NEW YORK – Veracyte said Tuesday that it is continuing to solidify both the evidence base and the community perception of its Decipher prostate cancer test and Afirma assay for assessment of suspicious thyroid nodules as newer assays, including its Percepta nasal swab lung cancer test and its bladder cancer minimal residual disease assay, now move through pivotal validation studies.
Veracyte CEO Marc Stapley said during a call discussing the firm's first quarter financial results that the company views the new MRD technology, which it brought on in its acquisition of C2i Genomics in January, as "the ideal solution for us to expand our test offerings throughout the patient journey."
He said that C2i's methodology, which involves using whole-genome tumor sequencing to create individualized assays for cancer recurrence detection and therapy response monitoring, fits well with Veracyte's larger platform. Since the January acquisition, Veracyte has moved development of the technology for MRD detection in muscle invasive bladder cancer into its CLIA lab, with an anticipated clinical launch in the first half of 2026.
According to Stapley, Veracyte is continuing many of the existing collaborations that C2i had with academia and industry, and is seeing interest from new potential partners.
"Between the inbound interest we have received since announcing the acquisition and the momentum in our development activities, we are confident in the strength and extensibility of our new MRD platform and the market potential," he said.
As a result of the shift in attention to advancing the C2i MRD tech, Stapley said that Veracyte has continued a planned investment reorganization. Part of that has been a downsizing of commercial support for its Envisia assay for interstitial lung disease.
"While we will continue to offer this important test to those patients facing interstitial lung disease, we will no longer maintain a separate Envisia sales force," Stapley said.
In the meantime, Veracyte's more established tests, led by its Decipher prostate cancer test and Afirma thyroid nodule classifier, have continued to cement themselves in the clinic. Stapley highlighted the February update to the National Comprehensive Cancer Network's guidelines, which gave Decipher Prostate a level 1B evidence rating.
Despite the bank of evidence already supporting the test, Stapley said that generating additional clinical data for Decipher is still a priority for the company, both to promote further guideline inclusion and to support reimbursement in what he said Veracyte believes is a "significantly underpenetrated prostate cancer market."
The company is anticipating finalization of a draft local coverage determination for Decipher, and other gene expression tests, in patients with metastatic prostate cancer later this year and believes that this population represents an additional 30,000 patients annually who could benefit from the prognostic and predictive information.
Amongst recent research outcomes that could drive penetration in other settings, Stapley cited a publication in the Journal of Clinical Oncology last month, which found that Decipher Prostate test was prognostic for identifying patients likely to progress on active surveillance.
According to the company, Decipher is the only test of its kind to demonstrate this ability in a prospective multicenter Phase II randomized trial.
Just this week, the company added that it had shared 14 additional data presentations at the annual meeting of the American Urological Association over the weekend, including data on both its Decipher Prostate and Decipher Bladder tests that further reinforce their prognostic value.
Other studies at the meeting highlighted findings from Veracyte's research-use-only Decipher GRID, which draws additional information beyond the basic test results from a background of whole-transcriptome sequencing.
Veracyte's Afirma thyroid nodule assay also continues to be a solid growth engine. Stapley said that the company reported approximately 14,000 Afirma test results during the first quarter of this year.
A major move for the company has been the launch of a research-use GRID option for Afirma, similar to Decipher, which allows physicians and researchers to access additional molecular information beyond the test score itself for discovery purposes.
Stapley said that Veracyte is seeing high interest in the new GRID option, with about half of ordering physicians requesting the additional report in March of this year. He added that the company is beginning to see added physician adoption in rural areas where Veracyte believes there is a "long tail of clinicians who aren't currently utilizing genetic testing for this patient population."
Veracyte cited Decipher and Afirma as the main drivers of growth in its testing business in the first quarter of this year, which grew 25 percent, "meaningfully" exceeding the company's expectations.
This drove a boost in the firm's first quarter 2024 revenues of 17 percent compared to the same period in 2023.
For the three months ended March 31, Veracyte reported total revenues of $96.8 million, compared to $82.4 million in Q1 2023, beating analysts' average estimate of $93.4 million.
The firm's testing revenue was $90.3 million, an increase of 25 percent compared to $72.4 million in the first quarter of 2023. Product revenue was down 9 percent at $3.5 million compared to $3.9 million, and biopharmaceutical and other revenue was down about 50 percent at $3.0 million compared to $6.1 million.
Veracyte's R&D expenses in Q1 were $16.0 million, up 25 percent from $12.8 million in the year-ago period. It's SG&A costs were $50.1 million, up about 6 percent from $47.2 million.
Stapley said during the call that the company is on track with its multi-platform IVD plans, which include adaptation of Decipher prostate to qPCR and its Prosigna and Percepta nasal swab lung cancer tests as NGS kits. "Once these tests are made available, we will still need to go country by country to drive adoption and reimbursement utilizing the clinical evidence that we already have and continuing to generate with our" laboratory-based tests.
The firm is continuing enrollment of NIGHTINGALE, a clinical utility study of the Percepta nasal swab lung cancer test but is still facing a slowdown in enrollment and plans to update investors on its progress when it can.
Veracyte's net loss for Q1 2024 was $1.9 million, or $.02 per share, compared to $8.1 million, or $.11 per share, in Q1 2023. Analysts, on average, had predicted a net loss per share of $.17.
The firm ended the quarter with $209.2 million in cash and cash equivalents.
Veracyte said it has raised its full-year 2024 total revenue guidance to between $402 million and $410 million, representing year-over-year growth of 11 percent to 14 percent, with testing growth of 15 percent to 18 percent. The company had previously predicted $394 million to $402 million in total revenues for the year.
In morning trade on the Nasdaq, Veracyte's shares were down about 1 percent at $20.80.