Myriad Genetics
(
MYGN
) has entered into a research agreement with Intermountain
Healthcare, a nonprofit healthcare system, to carry out studies on
molecular diagnostic tests developed by the company. This agreement
will benefit treatment decisions for patients at Intermountain.
While Myriad has been conducting several studies to help in the
rapid uptake of its tests, the recent agreement with Intermountain
will be another step in this direction. The collaboration will
evaluate Myriad's Prolaris test, in the first project (Pro-008), by
analyzing biopsy samples of 200 patients diagnosed with prostate
cancer. The study will assess if the Prolaris test is able to
identify those patients who are at an increased risk of biochemical
recurrence. This identification is significant since patients at
higher recurrence risk will need more aggressive therapy.
Myriad is conducting a number of additional studies to help in
the penetration of the Prolaris test. The program in Germany
(Pro-009), which is studying 450 radical prostatectomy samples with
the clinical endpoint of biochemical recurrence, is ahead of
schedule. The program, representing the ninth clinical validation
study on Prolaris, has already received most of the prostate tumor
samples with results expected next year. Other validation studies
are also progressing well. The company has also stepped up its
commercialization efforts and has almost doubled its sales
team.
We are encouraged by Myriad's ahead-of-schedule expansion plan
in Europe. The company hopes to generate $15 million of revenues
from international operations by fiscal 2016. While
reimbursements for Bracanalysis, Colaris and Colaris AP have
already been received in these markets, Myriad is working to
receive reimbursement for Prolaris. The Prolaris clinical program
is progressing smoothly and the company is in talks with large
institutions in France and Australia to initiate additional
validation studies later this year.
Meanwhile, due to the company's focus on international expansion
and pipeline development, expenses are on the rise. With R&D
expenses touching 9% of the total revenue level in 2012 (from 7% in
2011), margins will come under pressure. This is reflected in the
decline in operating margin during the reported quarter. Moreover,
the competitive landscape is quite tough with the presence of
players such as
Cepheid
(
CPHD
) and
Genomic Health
(
GHDX
).
We have a Neutral recommendation on Myriad genetics. Our
recommendation is backed by a Zacks #3 Rank (Hold) in the short
term.
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