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With Support from ASCO, Genomic Health Can Expect Better Reimbursement, Growth

Following the American Society of Clinical Oncology’s recent recommendation that physicians use Genomic Health’s OncotypeDX for breast cancer treatment planning, the company appeared confident that prescriptions for the test will grow throughout the rest of the year thanks to improved reimbursement and wider physician adoption.
The updated guidelines are an independent review that validates the clinical and economic utility of OncotypeDX, and will provide “further stimulation for all payors to consider the test for further coverage,” according to Genomic Health President Kim Popovits.
And while Popovits claims that “the number one barrier to usage remains reimbursement,” she said the ASCO guidelines “are going to help a lot with moving OncotypeDX toward the standard of care, and helping payors to adopt, or to expand policies that exist right now.”
In fact, non-covering payors have told Genomic Health that their decision to cover OncotypeDX is contingent on a professional group as weighty as ASCO recommending the test in treatment guidelines. Now that ASCO – a group representing 25,000 oncology practitioners and all oncology disciplines – has included the test in its guidelines, Genomic Health plans to resume conversations with these insurers again.
ASCO made its recommendation in an updated set of clinical practice guidelines that “serve as a guide for doctors by outlining appropriate methods for treatment and care,” Genomic Health CEO Randy Scott said during a call discussing the company’s third-quarter financial results. “Because guidelines have historically had an impact on clinical practice, we believe this marks another significant step forward for the role of molecular diagnostics in personalizing cancer treatment.”
The inclusion of OncotypeDX in ASCO's updated guidelines is based on multiple independent clinical studies of more than 2,600 breast cancer patients, including a large validation study published in the New England Journal of Medicine and a chemotherapy benefit study published in the Journal of Clinical Oncology.
“The inclusion of OncotypeDX in ASCO’s revised guidelines provides physicians, patients, and payors further independent evidence of the clinical utility and the economic value of OncotypeDX,” Scott continued. “We believe that the new practice guidelines, combined with our clinical progress, increasing adoption and growth in reimbursement, indicate that the use of OncotypeDX is becoming standard practice in breast cancer treatment planning.”
Sales of OncotypeDX generated $15.8 million in revenue in the third quarter compared to $6.9 million in the year-ago period, a 130-percent improvement. Total revenue for the company increased to $15.9 million from $7.1 million during the same period, which ended Sept. 30.
Since the launch of the test in early 2004, more than 6,600 physicians in the US have used OncotypeDX to help plan breast cancer treatment for 39,000 patients, according to the company.

“We are working with WellPoint to obtain expanded coverage for all patients under their plan, and will continue to seek reimbursement on behalf of patients outside this policy on an individual basis as we have successfully done in the past.”

According to Popovits, more than half of all insured individuals in the US are now covered for OncotypeDX. During the third quarter, the company signed reimbursement contracts with CareFirst Blue Cross Blue Shield, which insures 3.2 million people, and Blue Cross Blue Shield of Arizona, which insures 1.1 million people. In addition, the company signed a contract with WellPoint to cover OncotypeDX with certain restrictions.
“We are working with WellPoint to obtain expanded coverage for all patients under their plan, and will continue to seek reimbursement on behalf of patients outside this policy on an individual basis as we have successfully done in the past,” Popovits said.  
Research and development expenses nearly doubled in the third quarter of this year to $5.6 million from $3.2 million during the same period in 2006.
In the third quarter, the company announced that the Annual San Antonio Breast Cancer Symposium, to be held in December, had accepted three abstracts about OncotypeDX authored by company researchers and collaborators. And last month during the ASCO Breast Cancer Symposium in San Francisco, Genomic Health announced results from three studies that support the use of quantitative real-time PCR, like the kind used in OncotypeDX, to measure estrogen receptors and progesterone receptors in early breast cancer.
Finally, preliminary results from an OncotypeDX study in women with node-positive, hormone receptor-positive breast cancer conducted by the Southwest Oncology Group and Genomic Health suggest the test’s utility in predicting survival without breast cancer recurrence and chemotherapy benefit for both node-positive and node-negative breast cancer. Genomic Health plans to present this data at the San Antonio Breast Cancer Symposium.
Company officials also noted that development of its colon cancer test is progressing and a clinical validation study is slated for 2008.
Genomic Health in the third quarter also increased its direct-to-patient educational efforts and launched a new website, Selling, marketing, and general administrative expenses for the third quarter grew to $14 million from $9.9 million in the year-ago period.
Popovits noted that in the third quarter the growth in adoption and sales was impacted by the company’s decision to increase its sales force earlier in the year.
Net loss was lower in the third quarter at $7.3 million, compared to $8.2 million in the same quarter in 2006.
As of Sept. 30, Genomic Health reported it had cash and cash equivalents of $73.9 million, compared to $44.2 million at Dec. 31, 2006.
Finally, in the third quarter, the OncotypeDX collection kit received CE marking in Europe and the company plans to eventually distribute the kit in every country of the European Economic Area.

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