Genomic Health Q2 Revenues Up 14 Percent, Beat Views

Genomic Health reported after the close of the market on Thursday that its second quarter reported revenues rose 14 percent year over year, beating the consensus Wall Street estimate.

For the three months ended March 31, the company’s total revenues were $95.6 million, compared with $83.8 million in the second quarter of 2017, when adjusted to the new ASC 606 accounting standard the company adopted this January. On a constant currency, pre-606 basis, revenues rose 13 percent in Q2 2018 from $85.5 million in Q2 2017. Analysts had predicted revenues of $92.1 million on average.

During a conference call with analysts following the release of the earnings, Genomic Health Chairman, President, and CEO Kim Popovits said that the company believes its growth was driven by enhanced operational efficiency, strong reimbursement for the Oncotype DX breast cancer test, and increased private payor reimbursement for the firm’s Genomic Prostate Score test.

“With increasing reimbursement in our US urology business and the global impact of the recently published landmark TAILORx results, we are on track to deliver double-digit revenue growth and full year profitability,” she added.

Long-awaited results from the TAILORx study — which answered what had been an unresolved question regarding intermediate risk-scores — were presented at the annual meeting of the American Society for Clinical Oncology in June, and simultaneously published in the New England Journal of Medicine.

Genomic Health CSO and Chief Medical Officer Steve Shak said during the call that reception of the new data has been very warm, including across “key countries where there remains significant opportunity for increasing patient access.”

Notably, the German Federal Joint Committee — an authority that decides which therapies and medical services are covered under Germany’s public health insurance system — said in July that it had commissioned the Institute for Quality and Efficiency in Health Care to evaluate the new TAILORx results on the use of biomarker-based tests in primary breast cancer.

Popovits said that the UK’s National Institute for Health and Care Excellence (NICE) made a similar pledge to consider the new data in its ongoing reevaluation of OncotypeDx and other similar assays.

During Q2, Genomic Health’s US product revenues rose to $81.4 million from an ASC 606-adjusted $71.0 million in Q2 2017. The company’s invasive breast cancer testing in the US rose 13 percent to $72.5 million from $64.2 million in the year-ago quarter. Revenues from the company’s Genomic Prostate Score test rose 63 percent to $6.7 million from $4.1 million in the same period last year.

Genomic Health said that it delivered more than 33,590 Oncotype test results during the quarter compared to 31,550 in the same period last year. The company’s Oncotype DX breast cancer testing volume grew 4 percent in the US, while prostate cancer test volume increased 32 percent compared to the prior year’s quarter.

Popovits said that the company has now seen multiple private payor coverage decisions for its prostate cancer test, including a new positive decision by an unnamed “top five national payor,” bringing the total number of covered lives for the GPS test in the US to “more than 92 million.”

During a question and answer period, she added that the company believes it is likely that it will see at least one more positive coverage decision from another major payor before the end of the year.

Finally, although Popovits said the firm plans to continue to actively develop its urology pipeline, she also announced during the call that Genomic Health has discontinued its early-stage development of the IsoPSA assay, terminating its milestone-based licensing agreement with Cleveland Diagnostics.

Outside the US, Genomic Health’s international product revenues increased 11 percent to $14.2 million from an adjusted $12.8 million in Q2 2017. The company said it delivered about the same number of international tests as it did in the same part of last year, with international testing making up approximately 23 percent of its overall test volume during the quarter.

Genomic Health’s second quarter net income was $8.3 million, or $0.23 per share, compared with a net loss of $2.7 million or $.08 per share, a year ago. Analysts, on average, had expected income of $.06 per share.

The company’s R&D costs in Q2 shrank slightly to $15.3 million from $15.8 million the prior year, while SG&A costs dropped to $58.8 million from $59.1 million.

The firm ended the quarter with cash and cash equivalents totaling $53.8 million and short-term marketable securities of $99.1 million.

For full-year 2018, Genomic Health expects revenues of $366 million to $382 million, EPS of $.00 to $.14, and adjusted EPS of $.39 to $.56. Analysts are expecting revenues of $377.1 million for the year and EPS of $.45.

https://bit.ly/2OJwblI

BioMarin (BMRN) Target Raised to $126 at SunTrust

(from $121).

https://bit.ly/2vB3oXN

With no partner, MorphoSys drops myeloma product

• As part of its second quarter earnings call, MorphoSys has announced the discontinued development of its CD38 antibody MOR202 in myeloma and lung cancer.
• I-Mab, MorphoSys’ partner in China, Taiwan, Hong Kong and Macao, will continue development. I-Mab holds exclusive rights for development and commercialization in the Greater China region. A pivotal study in multiple myeloma is planned for the first quarter of 2019.
• MorphoSys will continue to evaluate development options for MOR202 in other indications.

