Genomic Health reports 22% revenue growth, 58% decrease in net loss for first-quarter 2010

Genomic HealthMay 6 2010

Genomic Health, Inc. (Nasdaq: GHDX) today reported financial results and business progress for the quarter ended March 31, 2010.

Total revenue increased to $41.2 million in the first quarter of 2010 compared with $33.9 million in the first quarter of 2009.  Product revenue from the Oncotype DX® breast cancer test was $40.3 million in the first quarter of 2010, an increase of 20 percent, compared with $33.4 million in the first quarter of 2009.

Net loss decreased 58 percent to $1.9 million in the first quarter of 2010 from $4.6 million in the first quarter of 2009.  Basic and diluted net loss per share was $0.07 in the first quarter of 2010, compared with basic and diluted net loss per share of $0.16 in the first quarter of 2009.

"In the first quarter we delivered year-over-year revenue growth of 22 percent, reduced our net loss by 58 percent and remained cash flow positive.  The consistent level of tests delivered quarter-over-quarter reflects a decline in U.S. node-negative breast cancer tests offset by the delivery of twice as many node-positive breast cancer tests and continued strong international growth," said Kim Popovits, President and Chief Executive Officer of Genomic Health.  "Further, we launched our second product franchise and were pleased to see strong uptake of the Oncotype DX colon cancer test. We continue our focus on long-term financial success and our mission of delivering personalized medicine to a broad range of cancer patients around the world."  

Additional First Quarter 2010 Financial Results

Approximately 54 percent of product revenue was recorded on an accrual basis and recognized at the time the test results were delivered during the first quarter of 2010, reflecting established payment patterns from payors with agreements to pay or contracts in place.

Total operating expenses for the first quarter of 2010 were $43.1 million including cost of product revenues of $9.0 million, compared with total operating expenses of $38.5 million, including cost of product revenues of $7.8 million for the comparable period in 2009.  Included in operating expenses were non-cash charges of $4.3 million, including $2.6 million of stock-based compensation expense and $1.7 million of depreciation and amortization expenses in the first quarter of 2010, compared with non-cash charges of $4.1 million for the same period in 2009.

Cash and cash equivalents and short-term investments at March 31, 2010 were $57.7 million compared with $57.4 million at December 31, 2009.

"More than 20 percent of Oncotype DX test volume in the quarter was from markets beyond our U.S. node-negative breast cancer business including a doubling in the number of node-positive breast cancer tests delivered in the U.S. and more than 50 percent growth in international tests compared with last year," said Brad Cole, Chief Operating Officer and Chief Financial Officer of Genomic Health.  "Additionally, we are gaining traction in securing reimbursement in international markets for our Oncotype DX breast cancer test."

Financial guidance for the full-year ending December 31, 2010:

• Revenue of $180 million to $190 million
• Full year net income of up to $2 million
• Test results delivered of 58,000 to 61,000 (includes both Oncotype DX breast and colon cancer tests)

Commercial Progress

• Delivered more than 13,310 Oncotype DX test results in the first quarter of 2010, an increase of 19 percent, compared with more than 11,210 test results delivered in the first quarter of 2009.
• Successfully launched second product franchise, the Oncotype DX colon cancer test, in January.
• During the quarter we began receiving delayed payments from Anthem Insurance Companies and the Blue Card program administered by Blue Shield of California.  

International Oncotype DX Breast Cancer Updates

• Announced exclusive agreement with Palex Medical S.A. to distribute the Oncotype DX test in Spain and Portugal.
• Germany's Institute for Quality and Efficiency in Health Care (ICWiG) issued updated guidelines that include evidence-based acceptance of the Oncotype DX test to predict the likelihood of disease recurrence and likelihood of chemotherapy benefit for a large portion of early-stage breast cancer patients.
• Secured reimbursement from our first private insurer in Europe, SimplyHealth, covering more than 1.3 million lives in the United Kingdom.
• The Ontario Ministry of Health and Long Term Care began reimbursing Oncotype DX through Ontario Health Insurance Plan's (OHIP) pre-authorization approval process.

Product Pipeline

• Announced that the Company's research scientists have developed a clinically useful method for whole genome expression analysis using standard tumor specimens that are routinely collected in clinical practice.  Results demonstrating the successful whole genome expression and mutation analysis from formalin fixed, paraffin-embedded tumor samples were presented at the 11th Annual Advances in Genome Biology and Technology (AGBT) meeting in Marco Island, Florida.
• Presented results at the 27th Annual Miami Breast Cancer Conference demonstrating that ribonucleic acid (RNA) extraction and reverse transcription polymerase chain reaction (RT-PCR) technology can be successfully performed to assess gene expression profiles from formalin fixed paraffin embedded ductal carcinoma in situ (DCIS) patient samples.  These findings indicate that it is feasible to obtain Oncotype DX Recurrence Score® results in DCIS patients.
• Signed contract to initiate second stage II colon cancer recurrence study.
• Expect pipeline milestones for the remainder of 2010 to include:
  • Conduct a large clinical trial in DCIS breast cancer
  • Report results from renal cancer gene identification study at ASCO in June
  • Report results from prostate cancer gene identification study

Peer-Reviewed Publications and Medical Meeting Presentations

• The Journal of Clinical Oncology published positive results from a large international study which demonstrated that the Oncotype DX breast cancer Recurrence Score result is a significant independent predictor of distant recurrence in both node-negative and node-positive, hormone receptor-positive, postmenopausal breast cancer patients who are treated with either anastrozole or tamoxifen.  
• Six abstracts were accepted for presentation at the upcoming ASCO Annual Meeting June 4-8, including four oral presentations of studies in breast, colon and renal cancers:
  • Abstract #4501: "Identification of Prognostic Genomic Markers in Patients with Localized Clear Cell Renal Cell Carcinoma (ccRCC)."  Oral presentation
  • Abstract #3503: "Comparison of molecular and pathologic features of stage II and stage III colon cancer in 4 large studies conducted for development of the 12-gene colon cancer Recurrence Score." Oral presentation
  • Abstract #509: "Recurrence risk of node-negative and ER-positive early stage breast cancer patients by combining recurrence score, pathologic, and clinical information: A meta analysis approach." Oral presentation
  • Abstract #511: "Potential biologic causes of the racial survival disparity in adjuvant trials of ER-positive breast cancer." Oral presentation
  • Abstract #6075: "The recurrence score and chemotherapy treatment in node-positive, ER+ early-stage breast cancer patients in Israel." Poster presentation
  • Abstract #3097: "Association of vorinostat with decrease in gene expression of proliferation-related genes in tumors from women with newly diagnosed breast cancer." Poster presentation
• Presented results from nine Oncotype DX studies at five medical meetings including the European Breast Cancer Conference (EBCC), the American Society of Breast Surgeons (ASBS) annual meeting, the United States and Canadian Academy of Pathology (USCAP) annual meeting, the Society of Surgical Oncology (SSO) annual meeting, and the Organisation for Oncology and Translational Research (OOTR) Annual Conference in Kyoto, Japan.