Genomic Health this week reported a 124-percent jump in fourth-quarter revenue on strong sales of its Oncotype DX test for breast cancer recurrence, and said it hopes to narrow net loss this year by expanding adoption of the assay.
"We expect our net loss to narrow in the coming year while we continue to invest in our product pipeline and commercial infrastructure,” Genomic Health President Kim Popovits said during the company’s fourth-quarter conference call this week.
She made her remarks as Genomic Health reported that revenue for the three months ended Dec. 31, 2007, swelled 124 percent to $19.3 million from $8.6 million in the year-ago period.
The company also said that net losses during the period declined to $6 million from $9 million year over year.
The company expects to lose between $15 million and $20 million in 2008, which would be between 27 percent and 45 percent better than 2007, Genomic Health Chief Financial Officer Brad Cole said during the call. Additionally, the company projected 2008 revenues to range between $100 million and $110 million, or between 56 percent and 72 percent better than 2007.
“We will continue to invest in our product pipeline and commercial infrastructure, including the addition of staff, clinical development and research, marketing programs, regulatory and quality systems, with a number of these investments occurring early in the year,” Cole said.
He said that these investments will occur early in the year, and therefore, the company expects to begin to narrow its loss after the first quarter.
In particular, by the second quarter the company intends to increase staffing to expand its commercial laboratory capacity to meet greater demand for testing on Oncotype DX. Genomic Health can now process 10,000 tests per quarter, and expects to deliver between 34,000 and 37,000 test results this year.
Research and development expenses for the fourth quarter increased to $6 million from $4.2 million for the year-ago period.
Selling and marketing and general and administrative expenses for the fourth quarter increased to $15.2 million from $11.2 million in the fourth quarter in 2006.
“Throughout 2007, and particularly in the fourth quarter, we experienced significant growth in product revenue fueled by increasing physician, patient and payor adoption of Oncotype DX," Genomic Health CEO Randy Scott said in a statement.
Helping drive this growth was Oncotype DX’s inclusion both in the American Society of Clinical Oncology and the National Comprehensive Cancer Network’s treatment guidelines for patients with early-stage breast cancer.
Patient adoption has increased over the past year as well, fueled by the company’s success in garnering reimbursement with national and local insurers.
Genomic Health delivered more than 7,200 test results in the fourth quarter of 2007 compared to more than 4,450 results in the year-ago period.
"In 2008, we will continue to seek to broaden the clinical utility of Oncotype DX by investigating ways to appropriately expand its use to help women and their physicians with treatment decisions for breast cancer, including patients with node-positive breast cancer and ductal carcinoma in situ, or DCIS.”
Health plans that together cover 70 percent of US lives have agreed to reimburse for Oncotype DX through contracts, agreements, and policy decisions, according to Popovits. Some of the recent contracts won by the company include Medi-Cal, its first Medicaid payor; Excellus Blue Cross Blue Shield, a payor in upstate New York; Regence Blue Cross Blue Shield, in the Pacific Northwest and Mountain states; Blue Cross Blue Shield plans of Florida, Idaho, North Dakota, Louisiana, and Mississippi; and Great-West Healthcare, which was recently acquired by CIGNA.
In order to keep Oncotype DX adoption growing, Genomic Health has previously announced plans to launch a string of studies to expand the indication for the assay and launch an online campaign to educate women about how the test may be an option for them [see PGx Reporter 01-16-2008].
"In 2008, we will continue to seek to broaden the clinical utility of Oncotype DX by investigating ways to appropriately expand its use to help women and their physicians with treatment decisions for breast cancer, including patients with node-positive breast cancer and ductal carcinoma in situ, or DCIS," Popovits said in a statement.
Launched in 2004, Oncotype DX is designed to help assess breast cancer recurrence and chemotherapy benefit in tamoxifen-treated patients with early-stage, node-negative, estrogen receptor positive breast cancer.
The company intends to advance Oncotype DX into a number of other cancer indications, including colon and kidney cancer; plans to launch a second-generation breast cancer-recurrence test; and aims to continue validating the assay in large-scale studies such as the National Cancer Institute’s TAILORx trial.
Genomic Health also plans expand Oncotype DX’s indication to node-positive breast cancer. In December, the Southwest Oncology Group presented a study at the San Antonio Breast Cancer Symposium, which reported positive results for use of Oncotype DX in early-stage node-positive breast cancer.
“Additionally, three studies assessing the impact of Oncotype DX on treatment decisions concluded that use of the test resulted in less recommendation for and use of chemotherapy, demonstrating the actionable nature of Oncotype DX in its ability to help reduce unnecessary use of chemotherapy,” the company said in a statement this week.
Genomic Health is also studying the ability of the test to gauge chemotherapy benefit when women are at a precancerous stage (DCIS), and studying whether the test will help determine if patients will respond to treatment with aromatase inhibitors.
Lastly, the Agency for Healthcare Research and Quality last month released an online report reviewing the field of genomic classifiers in breast cancer. This CDC-sponsored report, which reviewed Oncotype DX and other tests, found “strong evidence that Oncotype DX provides meaningful information beyond standard measures to predict recurrence and chemotherapy benefit, with demonstrated clinical utility.”
With these independent studies supporting Oncotype DX’s clinical utility, Genomic Health may become justified to demand premium pricing for the test — which the company intends to do. Scott told investors during the call to expect increases in the price of the test in the coming year, but did not indicate a dollar amount for pricing.
According to Scott, Genomic Health for the first time last June increased Oncotype DX’s list price from $3,460 to $3,650. “We will continue to focus on increasing the value of our tests and investing strongly in continuing to do additional clinical trials,” Scott said. “So, we'll certainly be looking at pricing and price increases on a yearly basis, but we won't be giving any kind of guidance as to what we expect to do there.”