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| 8-K - FORM 8-K - GENOPTIX INC | d8k.htm |
 2010
UBS Global Life Sciences Conference
New York, NY
September 2010
Tina Nova, Ph.D.
President & CEO
Sam Riccitelli
EVP & COO
Exhibit 99.1 |
 2
Safe Harbor Statement
Forward-looking statements contained in this presentation involve known and
unknown risks, uncertainties and other factors that may cause our actual
results, performance or achievements to be materially different from any
future results, performance or achievements
expressed or implied by the forward looking statements. They are
subject to significant
business, economic and competitive risks and uncertainties. Forward-looking
statements reflect our current views with respect to future events and are
based on our current assumptions and beliefs and subject to risks and
uncertainties. The Company disclaims any obligation to publicly update or
revise any forward-looking information or statements except as required
by law. Factors that could cause our actual results to differ materially from those
expressed or implied in such forward looking statements include,
but are not limited to, those
identified under the heading “Risk Factors”
in the Company’s Annual Report on Form 10-K
for the year ended December 31, 2009 and most recent Quarterly Report on Form
10-Q filed with the Securities and Exchange Commission.
|
    3
Genoptix
At-A-Glance
Nasdaq
Global Select, S&P Small Cap 600 Index, Russell
2000
®
Index
Specialized, differentiated
laboratory
service provider profitable
with
positive cash flows since 2007
Addressing unmet diagnostic
needs
in hematology and oncology
Addressing unmet needs in
predictive
therapeutics for solid tumor cancers
Established center of excellence for hematomalignancy
testing
with one of largest specialized physician groups in the U.S.
Delivering Personalized And Comprehensive Diagnostic Services
To Community-Based Hematologists And Oncologists
Located in North County San Diego:
Approximately 200,000 total sq. ft. in four
facilities, corporate headquarters and
diagnostic laboratories |
 4
Genoptix
One Patient
One Hempath
One Diagnosis
PCR
Cytogenetics/FISH
Flow & Morphology
The Genoptix Way
Comprehensive And Integrated Diagnosis
Community
Hem/Onc
Office
* Final diagnosis
* Treatment begins
Hempath
Consultation |
 5
Inadequacies of Traditional Testing
Results from 409 leukemia cases referred to MDACC:
27%
of
cases
were
overturned
due
to
a
wrong
diagnosis
18%
of
cases
required
a
change
in
treatment
and/or
prognosis
9%
of
cases
required
a
repeat
bone-marrow
and
re-test
Impact on patients and increase in costs:
Repeat bone marrow testing
Inappropriate drug treatment
Potential hospitalization and poorer outcomes
Potential precipitation or exacerbation of co-morbid disease
MD Anderson Cancer Center Study
* MD Anderson Cancer Center Study (MDACC). Dr David C. Hohn, MD, Past
Chairman of the Board of Directors of NCCN. 2008
National Comprehensive Cancer Network (NCCN) Case Management Program
|
 6
GXDX Business Update
3Q10 case volumes and revenues expected to be
5-10% below prior quarter (2Q10)
Economics continue to drive change in patient profile and trends
in
physician practice management
Increasing competitive activity leading to market saturation, slowing rate of
new customer acquisition
Number
of
actively
ordering
hem/onc
customers
stable
at
1300-1350
New laboratory open and operational in July 2010, customer service
center in 4Q10
Proprietary product in development with pilot launch by year-end
Additional
major
payor
contract
expected
by
end
of
the
year
Acquiring patient data on clinical outcomes to support efficacy of
GXDX model –
update by year-end
Maintaining
goal
to
capture
15
-
20%
market
share
by
2015
Revenue Trends Reflecting Change In Dynamics |
 7
Oncology Practice Management Issues
Changing patient profile
–
Number of uninsured at all time high
–
High deductible plans and increased cost of
coinsurance reducing patient utilization of
physician services
(2)
Physicians experimenting with
new
business models
–
Selling
to
hospital
or
management
companies
(3)
–
Creative revenue sharing between labs &
hem/oncs
–
Bringing lab work in-house
–
Implementation of EMR by 2014
(1)
Margot
J.
Fromer.
“Community
Cancer
Centers
Weather
Rough
Economy.”
CancerNetwork.com.
April
14,
2010.
(2)
“Behind
The
Numbers:
Medical
Cost
Trends
For
2011.”
PricewaterhouseCoppers
Health
Research
Institute.
June,
2010.
(3)
“Community
Oncology
Center
Care
Practice
Impact
Report.”
Community
Oncology
Alliance.
July
19,
2010.
