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Myriad Revenues Grow 9 Percent in Q1

NEW YORK (GenomeWeb) – Myriad Genetics reported after the close of the market Tuesday that its fiscal first quarter revenues grew by 9 percent from the year-ago quarter, beating analysts' consensus top-line estimate. 

The molecular diagnostics firm brought in total revenues of $183.5 million for the three months ended Sept. 30, compared to $168.8 million in Q1 2015, and above the consensus Wall Street estimate of $177.9 million.

Myriad's molecular diagnostic testing revenue was $171.9 million for the quarter, a 5 percent bump up from $164.5 million in Q1 2015. Hereditary cancer test sales increased 4 percent year over year to $156.7 million, with 80 percent of hereditary cancer tests being ordered as myRisk.

Myriad said it has completed converting 100 percent of its targeted physician base from older tests to the next-generation sequencing myRisk Hereditary Cancer platform. Mark Capone, Myriad Genetics president and CEO, said during a call to discuss the company's quarterly financials that the revenue growth suggests the company did not see any discernible market losses with the physicians it was targeting for conversion to myRisk.

The company has also implemented a telephone outreach program to help non-targeted physicians make the same conversion. To date, Myriad's customer service representatives have been successful in converting 55 percent of doctors after reaching out to them through this program, said Capone.

Goldman Sachs analyst Isaac Ro wrote in a note that UnitedHealthcare has proposed requiring genetic counseling for coverage of BRCA testing. "While details on how this process will work have not yet been finalized, [Myriad's] management has downplayed the potential risk to the business if in fact this policy is put into effect and/or spreads to other commercial payers," Ro wrote.

Capone noted during the call that with the UHC proposal physicians can themselves provide "an attestation" that shows they can perform genetic counseling for patients, although the details of this requirement haven't been laid out. "We don't see an impact in our business," he said, adding that many professional societies have invested in training medical professionals to provide such counseling.

Myriad has conducted a 600-patient breast cancer study in collaboration with Dana-Farber Cancer Institute evaluating mutation frequency in an "unselected population." The company is submitting this and two additional studies to the National Comprehensive Cancer Network in an effort to expand the criteria for hereditary breast cancer testing.

"We believe this data supports the testing of all breast cancer patients under the age of 60 based upon historical eligibility criteria utilized by NCCN," Capone said. If NCCN does accept this data, it would expand the percentage of newly diagnosed patients eligible for hereditary cancer testing from 37 percent to 60 percent.

Myriad is also improving its variant interpretation capabilities. The firm recently presented data on an advanced artificial intelligence literature search algorithm, called LitView, that Capone said increased Myriad's ability to identify variant references at a 36 percent higher rate than public databases. Another proprietary method, according to Capone, allows the company to evaluate the impact of a specific variant on the transcription and functionality of resulting RNA.

In addition to myRisk sales, during the quarter, the firm's Vectra DA rheumatoid arthritis test brought in $11.4 million in revenues, marking an 8 percent increase from $10.6 million in the year-ago quarter. Myriad's pharmaceutical and clinical service revenue increased 170 percent to $11.6 million from $4.3 million in the year-ago period.

Myriad has begun submitting Medicare claims for its Prolaris test for low- and very low-risk prostate cancer patients, according to Capone. The company anticipates beginning to record revenues from this test in Q2. Medicare contractor Noridian issued a final local coverage decision for the test in August and Myriad signed a contract with its first commercial payor, Tufts Health Plan, in October.

Myriad's net income for the first quarter was $26.6 million, or $.37 per share, compared to $16.0 million, or $.21 per share, in Q1 2015, a 66 percent increase. On a non-GAAP basis, its EPS was $.41, beating the average Wall Street estimate of $.35.

Myriad's Q1 R&D expenses decreased 24 percent to $17.2 million from $22.6 million, while its SG&A spending inched up to $86.5 million from $85.4 million.

Myriad ended the quarter with $87.4 million in cash and cash equivalents, and $68 million in marketable investment securities.

For fiscal year 2016, Myriad maintained its previous guidance for revenues of between $750 million and $770 million, with adjusted EPS between $1.60 and $1.65. For fiscal Q2, the company said it expects revenues in the range of $188 million to $190 million, and adjusted EPS of between $.40 and $.42.