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Veracyte Ramps up Clinical Evidence Generation, Driving Gains in Prostate and Thyroid Test Business


NEW YORK – As evidence gathers, supporting the clinical value of its tests, Veracyte on Wednesday reported a 19 percent year-over-year increase for its fourth quarter revenues. 

During a call with investors, Veracyte CEO Marc Stapley said that mounting clinical evidence has been key in the growth, noting several new publications supporting clinical utility, real-world performance, and new applications of various tests in its menu.

"Our evidence generation efforts are one of the most important and differentiating components … [of] our strategy," he said, adding that Veracyte participated in 23 Phase II and Phase III clinical trial collaborations that are now being translated into published data.

One report, published last week in the International Journal of Radiation Oncology, Biology, Physics concluded that the Decipher Prostate test can help personalize treatment decisions for men with clinically high-risk prostate cancer.

Investigators from the Dana-Farber Cancer Center obtained Decipher test scores on 265 biopsy samples from men in one of three NRG Oncology randomized Phase III trials who had prostate cancer designated "high-risk" by National Comprehensive Cancer Network criteria.

The researchers evaluated the association between Decipher scores and participants’ time to distant metastases, prostate cancer-specific mortality, and overall survival, reporting that the test was independently prognostic for all three outcomes.

"These findings represent the first validation of any gene expression biomarker on pretreatment prostate biopsy samples from prospective randomized trials," Stapley said.

The company also presented a swath of data on Decipher at the American Society of Clinical Oncology's Genitourinary Cancers Symposium this month. Stapley highlighted a study on the firm's Decipher GRID report, a research-use-only readout of potentially actionable findings from the whole-transcriptome data that is used to generate the clinical Decipher test result.

In a presentation at the meeting, researchers presented data from a study analyzing patient outcomes and treatment efficacy based on molecular subtype. Authors reported that individuals with basal-immune tumors benefited significantly from post-operative radiotherapy, while those with other subtypes did not.

In patients being treated for metastatic disease, the study found that those with luminal proliferating tumors had the greatest survival benefit from the addition of docetaxel to androgen-deprivation therapy.

Stapley said the firm's thyroid nodule test, Afirma, also set a record in Q4 2022 for both tests and revenue delivered. As with Decipher, Veracyte is backing this increased adoption with clinical utility studies.

In a recent meta-analysis publication in the Journal of Clinical Endocrinology & Metabolism, investigators concluded that Afirma's real-world performance was "similar to and in some cases even better than the original clinical validation results," Stapley said.

"As we evolve and enhance our test, we believe we will continue to further penetrate this market, especially in areas where we can provide valuable information around personalizing treatment, such as guiding the extent of surgery," he added.

Similar to Decipher, Veracyte collects additional whole-transcriptome data for cases tested with the Afirma assay, and it is beginning to see the same potential for additional precision medicine impact. The company cited a recent publication in Frontiers in Endocrinology, which provided new evidence that the firm's database of thyroid nodule whole-transcriptome sequencing data could help personalize care for patients with thyroid nodules.

Cleveland Clinic investigators studied the company's database, looking at cases with thyroid stimulating hormone receptor mutations and assessing their Afirma results. Nearly all cases with these variants — about 5 percent of all samples collected in the study or 8,881 individuals — had negative Afirma results. But in the 5 percent that were classified as suspicious for cancer, the risk of malignancy was more than 15 percent, a level Veracyte said would prompt most physicians to recommend at least active surveillance, if not a diagnostic surgery.

On the heels of the firm's clinical results, it reported total Q4 2022 revenue was $80.3 million, up from $67.3 million in the same period of 2021, beating analysts' estimate of $74.9 million. Testing revenue was $70.3 million, an increase of 32 percent compared to $53.4 million in the year-ago quarter, driven primarily by strong performance by the company's Decipher prostate and Afirma thyroid tests.

Overall test volume during the quarter was 28,001 assays, an increase of 26 percent year over year.

Veracyte's Q4 product revenue was up 17 percent at $3.2 million, compared to $2.8 million, but biopharmaceutical and other revenues dropped 39 percent at $6.8 million, compared to $11.2 million in Q2 2021. The company attributed the large change to a major milestone payment received in the prior-year period.

The company saw a net loss for the quarter of $3.8 million, or $.05 per share, compared to $10.5 million, or $.15, in the fourth quarter of 2021. Analysts had predicted the same per-share loss.

It's Q4 R&D costs were up about 9 percent at $11.2 million compared to $10.3 million in the same quarter last year. SG&A spending rose 3 percent to $42.3 million from $41.0 million.

For the full year, Veracyte reported total revenues of $296.5 million, an increase of 35 percent compared to $219.5 million in 2021. Analysts, on average, had predicted $291.3 million for the year.

Testing revenue rose 33 percent to $250.5 million from $188.2 million, product revenue was up 10 percent at $12.6 million compared to $11.5 million in the prior year, and biopharmaceutical and other revenues jumped 68 percent to $33.4 million from $19.9 million, driven primarily by the firm's acquisition of HalioDx.

Veracyte ran 102,524 tests during 2022, about 30 percent more than in 2021.

The firm's full-year net loss was $36.6 million, or $.51 per share, compared to $75.6 million, or $1.11 per share in 2021.

Its R&D costs were up 36 percent at $40.6 million compared to $29.8 million in the same quarter last year. SG&A spending dropped 4 percent to $174.1 million from $181.2 million.

Veracyte ended the year with cash and cash equivalents of $154.2 million and short-term investments totaling $24.6 million.

Looking into 2023, the company provided a total revenue guidance of $325 million to $335 million, assuming currency rates as of Feb. 22, 2023. This range includes mid-teen year-over-year growth of testing and product revenue, and a decline in biopharmaceutical and other revenue for fiscal 2023 compared to fiscal 2022.