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Executives

Kimberly Popovits - President and CEO

Dean Schorno - VP of Finance

Brad Cole - COO and CFO

Randy Scott - Executive Chairman

Steve Shak - CMO

Joffre Baker - CSO

Analysts

Scott Gleason - Stephens Inc.

Eric Criscuolo - Thomas Weisel Partners

Charles Duncan - JMP Securities

David Clair - Piper Jaffray

Bruce Cranna - Leerink Swann

Abigail Davis - JPMorgan

George Zavoico - Westport Capital Markets

Mathew Scalo - Cannacord Adams

Genomic Health, Inc. (GHDX) Q1 2009 Earnings Call May 5, 2009 4:30 PM ET

Operator

At this time, I would like to welcome everyone to Genomic Health’s First Quarter 2009 Financial Results Conference Call. All lines have been placed on mute to prevent any background noise. After the speakers remarks, there will be a question and answer session. (Operator Instruction)

I would now like to turn the call over to Mr. Dean Schorno, Vice President of Finance. Sir, you may begin your conference.

Dean Schorno

Thank you. Good afternoon everyone and welcome to Genomic Health’s first quarter 2009 financial results conference call.

Before we begin, I would like to remind you that various remarks that we make on this call that are not historical, including those about our future financial and operating results, future plans and prospects, the success of our business strategy, the impact of clinical data on demand for our tests, economic benefits and value to payers of our tests, growth opportunities, future products, product enhancements and our product pipeline, demand for our tests and drivers of demand, payer coverage and progress in patient access, our investment in our product pipeline and commercial organization, clinical outcomes and timing of clinical studies, our growth potential, our plans for international expansion, the impact of the economy on our business, and our expectations regarding our ability to comply with potential FDA regulation, constitute forward-looking statements within the meaning of the Safe Harbor provisions of the Private Securities Litigation Reform Act.

We refer you to our annual report on Form 10-K for the year ended December 31, 2008 filed with the SEC, in particular to the section entitled, Risk Factors, for additional information on factors that could cause actual results to differ materially from our current expectations. These forward-looking statements speak only as of the date hereof and we disclaim any obligation to update these forward-looking statements.

With that, I’ll turn the call over to Kim Popovits, President and CEO of Genomic Health.

Kimberly Popovits

Thanks, Dan. And good afternoon everyone, and welcome. Also with us today are Randy Scott, our Executive Chairman: Brad Cole, our Chief Financial Officer and Chief Operating Officer, Steve Shak, our Chief Medical Officer and Joffre Baker, our Chief Scientific Officer.

I will begin today with highlights and accomplishments from our first quarter. Brad will them discuss our commercial progress and review our 2009 financial results. Finally, I will conclude the comments about our pipeline and upcoming date of presentation, including the recently announced positive results on the QUASAR colon validation study.

We had a strong first quarter. Total revenue grew 45% for the first quarter, compared to last year. In addition, we have reduced our net loss to $4.6 million from over $6.6 million in the first quarter of 2008.

We attribute these results to our progress and making Oncotype DX standard practice in breast cancer treatment planning. With this in mind, we believe that the training of 28 additional sales representatives in the quarter will allow us to reach beyond the 50% of women in the US with node negative permanent receptor positive breast cancer to currently benefit from Oncotype DX.

Further, we are encouraged by the growing use of Oncotype DX in treatment planning for patients of micrometastasis and node positive disease. These two additional populations represent approximately 30,000 patients, bringing the total addressable US patients to over 100,000.

With coverage agreements, policies or contracts in place for over 90% of US insured lives for reimbursement of Oncotype DX in patients with node negative breast cancer, we are now concentrating on gaining similar coverage for appropriate node positive patients and those patients with micrometastasis.

We are pleased to report that over the last several quarters we have secured reimbursement for approximately 40% of patients with lymph node micrometastasis and will continue to focus our efforts on limiting this disease, so they spread to 1,2,3 lymph nodes.

As Oncotype DX continues to gain recognition in standard of care in the United States, we believe there is increasing potential for us to bring us demonstrated clinic utility to patients around the world.

