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Competition Coming for Myriad's BRCA Test, Whether or Not Gene Patents Hold Up

NEW YORK (GenomeWeb News) – In the next few years, or perhaps even sooner, Myriad may be at risk of losing its grip over the lucrative BRCA testing franchise in the US.

Myriad's key patents underlying its flagship BRACAnalysis are being challenged in the case Association for Molecular Pathology et al. vs. Myriad. The Supreme Court heard arguments in the case on April 15 and is expected to issue a decision sometime in June. Even if Myriad prevails, and its patents on large swathes of BRCA1 and BRCA2 genes are not invalidated by the court, some of these patents are slated to expire starting in 2015.

Meanwhile, in the life sciences market at large, diagnostic technologies are moving toward next-generation sequencing. While patents on large sections of isolated genes, like those Myriad holds, could hinder such testing, most industry experts believe that enforcing gene patents in this manner would severely hobble advances in molecular diagnostics and personalized medicine.

On top of these challenges, due to the structure of the European patent system, Myriad faces a difficult task in enforcing its patents against EU labs doing BRCA testing. Gert Matthijs, head of the Laboratory for Molecular Diagnostics at the Center for Human Genetics in Leuven, estimates there are between 60 labs and 75 labs performing BRCA testing for hereditary breast and ovarian cancer across Europe — and most of these labs are in some part infringing a Myriad patent covering its BRCA test.

"The remarkable thing is that for patents granted at the European level … someone who applies for the patent has to do it only once with the European Patent Office. But then, to make sure the patent remains active, the patent owner has to pay fees in each individual country, which makes it quite expensive and cumbersome at the same time," Matthijs said.

Myriad has recently set up shop in a number of European countries, aiming to grow adoption of BRACAnalysis and its hereditary colorectal cancer risk test Colaris, but revenue from these markets may not be enough to supplant the market share it stands to lose if its BRCA1 and BRCA2 patents are invalidated in the US.

Myriad has tried to deflect negative speculation about the impact AMP v. Myriad may have on its business by highlighting that it has a number of unchallenged patents for BRACAnalysis that will continue to offer IP protection against competitors, should the case result in invalidation of the patents at issue. Most importantly perhaps, even when these patents underlying BRACAnalysis expire, Myriad is betting that its in-house, proprietary database of BRCA1 and BRCA2 mutations will enable it to identify new markers associated with hereditary breast and ovarian cancer risk, launch improved versions of its risk test, and remain the market leader.

Myriad in 2006 stopped sharing information on BRCA1 and BRCA2 variants with the open-access international database Breast Cancer Information Core, a move that many researchers in the field believe was a deliberate effort by the company to keep its database a trade secret. In the meantime, Myriad has tested nearly a million patients on BRACAnalysis, and it's likely that the company has stored information on these cases in its internal database of genotype and phenotype data. In the face of a diminishing patent position and a competitive landscape rapidly moving toward advanced diagnostic technologies, for Myriad, this database is its trump card.

A Public Resource

A genetics researcher at the University of California, San Francisco, however, is quietly building a public database containing BRCA1 and BRCA2 variants, that he hopes will become the go-to resource for other labs who in the future perform BRCA testing. Just over a year ago, Robert Nussbaum began emailing cancer clinics that order genetic tests for women with a family history of breast and ovarian cancer to make a simple request. He asked whether they would submit de-identified data from patients tested for mutations in BRCA1 and BRCA2 genes to a publicly accessible database, called ClinVar.

A number of clinics agreed and to date ClinVar has amassed data on approximately 1,000 unique BRCA 1 and BRCA 2 variants, around one third of which have not been seen before. Nussbaum, head of the medical genetics division at the University of California, San Francisco, estimates that the amount of data on BRCA1 and BRCA2 genes contained in ClinVar today is about 1 percent of the information accumulated in the proprietary database held by Myriad.

