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Genomic Health Ties up With Biocartis, Boosts Oncotype DX


Genomic Health, Inc. GHDX and Biocartis Group NV (BCART) signed an agreement to develop an in vitro diagnostic (IVD) version of the Oncotype DX Breast Recurrence Scoretest on Biocartis' proprietary Idylla platform. This can be performed locally by laboratory partners as well as hospitals globally. Biocartis is an innovative molecular diagnostics company providing next generation diagnostic solutions.

According to Genomic Health, the Oncotype DX Breast Recurrence Score test evaluates the activity of 21 genes in a patient's breast tumor tissue. This provides customized treatment options based on the biology of the patients’ individual disease. The company claims this to be the only proven test to predict chemotherapy benefit. Consequently, this is included in all major cancer guidelines worldwide. Further, the test is considered standard of care for early-stage breast cancer.

Biocartis' Idylla platform provides a unique solution that is unparalleled in the localization of complex molecular diagnostics. Based on the advanced features of the Idylla platform, Genomic Health expects local pathology labs to generate Oncotype DX Breast Recurrence Score results with minimal labor and efficient turnaround time. The company also looks forward to maintaining the high quality and clinical utility that physicians and patients expect from Oncotype DX.

This agreement will provide Genomic Health rights to develop and commercialize Oncotype DX Breast Recurrence Score test on the Idylla platform. The development of the Oncotype DX IVD test is expected to initiate in late 2017. Genomic Health is anticipated to pay around $3.3 million to Biocartis in the third quarter of 2017. Rest of the payments will be made to Biocartis after achieving few commercial milestones.

Excluding the transaction cost of the partnership, Genomic Health continues to anticipate earning profits in full year 2017. Per the agreement, the company will make royalty payments based on net sales of the IVD tests developed on the Biocartis Idylla platform, post commercialization.

In September, Genomic Health announced that new data shows additional evidence of the unmatched value of the Oncotype DX Breast Recurrence Scoretest in predicting outcomes in early-stage breast cancer patients accurately.

In July, majority of panelists from the St. Gallen International Breast Cancer Conference Expert Panel supported that Oncotype DX was the only test providing information that aided physicians in taking the decision to omit chemotherapy in patients with up to three positive nodes. The panel also published updated guidelines endorsing Oncotype DX for guiding chemotherapy treatment decisions in both node-negative and node-positive breast cancer patients.

In June, five studies in breast cancer were presented at the American Society of Clinical Oncology (“ASCO”) Annual Meeting, including new analyses from the tie ups with the Surveillance, Epidemiology, and End Results or SEER Registry program. The study focused on outcomes of more than 49,000 women who have received an Oncotype DX Breast Recurrence Score test. One of these analyses examines the risk of breast cancer-specific mortality across the full range of Recurrence Score results and is consistent with previous validation studies.

According to a report by GBI Research, the global breast cancer therapeutics market is estimated to reach $17.2 billion by 2021, at a CAGR of 7.3%. Considering the huge potential of the market, we believe the latest agreement is a strategical fit.

In the past year, Genomic Health has been trading above the broader industry. The stock has gained 11.9%, in comparison with the broader industry’s 2.6% gain.

Zacks Rank & Key Picks

Genomic Health carries a Zacks Rank #3 (Hold). A few better-ranked medical stocks in the medical sector are Edwards Lifesciences Corporation EW, Lantheus Holdings, Inc. LNTH and IDEXX Laboratories, Inc. IDXX. Edwards Lifesciences sports a Zacks Rank #1 (Strong Buy), while Lantheus Holdings and IDEXX carry a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Edwards Lifesciences has a long-term expected earnings growth rate of 15.2%. The stock has rallied roughly 19% in the last six months.

Lantheus Holdings has a long-term expected earnings growth rate of 12.5%. The stock has gained 39.4% in the last six months.

IDEXX has a long-term expected earnings growth rate of 19.8%. The stock has gained around 45.1% in the last year.

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