During the first quarter we again expanded our international network through the establishment of distribution agreements in Brazil and Venezuela, bringing our total number of international partners to 10. We are now receiving breast cancer samples from more than 40 countries.

In April at the 2009 Kyoto Breast Cancer Consensus Conference International Convention an independent group of Japanese researchers presented results of a multi-cancer study demonstrating that Oncotype DX breast cancer test, was able to predict the likelihood of disease recurrence in Japanese women with estrogen receptor positive early stage breast cancer. This represents the first Oncotype DX breast cancer study focused on a specific ethnic population and provides additional evidence of the clinical utility of Oncotype DX.

As we have mentioned in past calls, we believe our international success will follow a pathway similar to the one pioneered in the US. Namely, we continue to believe that to secure reimbursement with National HealthCare systems, we may need to conduct country specific studies demonstrating the clinical utility of the Oncotype DX breast cancer test. In this regard, we believe these study results will help to lay the foundation for adoption and reimbursement in Japan.

I will now turn the call over to Brad to discuss our commercial progress and review our first quarter 2009 financial results. As always we look forward to your questions and comments during the Q&A.

Brad Cole

Thanks Kim. We believe our result this quarter during a challenging economic environment underscore the strong continued demand for Oncotype DX, improved operational efficiency and careful investment in our pipeline for future products.

Our continuous success and increasing test adoption and reimbursement is directly reflected in product revenue. Product revenue from the Oncotype DX breast cancer test in the quarter was $33.4 million, an increase of 43% compared with $23.3 million for the same period in 2008.

Product revenue once again increased at a greater rate and just delivered year-over-year as we continue to make progress in reimbursement and in securing payment for previously uncovered tests.

In the first quarter of 2009, we delivered 11,210 test results compared with more than 9150 test results in the first quarter of 2008, representing a 23% year-over-year growth rate.

Contract revenue from our collaboration with Pfizer in renal cancer, constituted the balance of revenue for the first quarter of 2009 or $500,000, this compares to contract revenue of $100,000 in the first quarter of 2008.

This program is in early stage development. We have established the feasibility of measuring gene expression in renal carcinoma using our Oncotype DX technology and are on track to start our initial gene identification study later this year.

Approximately 50% of product revenue in the first quarters of 2009 and 2008 was recorded on an accrual basis and recognized at the time the tests were delivered. Approximately 49% of tests were recorded on an accrual basis in the first quarter of 2009, compared with 39% a year ago, reflecting the conversion of contracted payers to accrual treatment.

Importantly, our gross margin on product revenue for the first quarter of 2009 increased to approximately 77%, compared with 75% in the same period a year ago. This reflects continued improvement in our operational efficiency and improvements in revenue yield.

Operating expenses were $38.5 million as expected in the first quarter, versus $30.6 million in the same period in 2008. As guided, selling and marketing expenses were up from the fourth quarter due to the expansion of our US sales force and our growing international presence.

Included in Q1 total operating expenses were non-cash charges of $4.1 million, including FAS 123 stock-based compensation expense of $2.5 million and $1.6 million of depreciation and amortization expenses.

Our loss from operations decreased to $4.6 million in the first quarter of 2008 compared with a loss from operations of $7.1 million in the first quarter of 2008, reflecting a reduction of 35% from the same period last year. Again, as expected and discussed on earlier calls, our sequential net loss of $4.6 million increased compared to $2.3 million in the fourth quarter of 2008 due to the investment we made in our US sales force and international expansion, as well as the anticipated first quarter increases in education activities following the San Antonio Breast Cancer Symposium.

In addition, income tax expense was $211,000, which is based on the company's expected, estimated tax position for the full year 2009. Cash and cash equivalents and investments at March 31, 2009 were $53.4 million, compared with $56.7 million at December 31, 2008 due to a strong a cash payments from payers and limited capital expenditures in the quarter.

As we continue to invest in the Worldwide Commercialization of Oncotype DX for breast cancer, prepare to launch our colon cancer test and advance our research and development pipeline, we remain focused on moving our organization toward profitability. I will now turn the call back to Kim.

