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Genomic Health Ready to Face Any FDA Regulatory Change Regarding Oncotype DX

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Awaiting the finalization of FDA’s draft guidance on in vitro diagnostic multivariate index assays, Genomic Health is holding off on projecting when it might make enhancements to its Oncotype DX test and launch new products currently under development.
 
During the company’s second-quarter earnings call this week, President Kim Popovits said that while the company is readying to meet any regulatory changes it may have to address with Oncotype DX, “until the guidance is finalized, the impact of timing on product enhancements and new product introductions remains difficult to predict.”
 
The FDA issued a new, vastly changed draft IVDMIA guidance two weeks ago after stakeholders criticized the initial version for being too broad, too burdensome for laboratory test developers, and for having the potential to stifle innovation [see PGx Reporter 08-01-2007].
 
Genomic Health officials have said they are encouraged to see that the agency has allowed for a transition period for companies already marketing IVDMIAs. However, the company feels that there are still unanswered questions regarding how FDA oversight of IVDMIAs will dovetail with the Clinical Laboratory Improvement Amendments under the Centers for Medicare and Medicaid Services that currently regulate laboratory-developed tests. 
 
“It’s premature for us to do anything definitively because the pathway is not clear,” Popovits said. “So there is still not what we would call a go-to regulatory pathway to market for an IVDMIA.”
 
According to Popovits, “there are a number of outstanding questions” regarding quality system, quality assurance, and quality control regulations “that conflict between CLIA and the FDA.” How FDA oversight of IVDMIAs would dovetail with existing CLIA regs for laboratory-developed tests was a major question at FDA’s public hearing on IVDMIAs earlier this year [see PGx Reporter 02-14-2007].
 
Company officials noted that Genomic Health and other stakeholders are seeking additional clarity and plan to comment on the new version. “Those things would need to be ironed out before we would have a definitive pathway, even if it were to end up under FDA’s jurisdiction through this new class of IVDMIA diagnostic tests. So we really need to get that finalized before we do anything on our side,” Popovits added.
 
Medical devices may be designated to three risk-based classes – Class I having low risk, Class II being moderate risk, and Class III having high risk. Most IVDMIAs will be Class II or Class III devices, FDA has said. Class II devices require a 510(k) premarket notification submission, while Class III devices require premarket approval.
 
Additionally, following the clearance of Agendia’s MammaPrint breast cancer recurrence test in May, the FDA issued a special controls guidance that conferred de facto Class II status to all breast cancer prognostic tests and absolved device makers from going through FDA’s more rigorous premarket approval process [see PGx Reporter 05-16-2007]. However, that means that predictive tests will be held as Class III devices and likely have to undergo premarket approval.
 
Although Genomic Health appears more open to considering the possibility that it might have to submit Oncotype DX, a predictive and prognostic test, for a pre-market approval with the FDA, the company would not offer a timeline for a potential submission.
 
“We don’t know how fast FDA can move forward with another round of draft guidance or directly to a final guidance. That will take several months to get together. It will depend on their timeline, which we don’t have much control over,” Popovits noted.
 
“What I can say is that we are building our infrastructure internally and we have a team in place to address any sort of FDA pathway, if that should be the place we end up. We await final clarity from FDA or the legislative side of this, whichever direction this goes.”
 
Financials
 
Meanwhile, Oncotype DX sales contributed to a 75 percent increase in Genomic Health’s second-quarter revenues. Total receipts for the three months ended June 30 increased to $14.7 million from $8.4 million year over year.
 
Product revenues jumped 87 percent to $14.6 million, while contract revenue decreased 76 percent to $135,000. CEO Randy Scott said product revenues from sales of the company’s Oncotype DX test were "stronger than our expectations," and that the firm made "important reimbursement progress" over the quarter.
 
R&D spending rose 93 percent to $5.2 million from $2.7 million in the year-ago period. Net loss widened by 47 percent to $7.2 million from $4.9 million in the second quarter in 2006.
 

“Those things would need to be ironed out before we would have a definitive pathway, even if it were to end up under FDA’s jurisdiction through this new class of IVDMIA diagnostic tests. So we really need to get that finalized before we do anything on our side.”

Genomic Health said it had around $43.6 million in cash and cash equivalents, and $36.1 million in short-term investments as of June 30.
 
Genomic Health said its revenue for the full year "may be at the high end” of the guidance it provided in January of between $57 million and $63 million. The company’s projected loss for the full year remains unchanged, between $27 million and $30 million.
 
Adoption, Reimbursement, Pipeline
 
In the second quarter of 2007, the company delivered 5,750 test results compared to 3,250 in the year-ago period. The company said that 6,000 physicians have ordered a total of more than 33,000 tests since the commercial launch of Oncotype DX two years ago.
 
To ensure the steady commercial growth of Oncotype DX, the company in the past quarter expanded its field sales team to 60 representatives from 40 representatives at the beginning of 2007.
 
During the quarter, Genomic Health signed contracts with several regional payors, including Blue Cross Blue Shield of Michigan, Blue Cross Blue Shield of Kansas, Health Net, Independence Blue Cross, and Health Partners. These new contracts, along with previous contracts signed with national and regional payors, comprise more than 145 million lives covered, the company said.
 
“The Blue Cross and Blue Shield Association's Technology Evaluation Center concluded that use of Genomic Health's Oncotype DX breast cancer assay to inform decision-making about adjuvant chemotherapy meets the BCBSA TEC criteria for women with estrogen receptor-positive, node-negative, tamoxifen-treated breast cancer,” the company said in a statement.
 
“We assume that having a positive tech assessment would facilitate coverage likely to be seen later this year and in early 2008,” Popovits said during the call.
 
The company is continuing to develop Oncotype DX in node-positive breast cancer with Southwest Oncology Group, and has completed two studies to refine the gene set and algorithm for a colon cancer test. Genomic Health expects to begin analytical validation work on the colon cancer test by year end, and a commercial launch is projected for 2009.
 
Additionally, Genomic Health has begun a study using Oncotype DX in postmenopausal women with breast cancer who were treated with an aromatase inhibitor, another standard treatment for early breast cancer patients with hormone receptor-positive disease.

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