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Myriad Reports 17 Percent Third Quarter Revenue Growth

NEW YORK (GenomeWeb) – Myriad Genetics reported after the close of the market Tuesday a 17 percent year-over-year increase in its revenues driven by its hereditary cancer tests.

For the three months ended March 31, Myriad reported total revenues of $182.9 million, up from $156.5 million in the third quarter of fiscal year 2013. The firm easily beat the consensus analysts' estimate of $175.3 million.

Molecular diagnostics revenue was $176.2 million, a 19 percent increase from $148.4 million for Q3 2013. Women's health revenue totaled $80.7 million, an increase of 53 percent over the third quarter of 2013.

Although Myriad's comprehensive BRACAnalysis test — including BRACAnalysis and BART — remains its best-selling product, bringing in $140.8 million for the quarter, the company's oncology segment took a dip in revenues to $92.4 million from $95.8 million due to a Medicare reimbursement cut for the test. "This $3.4 million year-over-year decline resulted from a $6 million decrease in the Medicare reimbursement rate for BRACAnalsysis that took effect January 1, 2014," the company said in a statement, adding that CMS decided recently to increase the reimbursement rate for the test by 37 percent effective April 1.

The next-generation sequencing based myRisk Hereditary Cancer test, which Myriad launched in September through an early access program, contributed $14.5 million to the firm's quarterly revenues. Company officials said they were on track to fully launch myRisk in the fall and then convert all hereditary cancer testing to the NGS panel by the summer of next year.

The Colaris and Colaris AP tests had combined revenues of $14.4 million. Myriad CEO Peter Meldrum highlighted during a conference call that the National Cancer Comprehensive Network revised its medical guidelines for hereditary colon cancer screening, noting this would likely positively drive more hereditary cancer testing in this space. The new guidelines support the use of risk-based criteria to identify patients that should be tested for hereditary colon cancer.

Meanwhile, Myriad's companion diagnostics revenues dropped from $8.1 million in the third quarter of fiscal year 2013 to $6.7 million in the third quarter of fiscal year 2014. Myriad is currently developing BRACAnalysis as a companion test for a number of drugmakers advancing PARP inhibitors and DNA-damaging agents.

The furthest along is Myriad's collaboration with AstraZeneca for the PARP inhibitor olaparib. The US Food and Drug Administration recently granted priority review status to olaparib with a PDUFA date of Oct. 3. Myriad announced in early April the submission of its first premarket approval application module for BRACAnalysis as a companion test for olaparib.

Anticipating the approval of olaparib in the US in the fall, Myriad is planning to educate healthcare providers about the importance of testing ovarian cancer patients on BRACAnalysis before prescribing them the drug. In relation to this educational effort, Meldrum during the call pointed out that the Society of Gynecological Oncologists also now recommends testing all ovarian and endometrial cancer patients for their hereditary risk of the diseases.

Additionally, AstraZeneca has launched three Phase III studies investigating olaparib in breast cancer and is planning to file an NDA for the drug in metastatic breast cancer patients in 2016. Myriad’s BRACAnalysis test will also be used in these studies to pick out best responders to the drug.

Myriad sees significant growth opportunities from transitioning BRACAnalysis to a companion diagnostic given that its pharmaceutical collaborators are using the test to stratify patients for PARP inhibitors in three major cancers – breast, lung, and prostate. "The approval of PARP inhibitors across multiple cancers will further position Myriad as a leading global diagnostic company and represents a market opportunity for the BRACAnalysis CDx test of over $1 billion annually in the US," Meldrum said during the call.

Meldrum highlighted the BRACAnalysis companion test, the Prolaris test, and myPath Melanoma as products that "are poised to be significant growth drivers" for the firm in 2015. "Each of these products has the potential to generate revenues of over $100 million in the next five years," Meldrum said.

Myriad is currently anticipating Medicare coverage for its Prolaris prostate cancer prognostic test in coming months. To this end, during the third quarter the company submitted to the Centers for Medicare & Medicaid Services data from the PROCEDE 500 clinical utility study, which showed that diagnostics influenced treatment strategies for the majority of 150 surveyed doctors.

Although company officials acknowledged that Medicare coverage will significantly help drive adoption of the test, Myriad still saw a 25 percent sequential growth in samples being analyzed with Prolaris."We're preparing for a more expansive launch of Prolaris in coordination with our expected receipt of Medicare reimbursement coverage," Mark Capone, president of Myriad Genetic Laboratories, said during the call.

The firm is also planning to submit data to CMS for Medicare coverage of myPath Melanoma next year.

Myriad's net income for the quarter was $36.8 million, or $.48 per share, in the third quarter versus $37.9 million, or $.46 per share, for Q3 2013. However, after factoring in non-cash charges associated with Myriad’s acquisition of Crescendo Bioscience during the quarter, its adjusted net income was $46.2 million, or $.60 per share. It surpassed the Wall Street consensus estimate of $.45.

The company's R&D expenses dipped slightly year over year to $13.4 million from $13.6 million, while its SG&A expenses jumped around 36 percent to $87.6 million from $64.6 million in Q3 2013.

Myriad ended the quarter with $277.7 million in cash, cash equivalents, and marketable investment securities.

The firm raised its revenue and EPS guidance for FY 2014 following the release of the third quarter results. It now expects revenues in a range between $770 million and $775 million, up from a previous range of $740 million to $750 million. It expects adjusted EPS between $2.37 and $2.40, up from its previous guidance of $2.09 to $2.12.

In Wednesday morning trade on the Nasdaq, shares of Myriad tumbled 10 percent to $36.76.