Kimberly Popovits

Thanks Brad. We are exited to share with you that two breast cancer abstracts have been accepted for presentation at the ASCO annual meeting at the end of the month. The first is a poster presentation of a large genomic study of male breast cancer samples compared with female breast cancer sample analyzed using the Oncotype DX Recurrence Score.

The second is an oral presentation and the genotypic characterization of triple-negative breast cancer. We look forward to sharing detail results with you during the conference.

We also are pleased that the recently announced positive top line results from the QUASAR validation study evaluating our Oncotype DX colon cancer test have been accepted for oral presentation at the ASCO annual meeting.

Additionally, it is one of seven studies selected from more than 4,000 abstracts that will be featured in ASCOs Advanced Presscast on May 14th.

As previously reported the QUASAR study met its primary endpoint to predict the likelihood of recurrence for Stage II colon cancer patients following surgery and also showed that the colon cancer Recurrence Score provided additional independent clinical value beyond standard measures of risk. Based on these results we are now focused on making the Oncotype DX colon cancer Recurrence Score available to physicians and patients in early 2010.

It is widely accepted that most stage II colon cancer patients will be cured of the disease with surgery alone. The decision to treat patients beyond surgery is based on an assessment of how likely the disease is to recur.

However, accurately identifying those with aggressive disease remains a critical issue for physicians and patients, because the available markers to determine the likelihood of disease recurrence are limited. Given this dilemma, we believe the successful development of the Oncotype DX colon cancer Recurrence Score will allow us to deliver the value of more accurate individualized risk prediction to colon cancer patients.

As in breast cancer our study collaborators will seek conclusion of the QUASAR validation results in peer review presentations and journals.

We believe the findings of the colon cancer validation study represent a significant milestone for the company, as we have now demonstrated that the rigorous clinical development strategy and standardized quantitative assay technology, designed for our Oncotype DX breast cancer test can be successfully applied to the development of Recurrence Score for patients with different tumor types.

While we are excited about bringing the Oncotype DX Recurrence Score to clinical practice for stage II colon cancer, our first priority and most important near-term opportunity remains the growth of our Oncotype DX breast cancer franchise.

We believe that there are substantial opportunity for expansion and penetration of the US breast cancer market. With this as our focus, we will continue to educate physicians and patients on the value our test provides in treatment planning while building the market abroad.

In conclusion, we believe our ability to achieve multiple milestone for maintaining a strong balance sheet during the first quarter is a testament to our solid business strategy. For the remainder of the year, we will continue to invest thoughtfully as we anticipate steady progress for our business and remain focused on delivering on the promise of personalized medicine.

Thank you for joining us today and I'll now open the call for questions.

Question-and-Answer Session

Operator

At this time we will open the lines for questions. (Operator Instructions). Your first question comes from the line of Scott Gleason with Stephens Inc.

Scott Gleason - Stephens Inc

Hey guys, thanks for taking my questions.

Kimberly Popovits

You're welcome.

Scott Gleason - Stephens Inc

Though, I've got little bit of cold here. First question Kim, just looking at some of the Japanese data that was presented this quarter. Can you update us on the progress you guys have made on the reimbursement front in Japan, and just maybe talk a little bit about how you view that market?

Kimberly Popovits

Yes. Scott thanks. Very early days with the work that we were doing in Japan. The study was a great first step in identifying that the Recurrence Score in fact, would work for that specific population and what we do know is that the reimbursement tap in Japan is one that will probably take some time and that will require a national coverage decision. So we've got people on the ground, they are working on that now but wouldn't expect to see that for probably several years.

Scott Gleason - Stephens Inc

Okay. Great, thank you. And then Kim I guess when you look at the new reps you guys brought on the quarter, pretty large number around 20. Can you talk about rep productivity at all there for some of the newer guys? What you guys are seeing and what you guys expect kind of going into the second and third quarters here?

Kimberly Popovits

Sure. We've always said that we believe it takes around 6 to 12 months or so for reps to be fully engaged, settled in our territories and making the peak end attacks that they can make.

And one of the things that we noted last quarter and in the prior quarter was that we probably waited a little longer than we didn't probably wait, we did wait longer than we had in the past to increase the size of the sales force, so we think adding these 18 in the first quarter and getting them fully trained, will probably have an impact.

