Genomic Health Inc. (GHDX)

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Genomic Health Announces Second Quarter 2008 Financial Results and Business Progress
Tuesday August 5, 4:02 pm ET
- Product Revenue Increased 81 Percent; Tests Delivered Grew 69 Percent Year over Year -
- Net Loss Continued to Narrow -
- Company Updates 2008 Guidance -
- Conference Call Today at 4:30 p.m. ET -

REDWOOD CITY, Calif., Aug. 5 /PRNewswire-FirstCall/ -- Genomic Health, Inc. (Nasdaq: GHDX - News) today reported financial results and business progress for the quarter ended June 30, 2008.

Total revenue increased to $27.8 million in the second quarter of 2008 compared to $14.7 million in the second quarter of 2007. Product revenue from the Oncotype DX® breast cancer assay was $26.3 million in the second quarter of 2008, an increase of 81 percent compared to $14.6 million in the second quarter of 2007, the result of continued growth in adoption and reimbursement. Contract revenue was $1.5 million in the second quarter of 2008, compared to $135,000 in the second quarter of 2007, reflecting continued collaboration with pharmaceutical partners to explore the development of tests for predicting benefit from certain targeted therapies.

"We believe the increasing impact of personalized medicine and our investment in Oncotype DX are reflected not only in our strong revenue and growth in tests delivered, but also in the narrowing of our net loss in the second quarter," said Randy Scott, Ph.D., chairman and chief executive officer of Genomic Health. "While we work to further reduce our net loss, we will continue to invest in our product pipeline and expand our commercial efforts outside of the United States, which we expect to be important components of future growth."

Additional Second Quarter 2008 Financial Results

During the second quarter of 2008, approximately 51 percent of product revenue was recorded on an accrual basis and recognized at the time the test results were delivered, reflecting established payment patterns from payors with coverage policies in place.

Cost of product revenue was $6.9 million in the second quarter of 2008, compared to $4.2 million for the second quarter of 2007. Research and development expenses for the second quarter of 2008 were $7.3 million, compared to $5.2 million for the same period in 2007. Selling and marketing and general and administrative expenses for the second quarter of 2008 were $18.1 million, compared to $12.9 million for the same period in 2007. Included in second quarter 2008 operating expenses was $2.3 million of stock-based compensation expense, compared to $1.5 million in the same period in 2007.

Net loss was $4.1 million in the second quarter of 2008, compared to $7.2 million in the second quarter of 2007. Basic and diluted net loss per share was $0.15 in the second quarter of 2008, compared to a net loss per share of $0.28 in the second quarter of 2007.

Financial Results for Six Months Ended June 30, 2008

Total revenue for the six months ended June 30, 2008 was $51.2 million, compared to $28.8 million for the first six months of 2007. Product revenue for the six months ended June 30, 2008 was $49.7 million, compared to $27.7 million for the first six months of 2007. Contract revenue constituted the balance of revenue for the first six months of 2008 and 2007.

Cost of product revenue for the six months ended June 30, 2008 was $12.7 million, compared to $8.0 million for the comparable period in 2007. Research and development expenses for the first six months of 2008 were $13.7 million, compared to $10.4 million in the first six months of 2007. Selling and marketing and general and administrative expenses for the first six months of 2008 were $36.3 million, compared to $25.2 million in the first six months of 2007. The increase in expenses includes stock-based compensation expense of $4.5 million in the first six months of 2008 compared to $2.8 million for the same period in 2007.

Net loss for the six months ended June 30, 2008 was $10.7 million, compared to $14.0 million for the first six months of 2007. Basic and diluted net loss per share was $0.38 for the six months ended June 30, 2008, compared to a net loss per share of $0.55 for the first six months of 2007.

Cash and Cash Equivalents

Cash and cash equivalents and investments at June 30, 2008 were $60.6 million compared to $65.4 million at March 31, 2008 and $68.4 million at December 31, 2007.