Researchers and labs in the US that are party to the lawsuit challenging Myriad's patents underlying its BRACAnalysis test, and especially those researchers that the company has stopped from conducting BRCA testing without purchasing a license, would characterize Myriad as a firm that aggressively defends its patent position. However, Nussbaum hasn't received any pushback from Myriad about his efforts to collect information on BRCA1 and BRCA2 variants through the Sharing Clinical Reports Project.

"Whether it's because they realize that there is nothing I'm doing that is improper or illegal or breaks regulations in any way, or whether they think it's kind of a small-level volunteer effort that's never going to go anywhere … [or] they don't think it is a considerable threat, I don't know," Nussbaum said. "But I've received no communication or feedback from [Myriad] at all."

Myriad launched BRACAnalysis in 1996 as a test that doctors could use to gauge whether patients harbored BRCA1 and BRCA2 mutations that predisposed them to a heightened risk of inherited breast and ovarian cancer. The company exercises a monopoly over BRCA testing for hereditary breast and ovarian cancer in the US. As a result, BRACAnalysis has grown to be the company's cash cow, bringing in more than 85 percent of the $472 million in molecular diagnostic testing revenue Myriad reported for the last fiscal year. Revenues of this magnitude from one test are rare for a molecular diagnostic firm, but Myriad has been able to achieve it largely because it has enforced its patents underlying BRACAnalysis to deter US labs and researchers conducting BRCA1 and BRCA2 testing for breast and ovarian cancer.

During a recent call with the financial services group Credit Suisse to discuss ClinVar and the patent lawsuit against Myriad, Nussbaum noted that although BRCA1 and BRCA2 are possibly "two of the most heavily studied human disease genes" over the last two decades, the fact that information on the gene variants aren't publicly available in the way other hereditary disease-linked genes are is a "huge, glaring hole."

ClinVar is run by the National Center for Biotechnology Information and data collection efforts are currently being supported through philanthropic contributions. Nussbaum and others involved in developing the database are awaiting an NIH grant to fund the development of software that will make it easier for labs and clinics to submit de-identified, interpreted clinical variant data, and enable people to discuss why one lab may have interpreted a variant differently than another, or engage in what Nussbaum calls "a crowdsourcing of interpretation."

Over the next two years, Nussbaum is hoping to cull data on BRCA1 and BRCA2 variants from approximately 100,000 patient reports. "As you talk to people who do a lot of molecular genetic testing … what is clear is that they are absolutely starving for the ability to trade information with each other," he told Credit Suisse investors, who were particularly interested in gauging Myriad's future financial prospects, given the Supreme Court case challenging its BRACAnalysis patents.

Ready Competition

Some financial analysts following AMP v USPTO closely have remained optimistic that even if the Supreme Court invalidates Myriad's patents, the company will hold on to the BRCA1/2 testing market since its vast proprietary database will enable it to market a more accurate test, with faster turnaround times, than competing labs. A survey conducted earlier this year by the investment bank Mizuho Securities found that more than 70 percent of the labs that responded said they would not perform BRCA testing, most often citing their lack of technical capabilities to perform such testing. Less than 15 percent of the surveyed labs, however, said they would perform BRCA testing even without the benefit of Myriad’s internal clinical database.

"Some investors play the event, and are trying to get a sense of how they should invest for now," Vamil Divan, VP and senior analyst covering the life science tools and diagnostics sector at Credit Suisse Group, told PGx Reporter. "But I think most people are looking beyond that and are thinking, 'What do I do after the verdict comes out?'"

Divan sees a growing segment of the investment community taking careful stock of advancements in the larger life sciences field, such as ClinVar and the emergence of next-generation sequencing-based cancer panels that promise to offer BRCA testing faster and more cheaply than BRACAnalysis. Given the number of cancer centers that are already using next-generation sequencing-based cancer testing in research, Divan said the gap between the amount of data in ClinVar and Myriad's internal database may close "relatively quickly."