Practices
getting
“squeezed”
as
community
oncologists
are
forced
to
manage
margins
–
52%
of
community
oncologists
surveyed
are
seeing
a
decrease
in
patient
volumes
(1)
Hematopathology
Testing Market Is Stable But In Transition |
 8
COMPASS
&
CHART:
The
Transformation
of
Hematomalignancy
DX
10
Convenient
Order Process &
Clear, Concise, Actionable Report
11
Complementary
Service
Offering Drives Customer Loyalty
Combines multiple COMPASS
reports
Extends our personalized
medicine/service model
Integrates intervening clinical
actions
Provides a complete clinical picture
Provides hem/onc with valuable, specialized
diagnostic tool to track individual patient’s response
to treatment
Mapping Patient Disease Progression Over Time
Emulating Quality Model With Superficial Imitation
•
“Me, too”
approach based on appearances not business model
•
We will continue to drive differentiation with quality service
offerings and new, innovative diagnostic processes |
 9
Oncologists Value the Benefits of Genoptix
Hem/Oncs
Using Genoptix
Services
0
200
400
600
800
1000
1200
1400 |
 10
Addressing Challenges In The Marketplace
Increase in regional competitiveness
Adding depth to sales coverage,
leveraging reputation for quality offering
Product imitation by competitors
Differentiating by adding new tests and
proprietary offerings
Competitive EMR purchases
Strategic EMR support for key accounts
Weakened sales force effectiveness
New sales leadership in place in 3Q10,
targeted training, new sales incentives
Increased pressure from managed care
Continued contractual negotiations,
additional agreement expected in 2010
Physician consolidation and in-sourcing
Targeted account management
initiatives underway
BM cases moving to hospitals
Initiating pilot program in 2H10 to sell
into hospitals
Challenge
Response |
 11
New Products & Services
Multiple Myeloma MRD -
iFISH
Enhanced detection
of Minimum
Residual Disease (MRD)
Improved sensitivity
with immuno-
enrichment over conventional
cytogenetics
(iFISH)
Early identification
of disease
progression
Molecular evaluations
for
Colorectal
and NSCL
carcinomas
Help
determine
optimal
treatment
options
Deepens
relationship
with
physician
customers
Extends the Genoptix
service
approach
to
solid
tumor
indications
Additional
tests
expected
in
2011 |
 12
Reimbursement And Payor
Relationships
Non-
contracted
Contracted
Contracted business
–
~ 40% Medicare
–
~ 20% major payors
expected by Y/E 2010
Non-Contracted business
–
Reimbursed by payors
as an out-of-network
provider
–
Bill patient co-insurance and deductibles at
in-network rates, as permitted by law
Evolution Of Payor
Mix
–
Signed first major national commercial
contract with Aetna in 1Q10
–
Expect to sign second major payor
contract in
2010
–
Expect mix to gradually shift toward
contractual relationships over next few years
Continuously
Evolving
Payor
Mix |
 13
Putting Capital to Work
Reinvesting income to build long-term value
Increasing operational capacity
Assessing various opportunities through intensive
evaluation
–
Technologies
–
Partnerships
–
Acquisitions
Several strategies/opportunities under consideration
–
Expansion of solid tumor testing capabilities
–
Accessing new market segments to evolve with market trends
–
Complementary technologies
Growing The Franchise |
 14
~ 8%
The Diagnosis Of Hematomalignancies
Incidence Rates
375,000 bone marrows/yr
250,000 related blood-based
tests/yr
Hem/Onc
Physicians
12,500 hem/oncs
9,500, or 76%, practice in the
community setting
Patients
850,000 patients in the U.S.
150,000 new cases annually
= Market Share
= Market Share Projection by 2015
Genoptix’
goal is to grow its share of
the bone marrow market
to
15-20% by 2015
A
Large
And
Growing
Market |
 15
Financial
Performance |
 |
 17
2010 Investments
2H 2010 EPS Impact
Laboratory Capacity Expansion
–
Grow HemPath team to 50 by Y/E
–
Additional lab support personnel
–
New laboratory opened in July
($0.10)
Sales & Marketing Expansion
–
Grow Sales team to 100 by Y/E
–
New Customer Service facility in 4Q
–
Selective investments in client EMR
($0.09)
Growth Investment Builds Strong Foundation For
Leverage Beyond 2010
Committing To Next Phase Of Growth |
 18
Financial Summary
($ in thousands)
2009
2010
Revenues
$84,487
$98,336
YOY Growth
--
16%
Cost of Revenues
32,201
39,245
Gross Profit
$52,286
$59,091
% Gross margin
62%
60%
Operating Expenses:
Sales & Marketing
14,321
20,851
Sales & Marketing % of Rev
17%
21%
General & Administrative
13,881
17,465
G&A as % of Rev
16%
18%
Research & Development
527
809
R&D as % of Rev
1%
1%
Total Operating Expenses
28,729
39,125
Income from Operations
23,557
19,966
% Operating Margin
28%
20%
Income Before Income Tax
24,491
20,496
% Pre-tax Margin
29%
21%
Net Income
13,816
10,945
% Net Income Margin
16%
11%
Six Months Ended June 30, |
 19
Summary
Targeting
15-20%
of
bone
marrow
market
share
by
2015
COMPASS
and
CHART
service
offerings
are
transforming
hematomalignancy
diagnostics
in
the
United
States
and
spurring
competitors
to
emulate
our
success
Continue
to
strengthen
sales
organization
to
convey
value
proposition
and
combat
new
entrants,
targeting
~
100
sales
reps
by
end
of
2010
Economic
pressure
on
community
hem/onc
driving
new
oncology
service
and
business
approaches
and
we
are
evolving
as
appropriate
to
meet
their
needs
A
developing
pipeline
of
new
products
and
services
for
liquid
and
solid
tumors
launching
in
coming
quarters
Actively
pursuing
objective
evidence
of
the
efficacy
of
our
diagnostic
model
Long-term
outlook
for
solid
gross
margins
in
mid-
to
high-50th
percentile
and
operating
margins
in
the
high-teens
to
low-20th
percentile
with
shift
in
payor
mix
over
next
few
years
Proactively
managing
resources
to
improve
efficiencies
and
control
costs |
 20
Thank You |