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Myriad Q3 Revenues Dip 2 Percent; FY 2015 Guidance Lowered

NEW YORK (GenomeWeb) – Myriad Genetics reported after the close of the market Tuesday that its third quarter revenues for fiscal year 2015 dipped 2 percent.

For the second quarter in a row, the company also lowered its guidance for the fiscal year.

Total revenues for the three months ended March 31 were $180.0 million compared to $182.9 million in the third quarter of fiscal year 2014. The revenues were below the consensus Wall Street estimate of $183.3 million. Myriad attributed the decrease to severe weather conditions in the northeast during January and February.

Total molecular diagnostics revenues were $173.0 million in the quarter, down from $176.2 million from the year-ago period. Myriad's oncology sector brought in $86.1 million, while preventive care and rheumatology contributed $76.4 million and $10.5 million, respectively.

The oncology business includes revenues from BRACAnalysis CDx, which received US regulatory approval late last year to identify patients with BRCA mutations considering treatment with AstraZeneca's PARP inhibitor Lynparza (olaparib).

According to Myriad, in the third quarter there was a 40 percent increase in ovarian cancer samples submitted to the firm, largely attributable to greater use of the germline BRACAnalysis CDx in the US market. AstraZeneca is still waiting to iron out reimbursement for Lynparza in Europe, where Myriad has launched a tumor BRACAnalysis CDx. Myriad and AstraZeneca expanded their arrangement for BRACAnalysis CDx in April to use the test as part of studies investigating Lynparza in metastatic pancreatic cancer, which represents a $500 million market opportunity.

Myriad during the quarter also expanded its agreement with BioMarin Pharmaceutical to use its NGS-based myChoice HRD companion diagnostic to prospectively identify patients with metastatic breast, ovarian, and other cancers who may respond well to the PARP inhibitor talazoparib. Mark Capone, president of Myriad Genetic Laboratories, said on a call to discuss the quarterly financials that Myriad is building a laboratory so it can perform studies involving myChoice HRD in line with US Food and Drug Administration regulatory requirements and is planning to submit an investigational device exemption application for the test with the agency.

Myriad's revenues from hereditary cancer testing were $159.0 million in the third quarter compared to $169.6 million the previous year. The myRisk Hereditary Cancer next-generation sequencing test contributed $81.6 million to third quarter revenues compared to $14.5 million in the third quarter of 2014.

At the end of the third quarter, 58 percent of its hereditary cancer testing business was attributable to myRisk, and the firm aims to completely transition its older hereditary cancer tests to myRisk by this summer.

Revenues from the Vectra DA rheumatoid arthritis test were $10.5 million in the third quarter compared to $3.1 million in the third quarter of 2014. Myriad has implemented a number of strategies to grow sales of Vectra DA, such as publishing a new health economic study; transitioning from an outsourced billings provider to an in-house billings and collections system; establishing a new sales force incentive program; and making it easier to order the test for community physicians. "These strategies are already starting to have an impact and … sample volumes increased during the month of April," Meldrum said on the call..

He noted that the company held discussions with commercial insurance providers on Vectra DA during the third quarter, and some of the insurers want to see additional clinical utility studies on the test. Myriad is designing additional studies in this regard, which will take some time, Meldrum noted. As such, Myriad is not assuming any significant additional private payor reimbursement next year, and the Vectra DA sales force will focus on the Medicare population.

Revenue from Myriad's pharmaceutical and clinical services business was $7.0 million compared to $6.7 million in the year-ago quarter.

During the third quarter, Myriad acquired a licensed German MVZ (Medizinisches Versorgungszentrum) clinic near Munich that the company believes will help it further expand into the German molecular testing market. According to Myriad, this clinic will enable the firm to negotiate reimbursement with government insurers and private payors and collaborate with hospitals and doctors. 

Myriad's net income for the third quarter was $21.5 million, or $.29 per share, compared to $36.8 million, or $.48 per share, in the year-ago period. On a non-GAAP basis, EPS was $.40, higher than analysts' consensus estimate of $.39.

During the quarter, Myriad repurchased around 1.8 million shares, or $62 million, of common stock under its share repurchase program. In February 2015, Myriad's board authorized the repurchase another $200 million of its common stock, most of which was remaining at the end of the quarter, the company said. 

The firm's R&D expenses in the third quarter were $16.7 million compared to $13.4 million in the third quarter of 2014, while its SG&A expenses were $91.3 million compared to $87.6 million in Q3 2014.

Myriad ended the quarter with $175.6 million in cash, cash equivalents, and marketable investment securities.

Myriad estimates that in the fourth quarter of FY 2015 the company will have revenues of between $187 million and $189 million, with adjusted EPS of between $.40 and $.42.

The company further lowered its full-year revenue guidance to between $720 million and $722 million, with adjusted EPS of between $1.44 and $1.46. At the end of the second quarter, Myriad had said it expected revenues of between $730 million to $740 million, down from a previous expectation of $800 million to $820 million.

"The primary reasons for this guidance revision are related to the impact of severe weather on our fiscal third quarter revenue, a delay in Medicare reimbursement for Prolaris until the first quarter of fiscal year 2016, and a delay in international reimbursement," the company said in a statement.

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