Updated 2008 Outlook and Financial Guidance

The company is providing the following revised guidance for the full year ending December 31, 2008:

-- Increasing expected test results delivered to 38,000 to 40,000 test
results, from previous guidance of 34,000 to 37,000 test results.
-- Projecting total revenue in a range between $105 million and $110
million, compared to previous guidance of $100 million to $110 million,
with an expectation that full-year revenue may be at the higher end of
this guidance.
-- Continuing to expect net loss of $15 million to $20 million for 2008,
with the net loss narrowing in the second half of 2008 as compared to
the first half of 2008.


Recent Highlights and Accomplishments

Physician Usage and Adoption
-- More than 9,690 test results were delivered in the second quarter of
2008, compared to more than 5,750 test results delivered in the second
quarter of 2007.
-- More than 18,850 test results were delivered in the first half of 2008,
compared to more than 11,200 test results delivered in the first half
of 2007.
-- More than 65,000 Oncotype DX test results have been delivered to
patients.


Peer-Reviewed Publications and Medical Meeting Presentations
-- The Journal of Clinical Oncology published a study online showing that
the Oncotype DX Recurrence Score provides additional prognostic
information in patients with early-stage breast cancer beyond that
derived from Adjuvant! Online, an online tool that evaluates clinical
variables to help physicians and patients assess the risks and benefits
of getting additional therapy after surgery.
-- Two abstracts were accepted for presentation at the ASCO Breast Cancer
Symposium in September of 2008.
-- The Journal of Clinical Oncology published results of a study
demonstrating the utility of Oncotype DX in measuring quantitative gene
expression for ER and PR status, indicating that quantitative RT-PCR,
as performed in the Oncotype DX breast cancer assay, is a reliable
method for determining hormone receptor status in breast cancer.
-- Presented results from two initial studies with collaborators that
could lead to the development of new tests for predicting benefit from
certain targeted therapies in cancer, at the 2008 ASCO meeting in June.


Reimbursement Progress for Oncotype DX
-- In June, Palmetto GBA, the company that will replace National Heritage
Insurance Company (NHIC) as the Medicare administrative contractor,
posted local coverage decisions for its jurisdiction that included
Oncotype DX. This coverage decision follows the identical criteria
previously set forth by NHIC. We expect to begin processing claims with
Palmetto in September of 2008.
-- Gained coverage for over 6.9 million additional lives for access to
Oncotype DX.
o Blue Cross Blue Shield plans of Louisiana, Mississippi and
Northeastern Pennsylvania established policies covering approximately
2.3 million lives.
o Group Health Incorporated and HIP Health Plan of New York established
policies covering approximately 4.6 million lives.


Product Pipeline
Breast Cancer
-- Targeting inclusion of quantitative HER2 scores in all Oncotype DX
reports by the end of 2008.
-- Conducting a study using Oncotype DX in breast cancer patients treated
with aromatase inhibitors with the goal of reporting results this year.

Colon Cancer
-- Received first trial specimens for our clinical validation study, which
we expect to begin in the second half of 2008.
-- Received milestone payment from Bristol-Myers Squibb related to Genomic
Health's program to identify genes to predict response to cetuximab
(Erbitux®).


Other Cancers
-- Established collaborators and identified sources of clinical samples
to further our prostate and lung cancer programs.
-- Began gene identification work to develop a prognostic test for
patients with renal cell carcinoma, clear cell type, under the Pfizer
collaboration announced in January of 2008.


International
-- Initiated a study supporting Japanese investigators as they gain
clinical experience with Oncotype DX for early-stage breast cancer
patients.
-- Processing samples from patients in Canada, Ireland and Peru enrolled
in the National Cancer Institute-sponsored TAILORx study, which has
expanded internationally.


Conference Call Details

To access the live conference call today, August 5, at 4:30 p.m. Eastern Time via phone, please dial [phone] from the United States and Canada or [phone] internationally. The conference ID is 56195752. Please dial in approximately ten minutes prior to the start of the call. A telephone replay will be available beginning approximately one hour after the call through August 12 and may be accessed by dialing [phone] from the United States and Canada or [phone] internationally. The replay passcode is 56195752.

To access the live and subsequently archived webcast of the conference call, go to the Investor Relations section of the company's Web site at http://investor.genomichealth.com. Please connect to the web site at least 15 minutes prior to the call to allow for any software download that may be necessary.