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Genomic Health's New Data on Oncotype DX GPS to Boost Uptake

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Genomic Health, Inc. (GHDX - Free Report) recently announced the publication of real-world clinical data supporting the use of the Oncotype DX Genomic Prostate Score (GPS) test, which has resulted in substantially greater use of active surveillance compared to no testing. Results of this new study were published in Reviews in Urology.

Another independent study was published by University of California, San Francisco (UCSF) researchers in the Journal of Urology. The results from this study supported the GPS test’s ability in identifying patients with more aggressive tumor biology and in need of more intensive treatment.

On the back of these positive study data along with the National Comprehensive Cancer Network’s (NCCN) updated guidelines and multiple positive private payor coverage decisions, the company expects to see increased adoption of the test.

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 strategic for Genomic Health.

High Potential of Prostate Cancer Test

Genomic Health’s U.S. prostate cancer business has consistently accelerated over the last few quarters. The company has seen increased adoption of this test on private reimbursement. Second-quarter revenues in this business rose 63% on a year-over-year basis led by rising test volumes, expanding coverage and payments from private payers along with CMS coverage for intermediate-risk patients.

Moreover, two studies supporting the favorable impact of the Oncotype DX GPS test on risk assessment in clinically low-risk prostate cancer patients in real-world practice were presented at the 2018 American Urological Association Annual Meeting.

Per management, the company continues to be the market leader in low-risk and intermediate-risk prostate cancer treatment, courtesy of its test volume performance over the last several quarters. The company has also been witnessing continued expansion of reimbursement coverage in Western Europe.

Thus, the company anticipates revenue growth of around 50% in prostate GPS and projects it to account for approximately 20% of expected total revenue growth for 2018. Furthermore, the company continues to expect contributions from the increasing adoption of the Oncotype DX AR-V7 test for prostate cancer launched in February 2018.

Earlier, the company was planning to expand its urology sales team by mid-2018. With this study, the Oncotype DX GPS test is now validated to predict long-term endpoints as well as the risk of adverse pathology.

So far, the company has successfully expanded the private coverage for the Oncotype DX GPS test. Currently, more than 92 million of U.S. covered lives, including Medicare, fall under the scope Oncotype DX GPS test.

Stock Performance Solid

Over the past year, Genomic Health has been outperforming its industry. The stock has gained 112% against the industry’s 12.7% fall.

Zacks Rank & Key Picks

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

Some better-ranked stocks in the broader medical space are Intuitive Surgical (ISRG - Free Report) , Amedisys, Inc. (AMED - Free Report) and Masimo Corporation (MASI - Free Report) .

Intuitive Surgical’s long-term expected earnings growth rate is 14.7%. The stock currently carries a Zacks Rank of 2 (Buy).

Amedisys’ long-term expected earnings growth rate is 19.4%. The stock holds a Zacks Rank #2 at the moment. You can see the complete list of today’s Zacks #1 Rank stocks here.

Masimo’s long-term expected earnings growth rate is 14.8%. The stock has a Zacks Rank #2 at present.

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