Back to top
Read MoreHide Full Article

Genomic Health, Inc. (GHDX - Free Report) recently announced a multi-year research collaboration agreement with Janssen Pharmaceuticals. Through this partnership, the companies will evaluate the responsiveness of Genomic Health’s Oncotype DX Genomic Prostate Score (GPS) test to Janssen’s prostate cancer drug pipeline. 

Per the agreement, Genomic Health will examine samples from Janssen studies to evaluate the association of GPS results with clinical outcomes.Notably, GPS is the first test that predicts the current state and the risk for prostate cancer.

Genomic Health's Prostate Cancer Business at a Glance

Genomic Health’s U.S. prostate cancer business has been consistently accelerating over the last few quarters. The company has continued to make progress, delivering actionable results to increase adoption of this test and gather evidence to support private reimbursement. In the last reported third quarter, revenues in this business more than doubled on a year-over-year basis with U.S. product revenues being driven by a 139% rise in Prostate test revenues. U.S. prostate volumes increased 39% despite the hurricane impact. Per management, the company continues to be a leader in the low-risk and intermediate-risk prostate cancer market on solid test volumes over the last several quarters.

 

 

With a full year of complete Medicare coverage, the company expects its prostate revenues to continue to grow in 2018.

Developments in Prostate Cancer

Genomic Health recently announced an exclusive licensing agreement with biotechnology company Cleveland Diagnostics, Inc. Per the agreement, Genomic Health will be authorized to develop and market early- and late-stage new prostate cancer diagnostics tests based on Cleveland Diagnostics' proprietary IsoPSA reagent and SIA technology.

In October, new study results were published validating the Oncotype DX Genomic Prostate Score’s test ability to predict prostate cancer death and the development of metastases at 10 years. With this study, the Oncotype DX GPS test is now uniquely validated to predict both these long-term endpoints as well as the risk of adverse pathology.

In August, Genomic Health announced expanded Medicare coverage of the Oncotype DX GPS test post issuance of a positive final Local Coverage Determination (LCD) by Palmetto GBA, a Medicare Administrative Contractor (MAC). Per management, after the successful implementation of the final LCD in October, the total number of Medicare patients eligible for GPS test will increase by around 20,000.

Market Prospects

Per a report by Grand View Research, the global prostate cancer therapeutics market is expected to see a CAGR of 4.8% between 2014 and 2025. Considering the huge potential of the market, we believe the latest agreement is a strategic fit for Genomic Health to gain more shares in this space.

Stock Performance Solid

Over the past three months, Genomic Health has been trading above the broader industry. The stock has lost 7.3%, narrower than the broader industry’s 13.1% decline.

Zacks Rank and Key Picks

Genomic Health carries a Zacks Rank #3 (Hold).

A few better-ranked medical stocks are Luminex Corporation (LMNX - Free Report) , Align Technology, Inc. (ALGN - Free Report) and Myriad Genetics, Inc. (MYGN - Free Report) . Notably, Luminex, Align Technology and Myriad Genetics sport a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Luminex has a long-term expected earnings growth rate of 16.3%. The stock has rallied roughly 3.3% over a year.

Align Technology has a long-term expected earnings growth rate of 28.9%. The stock has gained 143.1% in a year.

Myriad Genetics has a long-term expected earnings growth rate of 15%. The stock has gained 94.69% in a year’s time.

Wall Street’s Next Amazon

Zacks EVP Kevin Matras believes this familiar stock has only just begun its climb to become one of the greatest investments of all time. It’s a once-in-a-generation opportunity to invest in pure genius.

Click for details >>



More from Zacks Analyst Blog

You May Like