We'd like to say in the next quarter and certainly in the next couple of quarters, we already quite frankly, are seeing some impact in some of the territories already but the full impact won't be seen for several months.

Scott Gleason - Stephens Inc

Great and then Kim just one last question real quick, revenue recognized on a full basis. It seems like kind of sold out here a little bit in the 50% range. Is there any reason for that? And I guess is there any reason why we shouldn't continue to see that trend upwards as we move into the back half of the year here?

Kimberly Popovits

Yeah. We continue to make progress there I'll let Brad address the specifics on the accrual.

Brad Cole

Yes. So Scott as you are observing we moved up from 45% of our revenue to up 50% excuse of our test over the last six or nine months and it really comes down to, how many payers are going to move over to a - from a contract to payer basis or accrual basis over time how quickly we can make that happen. I'll remind you that United and CIGNA and Aetna and Medicare are some of the very large payers were already on that schedule.

So those payers that are moving across the last couple of quarters have been relatively small but there is still some large payers out there and will keep you apprised to that. We would expect over the next year or so that, that would increase, but it will not happen quickly and also remind you that it doesn't mean that the payers who aren't on an accrual basis aren't paying well. Half of our revenue for the quarter came from payers who are not on accrual basis, they may be contracted, they may have policies and their payment levels have continued to increase over the time and in fact it is one of the reasons that we've had strong results over the last couple of quarters.

Scott Gleason - Stephens Inc

Okay, great, great. Thanks Brad, thank you guys for taking my questions.

Kimberly Popovits

You're welcome, get well.

Operator

Your next question comes from the line of Peter Lawson with Thomas Weisel and Partners.

Eric Criscuolo - Thomas Weisel Partners

Good afternoon. This is Eric filling in for Peter. On the international growth, do you think that you're going to have to do more targeted studies like, for instance, the Japanese study showing the benefit in that specific population. Do you think you get these, these are the more homogenous populations to update the Oncotype test. You're going to have to run studies with those specific populations to get results, to kind of present to the payers?

Kimberly Popovits

Yeah, I think they were probably more looking at experience studies or clinical utility studies in other countries, so it will go on a country specific basis. But we are not anticipating that we are going to need data in other ethnic, specifically in ethnic populations in the large countries in Europe that we are focused on now, so it's more of what do we want to do with key opinion leaders and more regional type studies are on clinical utility.

Eric Criscuolo - Thomas Weisel Partners

Okay thanks. And as far as the, as far as the Switzerland operations Cole any update there as far as increased headcount or efficiency or anything like that?

Kimberly Popovits

Brad like to answer.

Brad Cole

There isn't really anything to report there, we have established the subsidiaries. It's up and running. They have a few employees in Europe but nothing significant.

Eric Criscuolo - Thomas Weisel Partners

Okay. And just lastly the renal program with Pfizer, when can we start expecting kind of the initial data I guess to come out of that, is it going to be presented at a show, at a conference or are you going to maybe just press release that information?

Kimberly Popovits

I'll let Steve to talk that for you.

Steve Shak

Yes, so again, we are very excited about initiating our first study in renal cancer this year, since our first study will focus on learning about the genes and whether genes matter. We would expect that it would first be presented at a meeting in conjunction with our collaborators and not by a press release.

And again, in terms of when that's going to occur and again, if we get the data and do the study later this year, we would then be talking to our investigators about the subsequent presentation.

Eric Criscuolo - Thomas Weisel Partners

Is that going to be on Pfizer's timeline more than yours?

Steve Shak

Actually, we got a tremendous encouragement from Pfizer in this program to move quickly, and they and our collaborators are moving very quickly with us on our genomic studies in renal cancer.

Eric Criscuolo - Thomas Weisel Partners

Okay great. Thanks.

Operator

Your next question comes from the line of Charles Duncan with JMP Securities.

Charles Duncan - JMP Securities

Hello.

Kimberly Popovits

Charles?

Charles Duncan - JMP Securities

Yes. Sorry, going back and forth between two calls. I had a quick question with regard to test build dynamics. Can you give us some additional color and I apologize if this has already been asked. But give us some additional color on not really the breadth, but the depth of prescriber usage. Are you seeing test build very deeply across practices now?

