Summary
Genomic Health (NASDAQ: GHDX) posted Q3 revenues that were 41% greater than Q3 08. Virtually all of the revenue out performance was due to sales of the company's Oncotype Dx molecular diagnostic test for breast cancer used in developing a therapeutic strategy and assessing risk of recurrence.
Analysis
Genomic Health reported Q3 revenues of $39.5 million, which marked a 41% increase over the $28.1 million in Q3 08. Genomic Health's net loss of $0.02 per share beat analyst estimates of $0.10per share.
The company intends to continue to drive top line growth with the planned launch of its Oncotype Dx colon cancer test in early 2010. Pre-launch activities will likely take place at December's San Antonio Breast Cancer symposium. In addition, Genomic Health added 20 sales representatives to promote its Oncotype Dx breast cancer test.
Genomic Health's future growth prospects are not without risk. There has been a growing call from public and private agencies for regulation of Laboratory Developed Tests (LDTs) such as Oncotype Dx, Myriad Genetics and others from major reference labs such as Quest Diagnostics and LabCorp (NYSE: LH). Also, the Secretary's Advisory Committee on Genetics, Health and Society (SACGHS) draft report on gene patents recommended that gene patents should be exempt from patent infringement. If this recommendation is implemented, it would have significant impact on many, if not all companies that offer high value, molecular diagnostic tests. On May 12 of this year, the Association for Molecular Pathology, the American Civil Liberties Union and Public Patent Foundation at the Benjamin N. Cardozo School of Law, and others filed a lawsuit against Myriad Genetics, the US Patent and Trademark Office and the University of Utah Research Foundation. The suit claims that the BRAC gene patents held by the University of Utah and exclusively licensed to Myriad Genetics for breast and ovarian cancer molecular diagnostic tests "stifle research that could lead to cures and limit women's options regarding their medical care." Since the BRAC tests are only available from Myriad, the plaintiffs believe that this not only limits access to these important tests, but also hinders test development, which typically occurs in a dispersed test environment. The court's decision will have far-reaching impact on many facets of genetic testing and companies developing and providing these tests.
For more information on Genomic Health, the companies and issues mentioned above and the high growth molecular diagnostics market segment, please contact your GLG representative today and schedule an individual consult.