MOR202 has been in Phase 1/2a clinical trials since at least 2015, and while founder and CEO Simon Moroney put this down to the lack of a partner and the “competitive situation in the Western world,” the slow progress also played a part in the discontinuation in multiple myeloma.

“We announced that we’ve decided not to continue development of MOR202 in multiple myeloma beyond completion of the current study. We had already said … that in the light of intense competition, we would not continue to develop MOR202 in multiple myeloma without having [a] suitable partner,” said Moroney.

“There are a couple of other programs that are ahead of us, including, of course, daratumumab, which is well-established in the market, but also now increasingly other mechanisms and other approaches,” Moroney added. “Given the opportunities we have elsewhere in the pipeline … it really doesn’t make sense for us to continue to invest in [MOR202 for] multiple myeloma.”

MO202 was previously in development in partnership with Celgene, but the two companies ended their collaboration in March 2015. MorphoSys stated at the time that it would continue development of the drug alone and in combination with Celgene’s lenalidomide and pomalidomide in relapsed or refractory multiple myeloma patients. Data published in 2016 showed objective responses in between 57% and 91% of patients for combinations.

MorphoSys signed a deal with I-Mab worth up to $120 million plus royalties late in 2017. This is unaffected, and clinical trials in China are planned for 2018.

The discontinuation of development in multiple myeloma “doesn’t refer to China,” Moroney said. “I should emphasize that. We think that our colleagues at I-Mab Biopharma have a great opportunity in China for MOR202.”

Development of MOR202 in other areas is ongoing.

“We have clinical data on [MOR202 that hints at activity in other indications, for example non-oncology indications, and we’re in the process of looking at the possibility of starting a Phase 2 trial in another indication. We’re not prepared to say in what that will be, but we do see opportunities there,” said Moroney.

https://bit.ly/2OBP4ai

Faulty Lipid Metabolism Linked to Alzheimer’s

New research reveals there may be a relationship between faulty lipid metabolism and Alzheimer’s disease (AD).

One such clue involves plasmalogens, a class of lipids containing long-chain fatty acids, such as the omega-3 docosahexaenoic acid (DHA) found in fish oil. These lipids are essential for proper membrane function.

A new study links reduced levels of plasmalogens to cognitive decline. The thinking is that faulty metabolism of these lipids in the liver results in less transport to the brain.

“The liver is a kind of factory for making plasmalogens that are packaged into lipoproteins and shipped to the brain, and we think that in Alzheimer’s disease, there is an insufficient amount of these plasmalogens to support normal brain function,” study author Mitchel A. Kling, MD, Veterans Affairs Medical Center and associate professor of psychiatry at Perelman School of Medicine, University of Pennsylvania, Philadelphia, told Medscape Medical News.

Finding an alternative way to get these lipids to the brain that bypasses the liver could offer a solution.

The study, and other related research, was presented here at the Alzheimer’s Association International Conference (AAIC) 2018.

Brain Function Regulation

During a press briefing, Kling noted that plasmalogens have unique properties, including the regulation of membrane functions in the brain and elsewhere.  He noted that these lipids are important for synapse function, including the release of neurotransmitters, and that alteration of synaptic function is a hallmark of AD.

With age, levels of circulating plasmalogens drop off, which may reflect a decline in the function of peroxisomes, said Kling. Peroxisomes are necessary for the breakdown of long-chain fatty acids to be used to form membranes.

The liver is a key site for synthesis of plasmalogens, which are then exported in circulating lipoproteins for delivery to the central nervous system, said Kling.

For this new study, researchers collected serum samples from 1545 participants enrolled in the Alzheimer’s Disease Neuroimaging Initiative. Participants had AD, mild cognitive impairment (MCI), or normal cognition and were of similar age, sex, and education.

Researchers also had samples from 112 participants with AD, MCI or normal cognition from the Penn Alzheimer’s Disease Center.

The investigators used indices of different plasmalogens. Based on previous research, they examined plasmalogens containing DHA and eicosapentaenoic acid, another omega-3 fatty acid, and an omega-6 fatty acid.

