Zacks has always had much too conservative an analysis of this company. This is a significant development and they still don't have the courage to upgrade to "buy". Then again, who cares what Zacks says. The important thing is the market recognized the potential and it was reflected in trading.
Genomic Makes New Advances
Zacks Equity Research, On Wednesday May 25, 2011, 5:45 pm EDT
Genomic Health (NasdaqGS: GHDX - News) recently announced positive results from a study of Oncotype DX in patients with DCIS (ductal carcinoma in situ of the breast). The study was conducted by the Eastern Cooperative Oncology Group (ECOG). It was observed that the test could predict the risk of local recurrence in breast cancer patients.
Encouraged by the positive findings, Genomic Health plans to make available the Oncotype DX DCIS Score to patients and physicians on a global basis. Complete data from the study will be presented at a Breast Cancer conference in December.
According to the Principal Investigator of the study, the treatment for DCIS comprises of surgical removal of the tumor followed by radiation treatments. However, he believes that the preliminary results indicate that it is possible to identify lower risk DCIS which could be treated with surgery alone. For higher risk patients, radiation along with surgery has to be considered.
Successful development of the test will be of immense benefit to a huge patient population. DCIS is an increasingly detected subgroup of breast cancer, and more than 45,000 patients are diagnosed with DCIS each year in the US alone.
Genomic Health reported a 20.8% growth in revenues to $49.8 million during the fist quarter of fiscal 2011. Product revenues (primarily from the Oncotype DX breast cancer test) climbed approximately 23% to $49.5 million in the quarter.
Contract revenues accounted for the balance. In the reported quarter, Genomic provided more than 16,230 test results, as against more than 13,310 test results in the comparable period of 2010, representing a growth of 22%.
Having established a strong foothold in the US market, Genomic Health is targeting the international arena and has established a European subsidiary in February 2009. Moreover, the company has established exclusive distribution agreements for its Oncotype DX breast cancer test with distributors of 13 countries.
Although Genomic Health is conducting several studies to expand its portfolio or increase acceptance of the tests, many of these are in their initial stages. Moreover, we remain concerned about the competitive scenario.
We are currently Neutral on the stock, which corresponds to the Zacks #3 Rank (Hold) in the short term.