Recently, Genomic Health (GHDX), an oncology-based biotech company, presented positive result from nine international studies on the effectiveness of OncotypeDX test in early-stage breast cancer patients at a conference in Switzerland. The result was based on the data of UK, Germany and Spain.
Similar results had been observed in the US earlier. Also the data of Greece, Hungary and Singapore were considered in the presentation.
The result based on these region-specific data, showed that the patient’s Recurrence Score (RS) result can guide the physicians in determining the course of treatment in around 33% of the cases. The test will assist the doctors in exploring various options such as hormone therapy or chemotherapy and find out which turns out to be more effective on the early-stage breast cancer patients.
The Oncotype DX is available globally. As per the data of December 2010, more than 10,000 physicians in 60 countries had ordered around 190,000 Oncotype DX tests. With this result, Genomic Health expects to penetrate further into the international market.
Genomic Health derived almost all sales (97.8%) from the Oncotype DX breast cancer test with 18% year-over-year growth in the last reported quarter. With this healthy performance, the company is expected to be perfectly positioned in the breast cancer market offering immense potential.
Also, the company is trying to diversify under its Oncotype DX franchisee. In January 2010 it has launched its Oncotype DX colon cancer test. However, the test is yet to contribute significantly to the company’s top line.
Moreover, Genomic Health operates in a highly competitive industry with existing diagnostic methods used by pathologists. The company also faces competition from commercial laboratories with strong distribution networks for diagnostic tests such as Laboratory Corporation of America Holdings (LH) and Quest Diagnostics (DGX).
For the long term, we have a Neutral rating on Genomic Health. The stock retains a Zacks #3 Rank (Hold) for the short term.
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