Brad Cole

Charles, this Brad, I think we have seen and throughout the first quarter of 2009 continued usage by new physicians although that's tailed off a bit and we are seeing it go a little bit deeper. In fact, the usage per physician during 2009 is higher than it was at the same time during 2008, so we are seeing both but more of the latter.

Charles Duncan - JMP Securities

Okay. And you had some data been presented at the upcoming ASCO on triple negative, is that something that you are going to work into your commercial messaging over the course of the second half of the year?

Steve Shak

Yeah. Charles. I think you saw even with our ECOG study that we've reported on more than a year ago. We very interested in looking at new genes and looking at expanding the potential utility of our testing, for triple negative patients. So again I think in talking about what we might do next I think we do have to wait for the presentation at ASCO and those results. But again I think this is really part of our continued commitment to research and to bring personalized medicine to breast cancer patients.

Charles Duncan - JMP Securities

Okay. And congrats on a QUASAR presentation in the presscast, is there any thing there that's going to be highlighted versus the actual data presentation at ASCO?

Steve Shak

Yeah. Again we are very pleased I think as Kim said by more than 400 abstracts that were accepted by ASCO. ASCO selected this presentation as one of seven to be highlighted at their advance presscast on the 14th and it is our understanding that with the presentation of data on the 14th that at least with regard to that date of the embargo will lift.

Charles Duncan - JMP Securities

Okay. Good deal, thank you.

Operator

(Operator instructions). And your next question comes from the line of David Clair with Piper Jaffray.

David Clair - Piper Jaffray

Hi, good afternoon. Thanks for taking my question. Congrats on a great quarter.

Kimberly Popovits

Thank you.

David Clair - Piper Jaffray

I guess the first question for me is just on the lymph node micrometastasis, sounds like we are getting some pretty good traction there. One, what kind of ramp should we expect as far as covered lives for that indication?

Brad Cole

I just started to predict what the ramp will be or look like. It will look like that the manage care team is working - I can assure you, its heart on this as they work on node-positive and as they work on colon in the future. So I think we will just see steady progress. So I wouldn't want to project what kind of ramp we would see.

David Clair - Piper Jaffray

Okay, and maybe just a little bit on the pipeline, prostate renal cancer, DCIS anything to share there?

Steve Shak

Well, again I guess we continue to be very excited about our efforts in that area. I think the news really -- the new news today is really about the renal program and the fact that we've seen some -- we had obtained revenue from Pfizer and we'll be initiating that study this year. We are also excited about our efforts in prostate cancer as well as in DCIS and I suspect will come back to that on a call based on data.

David Clair - Piper Jaffray

Okay, great. Thank you.

Operator

Your next question comes from the line of Bruce Cranna with Leerink Swann.

Bruce Cranna - Leerink Swann

Hey, good afternoon guys.

Kimberly Popovits

Good afternoon

Brad Cole

Hello Bruce.

Bruce Cranna - Leerink Swann

Just quick question, I guess, someone has to be little bit of a party popper here but, I am looking at my model. And the test volume I guess is a little bit lower than we were looking for and I am just curious, Kim do you think, sort of the, I guess the prior guidance of 50 to or is it 53,000 tests this year, is that still a good number to be carrying for us in terms of modeling?

Kimberly Popovits

Yeah, we are not changing our guidance.

Bruce Cranna - Leerink Swann

Now, so have you guys seen any, any economic impact at all in terms of ordering patterns?

Kimberly Popovits

Well, when we've been taking a look at this, as we mentioned in the last quarter that with the way things were going that we were going to continue to monitor it closely and we have seen perhaps a modest impact, but overall, we have been pleased with the growth. We think that the 20 reps that we've now trained and have out there, are going to be able to offset, whatever impact that they may have. However, as we said last quarter, we will continue to watch this closely.

Bruce Cranna - Leerink Swann

Yeah. Okay. And then Brad, I have to ask you I guess a kind of convoluted question too. If the accrual testing by volume of something like 49% and the revenues are 50%, I am just doing the math on this. The revenue line it looks like ASPs on that piece of the revenue pie if you will are sort of around 3100 maybe or so. Is that correct?

