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WIKI ANALYSIS
Genomic Health Inc. (NYSE:GHDX) is an oncology-based biotech company focused on the development and commercialization of genomic-based clinical diagnostic tests for cancer that allow physicians and patients to make individualized treatment decisions. Genomic Health earns revenue by analyzing tumor samples sent to its research facility and providing reports back to its customers. The company's first product, the Oncotype DX Breast Cancer Assay, is used for early stage breast cancer patients to predict the likelihood of cancer recurrence, the likelihood of patient survival within 10 years of diagnosis and the likelihood of chemotherapy benefit. In January 2010, Genomic Health released the Oncotype DX Colon Cancer Assay, which essential performs the same function as the breast cancer assay on colon cancer genes. The company currently has expanded Oncotype DX tests for breast and colon cancer in its pipeline, as well as new tests for melanoma and prostate, lung and renal cancer.[1]
Business Growth
FY 2010 (ended December 31, 2010[2]
- Net revenue increased 19.3% to $175 million.
- Net income was positive for the first time, at $4.3 million.
In 2010, revenue growth was driven by sales of the Oncotype DX Breast Cancer Assay. Total tests reports for this assay grew 17% to over 57,000, while the price of the tests increased 2.5% to $4,095. The company attributes this growth to ongoing sales and marketing efforts as well as increased publication of Oncotype DX data in scientific and medical journals.
Trends and Forces
Studies Showing the Effect of Using Oncotype DX on Clinical Outcomes will Effect Sales
While the two Oncotype DX tests have been validated in over a dozen clinical trials enrolling over 4,000 patients,[3] these studies only show the association between the Oncotype DX score and tumor recurrence. In addition, studies show that use of the Oncotype DX tests are already impacting the decisions of oncologists to use chemotherapy in patients.[4] However, further studies will be required showing the effect of using the Oncotype DX test on actual clinical outcomes for patients. Such studies can be large and costly, because they involve enrolling thousands of patients, including a control group of patients who do not receive the test, and following both groups over several years to track their clinical outcomes. The results of these studies, as they appear, could prove to be a boon or a blow to Oncotype DX franchise sales, depending on whether they show significant benefit or not.
The Success of Genomic Health's Pipeline will Drive Revenue Growth
Genomic Health has a broad pipeline covering six different cancers: breast, colon, prostate, renal, lung, and melanoma.[5] The success of these Oncotype DX systems in obtaining significant clinical data will drive Genomic Health's ability to further penetrate the cancer market and increase revenue. In addition, the ability of Genomic Health to create improved next generation systems will enable the company to compete over the long term and maintain sales.
Competition
The market for predictive genetic testing is still young and growth of the overall market will impact Genomic Health's revenue. However, several competitors also exist in the race for market share.
Quest Diagnostics (DGX): Quest Diagnostics is a leader in diagnostic services, including genetic testing in cancer. Quest's recent acquisition of Celera Corp (CRA) for $344 million further strengthen's its ability to compete in the genetic testing market.[6]
Agendia: Agendia is a private company, whose Symphony and Mammaprint testing systems compete with Genomic Health's Oncotype DX Breast Cancer Assay.
Biotheranostics: Biotheranostics is a developer of several genetic tests designed to guide clinical decisions in oncology.
References
- ↑ GHDX Pipeline
- ↑ GHDX 2011 10K
- ↑ Genomic Health - Oncotype DX
- ↑ Genomic Health Announces Results of Clinical Survey Showing Use of Oncotype DX Changes Treatment Recommendations for Women With Lymph Node-Positive Breast Cancer, Leading to Overall Reduction in Chemotherapy
- ↑ GHDX Pipeline
- ↑ Quest Diagnostics to Acquire Celera
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