They found that low levels of plasmalogen indices were significantly associated with increased likelihood of AD and MCI in both cohorts. As well, low levels were associated with cerebrospinal fluid (CSF) levels of total tau protein, a biomarker for AD, and with the ratio of tau to CSF amyloid β (Aβ), in both samples.

Biologically Meaningful

In general, the patterns showed that levels were lowest among patients with AD, followed by those with MCI and then health persons, Kling told Medscape Medical News.

Although the researchers didn’t compute the data to provide odds ratios, “if you lump all the values together, everyone who is below the highest 20% has a higher risk of developing Alzheimer’s disease. It’s at a level that seems biologically meaningful,” said Kling.

The investigators did not find an association between plasmalogen indices and Aβ alone in either cohort. Although researchers aren’t certain why this is, Kling has a theory that pertains to timing.

He explained that plasmalogen loss may occur closer to the time when people develop symptoms.  By the time patients have cognitive impairment, amyloid has likely been accumulating in their brain for many years (although some patients with amyloid burden don’t develop symptoms), but tau changes closer to the time when cognitive impairment begins.

“It may be that when the plasmalogen levels fall to a certain level, that is followed soon afterwards by cognitive symptoms and by tau elevation.”

Interestingly, the APOE4 gene, which is linked to AD, does not seem to be associated with low plasmalogen levels, said Kling.

“There is even some data suggesting that a high plasmalogen level can offset the increased risk conferred by having the APOE4 variant,” he added.

In addition to AD, low levels of plasmalogens may be associated with other neurodegenerative diseases, such as Parkinson’s disease, said Kling.

Kling and his team are investigating an approach to correct the lipid transport problem that does not depend on the liver. They have received a grant to study an oral daily supplement containing a precursor of plasmalogen (so the process that the liver would carry out is already done).

The compound has been tested in animals. These studies suggest that the compound increases plasmalogen levels and “corrects some of the deficits in behavior and cognition associated with plasmalogen deficiency,” said Kling.

The aim of the upcoming 16-week study, which will use an ascending-dose approach, is to determine safety and tolerability of the compound in patients with AD and MCI and whether it boosts plasmalogen levels in the blood and spinal fluid.

Results should be available within the next 3 years.

While a diet rich in foods with omega-3 fatty acids — such as seafood — appears to protect against dementia, taking fish oil supplements doesn’t seem to have that effect. A possible explanation for this paradox, said Kling, is that these supplements don’t boost plasmalogens.

“That’s because you have this defect at the level of the peroxisome.”

Supplements No Help

Another study highlighted during the press briefing found that metabolism of certain unsaturated fatty acids is disturbed in people with AD, particularly among men and those who are obese. However, taking supplements with high levels of omega-3 fatty acids failed to bring lipid levels back to normal.

These and other studies discussed during the briefing are part of a growing body of work related to the “gut-liver-brain” axis.

The field of gut bacteria research has yielded new information on how some bacteria may lead to inflammation and disease. There’s evidence that some species in the microbiome can promote protein buildup in the brain.

Gut bacteria can be altered through diet, some studies show.

“As a nutritional scientist, I am really excited about these types of studies,” commented briefing chair, Martha Clare Morris, ScD, professor, Department of Internal Medicine, Division of Digestive Diseases and Nutrition, Rush Medical College, Chicago, Illinois.

Such research “provides clues to how eating patterns may be linked to brain health and dementia,” said Morris.

“These clues can hopefully lead to therapeutic interventions and better screening and diagnostic methods, and can advance knowledge around specific foods and diet patterns that will prevent dementia.”

Morris is co-principal investigator for the US POINTER study, which was announced at last year’s AAIC meeting. The study will test whether combining a healthy diet with exercise, cognitive and social stimulation, and management of cardiovascular conditions will prevent decline in cognitive ability and development of AD.

No relevant financial relationships have been disclosed.

Alzheimer’s Association International Conference (AAIC) 2018. Abstract 26446. Presented July 24, 2018.

https://wb.md/2Kn3sjj

FDA Warns Against Long-Term Zmax Use in Certain Cancer Patients

Azithromycin (Zithromax, Zmax), an antibiotic generally used to treat infections of the lung, sinuses, and skin, should not be given long term to patients with cancers of the blood or lymph nodes who receive a stem cell transplant, the FDA said on Friday.

In a safety communication, the agency cited the results of a French clinical trial that found an increased risk of cancer relapse and even death with long-term use of azithromycin in this population, and added that the FDA is “reviewing additional data and will communicate our conclusions and recommendations when the review is complete.”

