GHDX Advances Cancer Program - Analyst Blog

Genomic Health (GHDX), an oncology-based biotech company, plans to fast-track its prostate cancer clinical development program aimed at launching a test in 2013, earlier than the previous plan of 2014. Increased focus on the program is based on encouraging results from a large gene identification study, the results of which were presented in December at the Society for Urologic Oncology (SUO) annual meeting.

Genomic Health is focused on developing a test for prostate cancer patients, which in addition to the Gleason score, will help identify if the cancer is life threatening. Along with Cleveland Clinic, the research partner, the company plans to present complete data at ASCO in February.

Successful development of the test will be beneficial for the patients as it will guide the physicians in determining the course of treatment. The test will assist the doctor decide from among the various options of active surveillance and immediate prostatectomy, radiation therapy, or the need for adjuvant therapy after initial treatment. Prostate cancer, the most common type of non-skin cancer found in American men, is the second leading cause of cancer deaths in men.

Genomic Health derives the majority of its revenues from Oncotype DX breast cancer test, used for early stage breast cancer patients to predict the likelihood of cancer recurrence, survival within 10 years of diagnosis and chemotherapy benefit. Although the company had launched Oncotype DX colon cancer test earlier in 2010, it is yet to make any significant contribution to the top line.

The path to manage reimbursement for the colon cancer test has been a bit difficult. However, we are encouraged to note that the company has received reimbursement for its Oncotype DX colon cancer test from Clalit, the largest insurer in Israel covering 65% of the population. Moreover, results from a second recurrence study in stage II colon cancer is expected in 2011, which if found favorable, should lead to a better reimbursement scenario.

We are currently Neutral on the stock which is also supported by the Zacks #3 Rank (Hold).