Brad Cole

That's correct.

Bruce Cranna - Leerink Swann

Now, how does that contrast on a year-over-year basis?

Brad Cole

On the accrual side, it is about the same, on the cash, the reason that the revenues come up is, that we've seen continued progress with the non-accrual based payers, it gets a little technical. So we continue to see those were policies and contracts not yet moved to accrual to increasingly improve their payment rate. And we've seen continued performance under the contracts at the historical rates.

Bruce Cranna - Leerink Swann

Okay. Some other line, I am looking at my prior year number, I had about and we could probably take this offline I had I think 3200 on an ASP basis, on a prior year period…

Brad Cole

Yeah. Well it's about the same. We've seen nice growth internationally as well. So Bruce you need to keep in mind that some of the international distributors where we're seeing good growth and although a small percentage of the business are lower than $3000 on a distributor relationship.

Bruce Cranna - Leerink Swann

Maybe that's the point…

Brad Cole

And that kind of on a quarter-to-quarter they can pull it down slightly.

Bruce Cranna - Leerink Swann

Okay.

Brad Cole

But not…

Bruce Cranna - Leerink Swann

All right. Thank you.

Operator

Your next question comes from the line of Tycho Peterson with JPMorgan.

Abigail Davis - JPMorgan.

Hi this is actually [Abigail Davis] sitting in for Tycho today. Kim, you know on the sales and marketing expenses in the quarter, can you give us a sense of whether that's a good run rate going forward for the remainder of 2009 or some of the initial training costs which you see with sales force expansion are going to go away?

Kimberly Popovits

Yeah. I'll let Brad address that.

Brad Cole

Yeah. Certainly a good base line but we will expect to see some modest increases in spending in sales and marketing over the course of the year. Most of the sales force expansion happened during January, but not on January 1st for example, and the lot of the medical education following San Antonio happens in Q1 and Q2, so it modulates throughout the year, but I think its likely we are down, that's for sure.

Abigail Davis - JPMorgan.

Great, thank you.

Operator

Your next question comes from the line of George Zavoico with Westport Capital Markets.

George Zavoico - Westport Capital Markets

Hi, everyone. Thank you for taking the question.

Kimberly Popovits

Hi, George. Thank you.

George Zavoico - Westport Capital Markets

You are talking more and more about international sales, but you are not breaking it out yet. You mentioned maybe single-digit or single percent of the total. What criteria, what hurdle or what target do you plan to - you expect to meet your full year before you start breaking it out US versus international?

Brad Cole

Its probably going to be a quite a while. I think until it’s a significant portion of revenue certainly well above 10%, we probably won't break it out separately and its well below 10% today.

George Zavoico - Westport Capital Markets

Okay. And regarding the colon cancer commercialization, the studies done, you waiting to do the presentation at ASCO and you could hopefully launch, you said I think early 2010 and the remaining part of the year its just basically ramping up what education, production, designing the packaging, medical education. What do you need to do between now and then to get it around the market as quickly as possible?

Kimberly Popovits

Probably the correct answer George is all of the above, that when you think I can't look at it today is, though we have now a great study with some really good data and we now need to turn that data into a product and of course as you can imagine, the clinical trials were done with archived dead tissue specimens.

And we now have to gear up our commercial lab to be able to process the product and all the commercial infrastructure around it to make sure that we are able to provide the same service with this product for colon cancer patients that we have for breast cancer. So getting that quality where we want it and getting the lab up and running will take us several months. So we think early 2010 is a good day to look towards.

George Zavoico - Westport Capital Markets

And what do you mean gear up the commercial lab; you already have a commercial lab. Is this going to go through a different side or a different process?

Kimberly Popovits

No, it's the same lab, but the same lab running multiple products, it's not the same patient reports and once we have that data presented and were able to work through the significant issues we have, just in terms of the IT associated around the reporting, getting that to together.

I mean think that you actually highlighted though an interesting point just in terms of our industry in general and what really differentiates, what we are doing from a traditional diagnostic test. I mean, it really does take that long to put the infrastructure together even though you have got a lab, a clear lab ready to go. You have to get inspections from New York State and you have to submit to clear, so there is a lot of things that still need to be done, once we have the data and before releasing a product.