Roger Klein, chair of the professional relations committee at AMP, is aware of several institutions and commercial labs that would offer BRCA testing for hereditary breast and ovarian cancer if competitive barriers are lifted either by patent expiration or invalidation by the Supreme Court. "I suspect that people are already setting up, for example, multi-gene testing using next-generation sequencing for hereditary breast cancer," Klein said. "In discussions I've had, people seem reluctant to include BRCA 1 and BRCA 2. But my guess is you'll start to see a number of entities starting to set it up."

For example, when breast cancer genetics pioneer Mary-Claire King and Tom Walsh of University of Washington launched the BROCA Cancer Risk Panel last year, they excluded BRCA1 and BRCA2 from the panel of genes that the targeted sequencing test gauges. BROCA tests for mutations in 40 genes associated with a heightened risk of various hereditary cancers, including breast and ovarian, and costs about half of what Myriad charges for gauging mutations in BRCA1 and BRCA2. Industry experts believe that if the BROCA test were to include BRCA1 and BRCA2, then the price may still be cheaper than, or at least comparable to, the $3,000 to $4,000 price tag for BRACAnalysis.

Similarly, InVitae has developed a targeted next-generation sequencing based test to assess 270 inherited conditions. The test, currently being offered to healthcare providers through an early access program with a $1,500 price tag, doesn't analyze BRCA1 and BRCA2 genes for hereditary breast and ovarian cancer.

However, in a friend of the court brief filed with the Supreme Court in AMP v. Myriad, InVitae expressed concern that patents on gene fragments will restrict its ability to offer the most complete and accurate test to patients. "InVitae is concerned that some patentees holding patent claims on specific genes or on individual mutations within a gene could foreclose its ability to provide patients with access to their genetic information which is naturally present in the human genome as well as preventing the research and commercial life sciences communities from developing further understanding of the medical significance of aspects of that genetic information," the company wrote in its brief.

GeneDx, a company that specializes in genetic testing for rare hereditary disorders, and its parent company Bio-Reference Laboratories intend to provide testing for BRCA1 and BRCA2 gene variants on a next-generation sequencing platform "when/if impediments are removed," said GeneDx Managing Director Sherri Bale, adding that GeneDx isn't the only lab with this plan.

In addition, as next-generation sequencing methods become more integrated into mainstream medical care, the efficiencies in terms of cost might be what ultimately break Myriad's monopoly on the BRCA testing market. Although in Mizuho's survey only a minority of labs said they wanted to offer BRCA testing to compete with Myriad, at least one clinical genetics expert was "chomping at the bit" to offer BRCA testing and knew other colleagues who were similarly interested in offering the test, analyst Peter Lawson wrote in a recent note to investors. The expert said that other labs that launched BRCA testing would be able to compete with Myriad in terms of pricing. The total list price for Myriad's integrated BRCA test is $4,040, which includes complete sequencing of the BRCA1 and BRCA2 genes and detection of five common large rearrangements in BRCA1 via its Comprehensive BRACAnalysis test (list price $3,340), as well as testing for additional large rearrangements in the two genes with the BRACAnalysis Large Rearrangement Test, or BART (list price $700).

"Once other large reference labs start to enter the market with competing tests, the pricing they're going to offer is going to be a lot less," Credit Suisse's Divan said. "So, Myriad might have to give up some market share to keep [BRACAnalysis] at the price that they have … or they'll have to sacrifice on pricing to hold on to some share."

Despite the enthusiasm of some labs to offer BRCA testing, the expert Mizuho's Lawson spoke to told him that the "biggest obstacle" for those who wish to compete with Myriad is its proprietary database. This, according to the expert, provides Myriad "quite an advantage" and presents a "constant struggle" for potential competitors.

A longer version of this article, which includes an in-depth look at Myriad's challenges and competition in Europe, ran in PGx Reporter on April 12.