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Myriad Q1 Revenues Up 13 Percent

NEW YORK (GenomeWeb) – Myriad Genetics reported after the close of the market on Tuesday that its fiscal first quarter 2019 revenues rose 13 percent year over year.

For the three months ended Sept. 30, total revenues rose to $202.3 million from $178.8 million in the year-ago quarter, just shy of analysts' average estimate of $202.4 million.

Of total revenues, molecular diagnostic testing revenues rose 13 percent to $189.0 million from $167.4 million. Within the firm's molecular diagnostics business, its hereditary cancer testing revenues fell 1 percent to $116.3 million from $117.0 million; GeneSight revenues rose 2 percent to $29.3 million from $28.8 million; Vectra revenues fell 7 percent to $13.0 million from $14.0 million; Prolaris revenues rose 59 percent to $6.2 million from $3.9 million; EndoPredict revenues rose 33 percent to $2.4 million from $1.8 million; revenues from prenatal testing came in at $18.1 million; and other revenues rose 95 percent to $3.7 million from $1.9 million.

"Earnings during the quarter exceeded expectations based upon strong hereditary cancer and new product volume growth," Myriad President and CEO Mark Capone said in a statement. Myriad recently introduced the 86-gene breast cancer riskScore to its hereditary cancer portfolio — during a call with analysts  to discuss the quarter's financials, Capone highlighted that this was a key contributor in the quarter, with double-digit year-over-year volume growth in patients that qualify for hereditary cancer testing but have less severe family histories.

The company also reported that GeneSight test volume increased 28 percent year over year, and that 15,500 physicians, including almost 2,500 new ordering doctors, ordered a GeneSight test in the fiscal first quarter. Prenatal testing volume also increased 16 percent year over year in Q1.

Although the company met its revenue expectations for the quarter, Myriad executives cited two factors in Q1 that affected GeneSight and prenatal testing revenues, and as a result the firm revised its annual revenue guidance for FY 2019 to a range of $855 million to $865 million. According to Myriad CFO Bryan Riggsbee, although GeneSight volumes increased during Q1, revenues lagged largely due to requirements from Medicare for additional documentation and doctors' attestations related to the indications for use on the test request form.  

"While we are actively working with physicians to meet these new requirements, we are assuming it would take a few quarters to achieve compliance," Riggsbee said during the earnings call. "Until then, samples without this documentation will not be submitted for reimbursement."

The second issue had to do with revenues from Counsyl, which Myriad acquired over the summer to enter the prenatal testing space. During the quarter, Counsyl contributed $30 million to revenues, which was flat year-over-year. Riggsbee noted that while prenatal volume growth was in line with expectations in Q1, revenues were lower than expected because of an out-of-network status from UnitedHealthcare.

Capone characterized these issues as "transitory," and as a result the company is maintaining its annual earnings guidance. The company has projected FY2019 EPS of $.40 to $.45, and adjusted EPS of $1.70 to $1.75. Analysts are expecting revenues of $888.0 million and EPS of $1.72 for fiscal 2019.

During the quarter, there was also a delay in a pivotal publication for GeneSight for the 1,200-patient prospective, blinded, and randomized GUIDED study. Myriad decided to pull its submission to a publication that wanted the company to disclose the test's proprietary algorithm. The company has now submitted the manuscript to a second publication and is anticipating its acceptance by the end of the fiscal second quarter.

"We believe the GeneSight dossier is the strongest in our 27-year history," Capone said, adding that the day this study is accepted for publication, Myriad will send the dossier to technical assessment organizations at payors that represent 60 percent of commercial lives. Additionally, based on the strength of the data from GUIDED and another recently published study, Myriad will send a reconsideration request to Medicare to try to expand access among primary care physicians, Capone said.

Recently, the US Food and Drug Administration authorized consumer genomics firm 23andMe's pharmacogenetic tests for 33 variants but with the caveat that the test results must be confirmed with a clinical test before they can be used to inform treatment strategies. The FDA also issued a safety alert cautioning doctors and patients against using PGx tests without the agency's approval or clearance, because such tests may lack evidence and result in harm. These actions have confused industry players and put a spotlight on all companies selling PGx testing as lab-developed tests performed in CLIA certified labs but without the agency's approval, which comprise the majority of the genetic tests on the market.

"We strongly agree with this position as unlike GeneSight, most companies have not published clinical outcomes data supporting their tests," Capone said, responding to questions about the FDA's recent communications during the earnings call. "The FDA has maintained their position to exercise enforcement discretion over LDTs subject to congressional legislation. Myriad continues to support additional oversight of LDTs through legislation to ensure a consistent level of clinical evidence for approved or clear tests."

Myriad told GenomeWeb last week that it doesn't expect the FDA's authorization of 23andMe's PGx test to impact its business, and highlighted the data it has published on GeneSight showing the test improves patient outcomes, as well as the key technological differences between its own assays and 23andMe's tests. Further, the FDA's previous authorization of 23andMe's BRCA test for three variants did not affect Myriad's hereditary cancer testing revenues, a company spokesperson said. When patients brought in 23andMe's BRCA test reports to their doctors, they ordered Myriad's test for confirmation, Capone suggested.

Further, last week, when the FDA issued its safety alert, was a record week for GeneSight in terms of test orders, according to Capone. He added that among doctors Myriad has spoken to, there is low awareness of 23andMe's PGx test and confusion about what the FDA's caveats in the authorization meant, though most seemed to understand the substantial differences between the combinatorial PGx test Myriad offers and 23andMe's SNP test.

Meanwhile, pharmaceutical and clinical service revenues during the quarter rose 17 percent to $13.3 million from $11.4 million a year ago.

Myriad reported a net loss of $700,000, or $.01 per share, compared to net income of $78.8 million, or $1.12 per share, in fiscal Q1 2018. On an adjusted basis, the company reported earnings per share of $.43 for the quarter, beating the Wall Street estimate of $.30 per share.

The company's fiscal Q1 2019 R&D expenses rose 19 percent to $21.1 million from $17.8 million in fiscal Q1 2018, and its SG&A costs for the quarter rose 21 percent to $129.9 million from $107.2 million.

Myriad ended the quarter with $93.3 million in cash and cash equivalents and $74.2 million in marketable investment securities.

For the fiscal second quarter, the firm is expecting revenues of $216 million to $218 million, EPS of $.06 to $.08, and adjusted EPS of $.36 to $.38. Analysts are expecting revenues of $224.5 million and EPS of $.43 for Q2.

Myriad's shares fell more than 10 percent to $32.90 in Wednesday morning trading on the Nasdaq.