NEW YORK – Molecular diagnostics firm Veracyte said this week that it is encouraged by recently reported data from a study that confirmed the performance of its core Decipher prostate cancer test across different ancestries, specifically in African American men.
Decipher continues to be a leading revenue driver in Veracyte's test portfolio, with both volume and sales up significantly in the third quarter of 2024 compared to the same period last year. The firm's ability to maintain and expand market share for the assay remains at the forefront, executives said during a call discussing the firm's earnings on Wednesday, even as the company has begun to invest in other areas, such as minimal residual disease testing.
Veracyte reported after the market closed Wednesday that its overall testing revenue increased 34 percent to $109.5 million from $82.0 million for the third quarter of 2024, while its testing volume grew 24 percent year over year to 36,792 tests.
Decipher revenue outpaced this overall growth with sales rising 48 percent year over year and volume up about 36 percent at approximately 21,250 tests.
Veracyte is hoping that the recent data on Decipher will drive revenues and volume further. It previously had some retrospective evidence but didn't have prospective data confirming that Decipher was equally accurate across different racial populations.
In prostate cancer (as in other tumor types) there are clearly observed disparities in the outcome of patients from different ancestries, ethnic backgrounds, or populations. According to the American Cancer Society, African American individuals are more than 70 percent less likely to be diagnosed with prostate cancer and more than twice as likely to die of the disease compared to white individuals.
Investigators have been curious about the performance of tests like Decipher across different races for several years. For example, a 2019 study comparing results from home-brew versions of the Decipher algorithm and those of its two competitors on the market — Myriad Genetics' Prolaris, and Genomic Health's Oncotype DX prostate, which is now marketed by Exact Sciences — concluded that while there wasn't clear evidence that these tests perform differently in different races, there was still an unmet need for continued prospective evaluation.
The new data, presented at the American Society for Radiation Oncology last month, is some of the first to directly compare individuals of European and African descent in a one-to-one ratio, assessing whether there is any disparity in the accuracy of the test for African Americans.
The results, from a trial called VANDAAM, showed no significant difference in the test's ability to predict more aggressive disease in men with early-stage prostate cancer regardless of their ancestry, something which Veracyte CEO Marc Stapley said the firm hopes it can use to better persuade oncologists to adopt Decipher testing to personalize treatment decisions across populations.
"We didn't know whether there would be a disparity or not. We know there's a disparity in care, and we know there's a very significant disparity in diagnosis and outcomes," Stapley said in an interview.
African American men are over 70 percent more likely to be diagnosed with prostate cancer and more than twice as likely to die of the disease compared to non-African American men, according to the American Cancer Society.
Part of why this test's cross-population accuracy wasn't known for sure is because Decipher, like many other molecular assays, was trained and validated predominantly using samples from individuals of European origin, which have historically dominated what has been available for test developers. The issue isn't only applicable to older tests, though.
Grail, which has developed a multi-cancer early detection (MCED) test, published results last month from a sub-analysis of its assay training study focused on the detection of prostate cancers. In that report, authors conceded that because the vast majority of their study's cohort self-reported as White, non-Hispanic, the generalizability of their findings was limited, "given that overdiagnosis of [prostate cancer] due to PSA levels has been shown to disproportionately affect Black men."
Stapley said that Veracyte is dedicated to taking diversity into account across new tests. "We're closing the gap later than the industry should, but it's important that we take that into account more, because you have to know that the test is going to work in the population in which you want it to be used," he said.
Veracyte wants Decipher to be used potentially "for every man around the world with prostate cancer," he added. Much the same would be true of a multi-cancer screening assay.
Apart from the new ancestral subgroup data, the company also recently shared new results from a study of Decipher in a multicenter trial supported by Cancer Research UK, which explored test utility in patients with metastatic prostate cancer.
According to the company, studies have shown that adding chemotherapy to standard-of-care androgen deprivation therapy can improve outcomes for some patients with metastatic prostate cancer, but the benefit varies from patient to patient. The new study, called STAMPEDE, indicated that Decipher may offer more precise differentiation — compared to standard of care — of patients who will receive the greatest benefit from chemotherapy versus those who won't.
"This could help patients avoid unnecessary toxicity while helping to determine the best treatment path for those who will benefit most," Stapley said.
Medicare administrative contractor Palmetto finalized a local coverage determination providing reimbursement for Decipher in the metastatic setting in August.
According to Stapley, Veracyte is currently undergoing the technical assessment process necessary to finalize reimbursement, which it expects to finish in late 2024 or early 2025. "We're excited about metastatic [cancers] as a potential growth driver for 2025 and beyond, as we expect to see revenue from this indication start to ramp in the back half of next year," Stapley said.
Veracyte previously disclosed it has also been shifting resources toward new markets, which include minimal residual disease testing, with its January acquisition of C2i Genomics, as well as to development of IVD versions of its existing menu to allow more distributed, global testing. As part of that shift in resources, the firm will no longer offer its Envisia assay for interstitial lung disease after the end of this year.
Q3 results
Veracyte's total revenue for the third quarter was $115.9 million, up 29 percent from $90.1 million in the third quarter of 2023, beating the average Wall Street expectation of $109.8 million.
Its product revenue was $3.2 million, down 21 percent from $4.0 million in Q3 2023, while its biopharmaceutical and other revenue totaled $3.1 million, down 23 percent from $4.1 million in the year-ago quarter.
The company's R&D spending was $17.6 million during Q3, up 32 percent from $13.3 million in the same period last year. Its SG&A costs rose 19 percent to $48.4 million from $40.7 million.
The firm reported net income for Q3 2024 of $15.2 million, or $.19 per share, compared to a loss of $29.6 million, or $.41 per share, in the same period of 2023. The results from the third quarter of 2023 included a $34.9 million impairment charge related to its nCounter license as the firm adopted a multi-platform IVD strategy. Its non-GAAP EPS for Q3 2024 was $.33, easily surpassing analysts' average estimate of $.03 per share.
Veracyte ended the quarter with $274.1 million in cash and cash equivalents.
It said it is raising its full-year 2024 total revenue guidance to between $442 million and $445 million compared to its prior guidance of between $432 million and $438 million.