Genomic Health (GHDX), BioCartis Extend Deal to Urology

Genomic Health, Inc. GHDX and molecular diagnostics company Biocartis Group NV recently expanded their existing exclusive partnership. The companies’ earlier association was formed last year in the field of breast health. Both now stretched the relationship to urology.

The extended alliance is aimed to develop an in vitro diagnostic (IVD) version of the Oncotype DX Genomic Prostate Score (GPS) test on Biocartis' proprietary Idylla platform and potentially additional cancer tests that can be performed locally by laboratory partners and in hospitals globally.

According to Genomic Health, the Idylla Oncotype DX GPS test, the first urology test to be developed on Biocartis' fully- automated, PCR-based Idylla platform, will offer a unique sample-to-result molecular diagnostics solution.

On successful execution of this process, local pathology labs and urology centers will be able to generate accurate Oncotype DX GPS test results with efficient turnaround time.

This strengthened collaboration with Biocartis will lend Genomic Health exclusive worldwide rights to develop and commercialize its Oncotype DX GPS test on the Idylla platform with the option of expanding the deal to include additional tests in oncology and urology. The company expects to progress with the developing IVD version of the GPS test from early 2019 onward.

Financial Terms of the Deal

With regard to this elongated deal, Genomic Health will pay Biocartis an amount of EUR 2.5 million, which is expected to be expensed in the fourth quarter of 2018. Upon commercialization ofthe Idylla Oncotype DX GPS test, Biocartis will receive royalty payments from Genomic Heath based on net sales.

Market Prospects

Currently, prostate is the most common form of cancer among men and can often be treated successfully. Per a study published in The Smyrna Themes, the worldwide market for Prostate Cancer Diagnostics is expected to see a CAGR of roughly 7.1% over the next five years. It will reach $17.9 billion in 2023 from $11.9 billion in 2017. Looking at this enormous scope within the market, we believe, the collaboration between Genomic Health and Biocartis will be perfectly strategic.

A Look at the First Genomic Health-Biocartis Contract

In 2017, Genomic Health and Biocartis signed an exclusive agreement to develop an in vitro diagnostic (IVD) version of the Oncotype DX Breast Recurrence Score test on Idylla platform. Development of this Oncotype DX IVD test was initiated late last year.

Share Price Performance

In the past year, shares of Genomic Health have outperformed the industry. The stock has rallied 161.5% versus the broader industry’s 13% decline.

Zacks Rank & Other Key Picks

Genomic Health currently sports a Zacks Rank #1 (Strong Buy). Other top-ranked stocks in the broader medical space include Integer Holdings Corporation ITGR, Surmodics, Inc. SRDX and Veeva Systems VEEV.

Integer has an expected earnings growth rate of 31.2% for the fourth quarter 2018 and a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Surmodics’ long-term earnings growth rate is projected at 10%. The stock currently carries a Zacks Rank of 2.

Veeva Systems’ long-term earnings growth rate is estimated at 19.3%. The stock is presently a Zacks #2 Ranked player.

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