Genomic Health, Inc. (GHDX)

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Genomic Health, Inc. (GHDX)

Q3 2008 Earnings Call Transcript

November 5, 2008 4:30 pm ET


Brad Cole – CFO, EVP of Operations, and Secretary

Randy Scott – Chairman and CEO

Kim Popovits – President and COO

Steve Shak – Chief Medical Officer


Bill Quirk – Piper Jaffray

Charles Duncan – JMP Securities

Eric Criscuolo [ph] – Thomas Weisel Partners

George Zavoico – Cantor Fitzgerald

Kevin DeGeeter – Oppenheimer & Co.

Scott Gleason – Stephens, Inc.

Sun June [ph] – JP Morgan

Matthew Scalo – Canaccord Adams

Bruce Cranna – Leerink Swann



Good afternoon. My name is John and I will be your conference operator today. At this time, I would like to welcome everyone to the third quarter Genomic Health conference call. All lines have been placed on mute to prevent any background noise. After the speakers’ remarks, there will be a question and answer session. (Operator instructions) I would now like to turn the conference over to Brad Cole, Chief Financial Officer. Sir, you may begin your conference.

Brad Cole

Thank you. Good afternoon everyone and welcome to Genomic Health’s third quarter 2008 conference call. Before we begin, I would like to remind you that various remarks that we make on this call that are not historical, including those about our future financial and operating results, future plans and prospects, the success of our business strategy, the impact of clinical data on demand for our tests, economic benefits and value to payors of our tests, growth opportunities, future products, product enhancements and our product pipeline, demand for our tests and drivers of demand, payor coverage and progress in patient access, our investment in our product pipeline and commercial organization, clinical outcomes and timing of clinical studies, our growth potential and our expectations regarding our ability to comply with potential FDA regulations, constitute forward looking statements within the meaning of the Safe Harbor provisions of the Private Securities Litigation Reform Act.

We refer you to our quarterly report on Form 10-Q for the quarter ended June 30, 2008 filed with the SEC, in particular to the section entitled Risk Factors for additional information on factors that could cause actual results to differ materially from our current expectations. These forward looking statements speak only as of the date hereof and we disclaim any obligation to update these forward looking statements.

With that, I will turn the call over to Randy Scott, Chairman and CEO of Genomic Health.

Randy Scott

Thanks, Brad. Good afternoon everyone and welcome. Also joining us today are Steve Shak, our Chief Medical Officer; and Kim Popovits, our President who will be joining the Q&A portion of the call from the East Coast. I will begin by sharing our third quarter accomplishments and commercial progress with you, Brad Cole will then provide you with our third quarter financial results, finally I will close with an overview of the progress we are making with our development programs. As always, we look forward to your questions and comments during the Q&A.

Once again, we saw an increase in product revenue, growth in Oncotype DX tests delivered, and a narrowing of our net loss this quarter. Our year-over-year product revenue grew 78% and test delivered grew 72%. In addition we reduced our net loss to $3 million from over $7 million in last year’s third quarter. More than 10,220 test results were delivered in the third quarter of 2008 compared to more than 5950 in the third quarter of 2007. To date, more than 75,000 recurrent score results have been delivered to patients. We continued to receive increasing numbers of node-positive samples following the launch of our new report in the second quarter of 2008. These results clearly demonstrate the medical community’s increasing support and utilization of Oncotype DX. We attribute our success to the strength of our business model and believe that within today’s economic landscape personalized medicine will prevail as a cost-effective way to shape the future of our healthcare system. This ability to reduce the unnecessary use of costly treatments like chemotherapy will become increasingly important in the context of healthcare reform. Our recent enhancement of Oncotype DX to include quantitative HER2 gene expression scores in all reports is another example of the increased clinical utility and economic value that our tests can provide to physicians, patients and payors.

Given the current economic environment, we are carefully reviewing our goals for 2009 with an emphasis on the continued growth of Oncotype DX in maintaining our strong balance sheet. We anticipate expanding our commercial operations particularly our US sales force early next year. We believe this investment will enhance our ability to provide the highest level of service to our customers reflecting our commitment to make Oncotype DX available to all early stage breast cancer patients. As we approach standard of care in the United States, we believe Oncotype DX has increasing potential abroad. We recently promoted Jim Vaughn, who was previously our Director of US sales in the Western Region to Vice President, European Markets. Jim played an integral role in our commercial success with Oncotype DX in the United States and we believe that his prior experience in Europe and history with the company will allow him to do the same overseas.

We also completed a European study which evaluated the use of Oncotype DX in node-negative and node-positive breast cancer patients treated with the Aromatase inhibitor anastrozole. This study was accepted for oral presentation at the San Antonio Breast Cancer Symposium in December. With new agreements in Australia and Taiwan, we now have 7 international distribution partners and have received samples from 39 countries. Oncotype DX is now included in the updated 2008 guidelines of the Dutch Institute for healthcare improvement.

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