), an oncology based biotech company, presented the results from
6 studies of the Oncotype DX breast cancer test at the San
Antonio Breast Cancer Symposium earlier this month. The company
has been recording robust revenue growth over the last few
quarters banking on its flagship product, Oncotype DX breast
This test is used to predict the likelihood of cancer
recurrence, patient survival within 10 years of diagnosis and
chemotherapy benefit for early stage breast cancer patients.
Genomic Health believes that these latest studies will fortify
the impact of this test providing physicians with better
treatment options in node-negative and node-positive invasive
early-stage breast cancer. Also, two of these studies have
proved the cost effectiveness of this test in invasive breast
cancer and ductal carcinoma in situ (DCIS).
Genomic Health has undertaken several studies to expand the
use of Oncotype DX. In September 2012, the company announced
positive results from a large clinical validation study of its
biopsy-based prostate cancer test. Accordingly, the commercial
launch of the Oncotype DX prostate cancer test is expected by the
first half of 2013.
In the same month, the company also announced positive data
supporting the extended use of the Oncotype DX tests in
optimizing treatment decisions for breast and colon cancer
patients at various stages of the disease. Successful development
of the test will be of immense benefit to a huge patient
population as DCIS is an increasingly detected sub-group of
breast cancer, and more than 45,000 patients are diagnosed with
DCIS each year in the U.S. alone.
The number of Oncotype DX tests delivered by Genomic Health,
during the most recent quarter, increased 7% year over year with
deeper penetration in new markets. We encouragingly note that, in
the quarter, the company established reimbursement agreements
with three additional state Medicaid programs for node-negative
breast cancer patients. Although the colon cancer test, launched
in January 2010, is yet to make a significant contribution to the
top line, the situation is gradually improving with Medicare's
decision to cover the Oncotype DX colon cancer test. We believe
that favorable data from the worldwide studies might help the
company in securing reimbursements.
We are also encouraged by the company's increasing focus on
the international market. In the last reported quarter, the
company secured incremental international reimbursements for the
Oncotype DX breast cancer test in France, Greece, Kuwait and
Spain. Further, Genomic Health is conducting several studies to
expand its portfolio or increase the acceptance of the tests.
However, the expansion plans involve higher expenses, which in
turn will adversely affect the margins. Additionally, the
company's newly formed subsidiary InVitae Corporationwill require
substantial investment. The company faces tough competition from
players such as
), among others.
Currently, Genomic Health retains a Zacks #3 Rank (short-term
'Hold' rating). We have a 'Neutral' recommendation on the stock
over the long term.
GENOMIC HEALTH (GHDX): Free Stock Analysis
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