Myriad Genetics Inc.
) registered a steep decline of 9.3%, closing the session at
$26.98 on Dec 2, 2013. The downfall continued the following day
with a fall of 5.3% and closed at $25.55. The two heavy setbacks
pulled down the stock price of the company that is presently
trading way below its 52-week high of $38.27.
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Two recent developments can be primarily held accountable for
this disappointing performance of Myriad's stock.
The Centers for Medicare & Medicaid Services (CMS) recently
proposed to pay $1,438 to Myriad for each BRACAnalysis test
conducted by the company. CMS, an agency in the US Department of
Health & Human Services, is attempting to introduce several
key healthcare reform measures. The considerable reduction from
the previously paid amount of $2,795 is expected to put a heavy
burden on the company. BRACAnalysis is a popular breast cancer
test, used to identify people who are highly susceptible to
developing breast and ovarian cancer.
Further on, in a move by Invitae Corporation, Myriad Genetics has
been sued by the former over its genetic testing patents. The
lawsuit filed by Invitae is in response to a previous lawsuit
filed by Myriad regarding Invitae's BRCA and MUTYH genetic tests.
Invitae has dismissed the allegations of infringement and
promised to resolve the issue aggressively.
The suit filed by Invitae in the U.S. District Court for the
Northern District of California is based on the fact that certain
Myriad patents relating to the BRCA1/2 and MUTYH genes are
invalid and are not infringed by Invitae. Moreover, the Supreme
Court has already stated that naturally occurring DNA and any
such related information cannot be patented.
The law suit can deter growth in the BRACAnalysis market, thereby
exerting pressure on Myriad's revenues as BRACAnalysis is one of
its prime offerings. The company has already suffered a revenue
loss of $5 million in the first quarter of fiscal 2014 and
expects further market erosion in the forthcoming quarters, due
to increased competition.
Currently, Myriad Genetics carries a Zacks Rank #2 (Buy).
Investors interested in the industry may also consider stocks
AMAG Pharmaceuticals, Inc.
). All these stocks carry a Zacks Rank #1 (Strong Buy).