United States for our colon cancer test."
The company also reiterated its previously stated commitment to move its biomarker discovery programs — and eventually its testing platform — to next-generation sequencing (PGx Reporter 2/16/2011).
As part of this effort, the company this week disclosed its investment in two startups that are developing technology related to next-generation sequencing.
One firm, Station X, describes itself on its website as "an early-stage company developing software applications for scientists and physicians working with next-generation genome sequence information." The company's founding CEO, Richard Goold, was previously senior vice president at Incyte and the founder and president of Prospect Genomics. Tod Klingler, founder and chief scientific officer, held vice president positions at XDx, Synergenics, and Structural Genomix.
The second company, Locus, describes itself as a startup "developing clinical tools and services that will enable more personalized, predictive, preventative, and cost-effective healthcare." Founding CEO Sean George was previously COO at Navigenics, senior vice president of marketing at Affymetrix, and vice president of Invitrogen's labeling and detection business at Invitrogen; while CSO Michele Cargill served as vice president of genetics at Navigenics, associate director at Affymetrix, and was a senior staff scientist at Celera Diagnostics. The company is seeking staffers in genetics, engineering, bioinformatics, and biotechnology.
Popovits described Genomic Health's interest in the companies as "strategic" investments intended to "augment" the work the company is currently doing in next-generation sequencing.
Genomic Health officials declined to provide much detail on the company's goals for Locus Development and Station X, citing the early stage of both firms' activities. Popovits said that the company's interest in the firms is related to applications for next-gen sequencing "and being able to develop tools that will aid physicians and patients in using the information in clinical practice."
Citing Genomic Health's success in moving RT-PCR into clinical practice as part of the commercialization process for the company's Oncotype Dx breast cancer recurrence test, she said, "We see the same thing coming for next-generation sequencing."
She added that the company's long-term goal for the technology is to "validate the results of next-generation sequencing in large clinical trials in an effort to correlate either gene mutations or expression profiles to clinical outcomes that may provide information to physicians and patients beyond that already available through the use of the Oncotype Dx recurrence score."
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