Myriad Genetics, Inc. (MYGN)

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Myriad Genetics, Inc. (MYGN)

F3Q09 (Qtr End 03/31/09) Earnings Call

May 5, 2009 10:00 am ET


Peter Meldrum - President and Chief Executive Officer

Jim Evans - Chief Financial Officer

Greg Critchfield - President, Myriad Genetic Laboratories

Adrian Hobden - President, Myriad Genetics Pharmaceuticals

Mark Capone - Chief Operating Officer


Geoff Meacham - JPMorgan

Charles Duncan - JMP Securities

Derik de Bruin - UBS

Lucy Lu - Citigroup

Michael Yee - RBC Capital Markets

Kim Lee - Wedbush Morgan Securities

Bruce Cranna - Leerink Swann



Ladies and gentlemen, thank you for standing by. Welcome to the Myriad Genetics third quarter 2009 financial earnings results call. (Operator Instructions) As a reminder, this conference is being recorded Tuesday, May 5, 2009.

I would like now to turn the conference over to Peter Meldrum, President and CEO. Please go ahead, sir.

Peter Meldrum

Good morning, and welcome to the Myriad Genetics earnings call for our third fiscal quarter ended March 31, 2009. My name is Peter Meldrum, and I'm the President and Chief Executive Officer. I'm joined today by James Evans, our, Chief Financial Officer, Gregory Critchfield, President of Myriad Genetic Laboratories, and Adrian Hobden, President of Myriad Pharmaceuticals.

I will begin the discussion this morning with a brief review of the past quarter and will be followed by Mr. Evans who will discuss our financial results. Dr. Critchfield will review the company's molecular diagnostic business, and Dr. Hobden will discuss Myriad Pharmaceuticals drug development activities. At the end of the presentation, I will turn the call over to the operator for a question-and-answer period.

Please note that some of the information presented here today may contain projections or other forward-looking statements regarding future events or the future financial performance of the company. These statements are based on management's current expectations, and the actual events or results may differ materially and adversely from those expectations for a variety of reasons.

We refer you to the documents the company files from time-to-time with the Securities and Exchange Commission. Specifically, the company's annual report on Form 10-K, its quarterly reports on Form 10-Q, its current report on Form 8-K, and Myriad Pharmaceuticals' Form 10 registration. These documents identify important risk factors that could cause the actual results to differ materially from those contained in our projections or forward-looking statements.

I'm pleased to report that we have received initial comments from the Securities and Exchange Commission on Myriad Pharmaceuticals' Form 10. We are preparing our response to those comments and are on schedule with the implementation of the spin-off of our pharmaceutical and research businesses.

At our upcoming June 2nd Board of Directors' meeting, the Board will set the shareholder record date and dividend payment date for the distribution of Myriad Pharmaceuticals stock. For each share of Myriad Genetics stock, our shareholders will receive an additional one quarter share in Myriad Pharmaceuticals. We expect that the shares of Myriad Pharmaceuticals will be distributed to our shareholders as a pro rata tax-free dividend. Myriad Genetics, Inc. will not retain any ownership position in the new pharmaceutical company.

On February 13, we filed a private letter ruling request with the International Revenue Service regarding the tax free nature of this transaction. We anticipate a response from the IRS later this month and remain confident that following the spin-off transaction, the parent diagnostic company will retain the majority of our NOLs and tax credits, which approximate $400 million in offsets to our future taxable income.

Following the separation of our businesses, Myriad Pharmaceuticals will operate as an independent entity with publicly traded stock on NASDAQ under the new ticker symbol MYRX. Because Myriad Pharmaceuticals has elected not to adopt MYGN ticker symbol, we have decided to retain the MYGN ticker for the parent diagnostic company instead of switching to a new ticker symbol.

I'm proud of the Myriad Genetics employees and their accomplishments this quarter in achieving record revenues of $87.5 million and record net profits of $25.3 million or $0.25 per share on a fully diluted basis. This represents a 4% revenue increase and a 19% increase in profitability, as compared to our prior quarter ended December 31, 2008.

Our molecular diagnostic revenues in the 2009 third fiscal quarter grew 47% over the same period of the prior year. Even more impressive is the fact that these results were achieved in a very difficult economy with unemployment hitting a 26-year high of 8.5%. Although, we're not being impacted significantly by the current severe recession, we believe the economic downturn is having a modest effect on our revenue growth.

The company continues to post strong profits from our operations. Even before the spin-off of the pharmaceutical business, with its substantial R&D spend, the net profit as a percent of revenues was 29%. This profitability growth compares favorably with our prior two quarters net profit margins of 25% and 20% respectively. As a result of this performance, the company continues to generate positive cash flow and finished the quarter ending March 31, 2009 with a strong balance sheet and $535 million cash in the bank.

I believe that Myriad has been able to grow revenues and improve profitability during the severe recession, because our molecular diagnostic products save lives, improve the quality of life, guide treatment decisions, reduce psychological stress in patients and are cost-effective to the overall health care system.

These attributes of our products are not just Myriad's belief, but represent the independent assessment of leading researchers and clinicians as published in journals such as Nature, the New England Journal of Medicine, Lancet, the Journal of the American Medical Association, and Obstetrics and Gynecology.

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