With the reaffirmation of an earlier ruling from the U.S. Court
of Appeals for the Federal Circuit, a major breakthrough took place
for molecular diagnostic company
Myriad Genetics, Inc.
(
MYGN
). The earlier ruling given on July 29, 2011 confirmed Myriad's
right to patent two isolated human genes - BRCA 1 and BRCA 2 -
directly related to breast and ovarian cancer. However, the Supreme
Court asked for a reconsideration of the whole matter.
The lawsuit was initiated on May 12, 2009 by the Association for
Molecular Pathology, et al. (Plaintiffs) in the U.S. District Court
for the Southern District of New York with the allegation that
Myriad's patents on BRCA 1 and BRCA 2 human genes were invalid and
unlawful. Currently, Myriad has exclusive license rights to 525
claims in 24 issued U.S. patents related to Bracanalysis
testing.
Bracanalysis is Myriad's flagship product, contributing 81.7% of
total revenue. This test provides a comprehensive analysis of BRCA
1 and BRCA 2 genes for assessing a woman's risk of hereditary
breast and ovarian cancers. A woman testing positive for a
deleterious mutation with the Bracanalysis test has an 82% risk of
developing breast cancer and a 44% risk of developing ovarian
cancer during her lifetime. The test is currently priced at
$3,340.
However, the company noted that 95% of the U.S. patients
requiring Bracanalysis can obtain coverage through private
insurance, Medicare, Medicaid or Myriad's Financial Assistance
Program. For the past 3 years, more than 5,000 patients have
benefitted from this assistance program.
In the fourth quarter of 2012, revenues from Bracanalysis
increased 17%. Foreseeing significant growth opportunity in the
Women's Health market for Bracanalysis, Myriad is currently
focusing on penetrating the segments of ovarian cancer, carcinoma
in situ and triple negative breast cancer indications.
We consider Myriad's Bracanalysis system a valuable asset for
top-line growth as it has the potential to tap a widely unexplored
market. The company considers the oncology market to be huge, with
Bracanalysis having penetrated about 50% of the cancer segment. As
a result, the favourable second ruling by the U.S. federal appeals
court may be considered a positive development for Myriad. The
company is currently undertaking various strategies to increase
both the market size and penetration level of Bracanalysis. During
fiscal 2012, the company entered into agreements with Cephalon, a
subsidiary of
Teva Pharmaceutical
(
TEVA
) and Pharma Mar to conduct companion diagnostic testing for their
clinical trials.
We currently have a Neutral recommendation on Myriad. The stock
retains a Zacks #3 Rank (Hold in the short term).
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