Steve Shak

So George, I would also add that, that just reflects what we think is a fairly significant difference in our business model from the typical lab that puts out 4,000 tests on a menu or 100s and 100s of different things they design their system to do that, that's more of a high volume, high throughput commodity based, a product versus what we are doing. Which is a really a very high-end quality service operation that meets the needs of, pathologist, the physician, the patients, the payers, has all reimbursement support.

And so we think this is a significant opportunity here to do colon right and to roll it out in a way that's really patient-centric which is always our first concern. So we probably won't be in the category of labs that are putting out 100s of different tests and just launching test at whim. When we do it, it's going to be very much a high-end product with a high service component that's really targeted and designed for the patient-physician community.

Kimberly Popovits

And I will just add to that we know from our experience in breast cancer that having, not just presented, but published data is what's going to be very important in terms of us being able to secure reimbursement, so that patients have access to the product. So what we wouldn't also want to do is get out with a product that we weren't -- that didn't meet our quality standards and also was out there before we had the data in a place where we could really use it to make sure the patients would have access and that physicians would be able to access that data in making their decision on whether or not to use the assay.

George Zavoico - Westport Capital Markets

And believe me, I'm glad, you're not going in that direction. And with that regard are you also going to use the same sales person in the next several months you're going to be hiring specialized sales person for the colon test?

Kimberly Popovits

Well this is an opportunity. We think we have to leverage around the infrastructure that we built in breast cancer. With that said, because we have so much opportunity left in the breast cancer arena as we mentioned earlier, with now over 100,000 patients there and we have a lot of room to grow.

So what we don't want to do is take off our focus off of that. So we'll probably do a mixture of the two. That will be able to leverage the group that we have and likely need to add a little bit to that, to be able to reach the colon cancer physician, many of which overlap, but some do not.

George Zavoico - Westport Capital Markets

Okay, great. Thank you very much.

Kimberly Popovits

You are welcome George.

Operator

Your next question comes from the line of Matthew Scalo with Canaccord Adams.

Matthew Scalo - Canaccord Adams

Hi guys. I just wanted to follow-up I guess on that last question, which is Kim you talked a little bit about maybe you waited a bit long to add the 20 reps. Is there a target number of reps that you see longer-term for the entire sales force and then do you see kind of colon cancer specialty group within that group?

Kimberly Popovits

Yeah. Do we think it needs to be a bit larger to launch colon? Yeah we probably will add some to that. We've not committed to a specific number. I think as you look at oncology sales forces in general to be in the neighborhood of a 100 to 125 people is probably pretty standard, with multiple products. It could be that we go up a bit from there but we've not made that decision yet. I think we clearly will add some reps to launch the colon cancer test and did you end with a part two to of your question?

Matthew Scalo - Canaccord Adams

Yes.

Kimberly Popovits

The number of questions.

Matthew Scalo - Canaccord Adams

Yeah. Whether you are going to see the synergies by training all the reps on colon or you will have a kind of a small specialty group that’s kind of…

Kimberly Popovits

Yeah. We will and again we've not totally finalized all of our plans, so we absolutely see synergies in having all reps trained on both products. That said, it may behoove us to have a few folks whether its from the MSL type category to specializing colon in certain centers that might be an option for us as well, where see specialty groups.

Matthew Scalo - Canaccord Adams

Okay. Terrific and then just I guess follow-up question for you Brad, were there any catch up cash payments in the raw material in the quarter?

Brad Cole

No.

Matthew Scalo - Canaccord Adams

Okay. Thanks guys.

Operator

At this time, we will conclude the Q&A portion of this call. Ms. Popovits do you have any closing remarks?

Kimberly Popovits

I'd like to just say thanks for your participation today in our call and for your continued interest in Genomic Health and we look forward to seeing those of you that will be attending the upcoming ASCO meeting at Orlando. Thanks.

Operator

And this concludes today's first quarter 2009 conference call for Genomic Health. You may now disconnect.

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Source: Genomic Health, Inc. Q1 2009 Earnings Call Transcript
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