The announcement noted that the drug should not be given to patients to prevent the inflammatory lung condition bronchiolitis obliterans syndrome, because azithromycin is “not approved” for this type of use, and “there are no known effective antibiotic treatments for prophylaxis of bronchiolitis obliterans syndrome.”

In the meantime, the manufacturer of azithromycin said the company is supplying a letter to healthcare providers who are caring for patients with donor stem cell transplants.

French researchers discovered this risk during a trial examining long-term effectiveness of azithromycin to prevent bronchiolitis obliterans syndrome in patients who underwent stem cell transplants to treat cancer of the blood or lymph nodes (e.g., leukemia, lymphomas). The FDA wrote that the researchers were forced to “stop the trial approximately 13 months after the study completed enrollment of 480 patients,” due to unexpected increases in cancer relapses and deaths. About a third of patients on azithromycin treatment experienced a relapse and 95 patients died (compared with a 20.8% relapse rate with 66 patients dying in the placebo group), which led to a 2-year survival rate of 56.6% in the azithromycin group and 70.1% in the placebo group, the agency said.

The researchers concluded that “the risks of long-term azithromycin exposure after donor stem cell transplantation may exceed the benefits,” although they said they could not determine why the rates of relapse and death were higher in the azithromycin group.

https://bit.ly/2MhXaUb

Healthcare added 34% fewer jobs in July

July wasn’t a stellar month for hiring in the U.S. healthcare sector, with fewer jobs added in ambulatory care, hospitals and nursing facilities compared with a month earlier.

The sector added 16,700 jobs in July, down 34% from the 25,200 new jobs in June and well below the nearly 29,000 the sector added in May, according to the U.S. Bureau of Labor Statistics’ newest jobs report released Friday.

As usual, ambulatory healthcare services dominated healthcare hiring with its 9,900 new jobs, although that was a 27% drop from the 13,500 jobs added in June. Home health saw the most new hires within the ambulatory sector, adding 5,600 jobs. Below that was outpatient care centers, adding 4,300 jobs. A category called other ambulatory healthcare services dropped by 1,200 jobs, and offices of other healthcare practitioners lost 900 jobs. Hiring in dentists’ offices was relatively flat, adding only 200 jobs last month.

Hospitals added 6,800 jobs in July, 36% fewer than the 10,600 new jobs added in June, a month that represented a massive hiring spike from sluggish May growth.

Nursing and residential care facilities didn’t add any jobs overall in July. Instead, the 2,500 fewer jobs in nursing care facilities and 1,100 fewer jobs in residential mental health facilities balanced out the 2,400 new hires in community care facilities for the elderly and 1,200 new hires in other residential care facilities.

Overall, the U.S. unemployment rate inched down to 3.9% in July, following an increase in June, with total employment increasing by 157,000 jobs.

https://bit.ly/2vgsb4h

Kaiser sees 55% drop in Q2 operating income

Despite posting slightly higher operating revenue in the second quarter of 2018, Kaiser Permanente reported a 55% drop in operating income during the period.

The not-for-profit Oakland, Calif.-based system’s operating income totaled $345 million in the second quarter, compared with $772 million during the prior-year period. That’s despite an 8% increase in operating revenue to $19.6 billion during the quarter, compared with $18.1 billion during the same period in 2017.

Kaiser, the nation’s largest integrated healthcare provider, saw improved non-operating income during the quarter, rising to $308 million compared with $240 million in the second quarter of 2017. That resulted in net income of $653 million during the quarter, a 35% drop from $1 billion in the 2017 period.

Membership in Kaiser’s health plan was 12.2 million as of June 30, reflecting 453,000 new members since the end of 2017.

Kaiser reported spending $735 million on capital projects during the quarter, including opening new facilities and upgrading others, as well as adding technology. The health system opened five new medical offices during the quarter, all in California: Downtown Commons Medical Office in Sacramento, Skyport Medical Office in San Jose, Mercury Way Medical Office in Santa Rosa and mental health services offices in San Mateo and Hesperia. With the additions, Kaiser now has 689 medical office locations and 39 hospitals.

Two Emory Healthcare hospitals in the Atlanta area will become primary hospitals for Kaiser physicians and members starting in October, the two health systems announced in June. Kaiser provided an undisclosed capital contribution to expand both facilities.

https://bit.ly/2OIvgST