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GenomeWeb Feature: Regardless of Gene Patent Challenges, Myriad Faces Shifting Competitive Landscape


Originally published April 12.

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 Genetics, the molecular diagnostics firm that currently exercises a monopoly over BRCA testing for hereditary breast and ovarian cancer in the US.

Researchers and labs in the US that are party to a 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. Since then, 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.

However, perhaps for the first time, Myriad may be at risk of losing its grip over its diagnostic franchise in the US. Myriad's key patents underlying BRACAnalysis are being challenged in the US Supreme Court in the case Association for Molecular Pathology et al. vs. Myriad. Even if a number of its patents on large swathes of BRCA1 and BRCA2 genes are not invalidated, some of these patents are slated to expire starting in 2015. The Supreme Court is scheduled to hear arguments in the case April 15.

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. Finally, although Myriad controls the commercial BRCA testing market in the US, due to the structure of the European patent system, the company hasn't been able to enforce its patents against EU labs doing BRCA testing in the same way. 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 16 unchallenged patents for BRACAnalysis that will continue to offer IP protection against competitors, should the case result in invalidation of all seven 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 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.

Ready Competition

While ClinVar is still in a pilot phase, it doesn't pose an immediate threat to Myriad. Nussbaum's vision for the database, however, is much grander. He plans to collect de-identified phenotype and genotype data on all types of disease-linked hereditary gene variations, so ClinVar will become the go-to public resource for clinicians to find out how many times a particular marker has been seen and how it was interpreted by various labs. Through the Sharing Clinical Reports Project, Nussbaum has focused particularly on collecting data on BRCA1 and BRCA2 variants within ClinVar since Myriad is the only US lab doing commercial testing of these genes for breast and ovarian cancer and, for competitive reasons, wouldn't want to submit this information to a publicly accessible database.

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." So, in conceiving the data-sharing effort, Nussbaum figured out a way in which he could possibly bridge this gap.

A 2004 NCI survey of state regulations on research use of human tissue specimens and other types of data, including genetic data, found that clinics can release test data once they are de-identified or for institutional review board-approved research. As such, Myriad's patent position on BRCA testing doesn't have any legal bearing over what cancer clinics ordering BRCA testing do with the information in the report, freeing them to submit de-identified data to a public database if they choose. The BRCA test data that Nussbaum is collecting from clinics is scrubbed of identifying information and he also has an IRB waiver.

Around 30 clinics have so far submitted data on BRCA1 and BRCA2 variants to ClinVar. Whether more clinics will participate, making ClinVar a resource rivaling Myriad's database, remains to be seen. "We've not really gotten started yet," Nussbaum told PGx Reporter. "What we've done up until now is a pilot to gauge people's willingness and the real push now is about to start."

There hasn't yet been a real organized effort to gather data on BRCA1 and BRCA2 variants from US clinics into ClinVar. Nussbaum admitted to Credit Suisse investors that the information currently in the database is the result of the emails he has sent to clinics in NCI's list of National Comprehensive Cancer Centers during his spare time. Those involved in the project are planning to be "much more vigorous about following up" with these clinics about submitting variant data, he noted.

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 upcoming Supreme Court case challenging its BRACAnalysis patents.

Depending on the how the Supreme Court rules, AMP v. Myriad could not only invalidate Myriad's patents on BRCA1 and BRCA2 gene sequences, but could also do away with the practice of gene patenting altogether. As such, investors are keeping a close watch on the case, and Wall Street analysts are scrambling to predict how a Supreme Court decision against Myriad's patents would affect the company's future revenues and the life sciences field at large.

Some financial analysts 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?'"

Since Nov. 29, the day before the Supreme Court agreed to take on AMP v. Myriad, Myriad's stock has declined nearly 13 percent. In contrast, the average stock prices of the 29 companies covered by the GenomeWeb Daily News Index have collectively increased nearly 18 percent. "Investors are cautious and nervous about how this might play out," Divan said.

Realizing that several of Myriad's patents on BRACAnalysis are going to expire in a few years, 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 to the court.

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 AMP v. Myriad, judges in the US Court of Appeals for the Federal Circuit during an April 2011 hearing raised the question of whether whole-genome sequencing and other advanced sequencing approaches would infringe Myriad's patents, and many legal analysts have speculated on the subject since (PGx Reporter 4/6/2011). However, the US courts haven't yet provided any definitive guidance on the matter. "There has been no legal test of whether next-generation sequencing infringes the patents," Bale told PGx Reporter via email. "But even if it doesn’t, the variants identified by next-generation sequencing need to be confirmed by Sanger [sequencing] prior to reporting out (our belief and most others in the field) and the Sanger confirmation does infringe." Myriad's BRACAnalysis test combines two types of technologies: Sanger sequencing and PCR. Sanger sequencing requires isolating the gene sequences that are patented by Myriad, whereas certain next-generation sequencing approaches may not require an isolation step.

Meanwhile, Credit Suisse's Divan is aware of cancer centers and labs performing exome sequencing that are also detecting which patients have BRCA1 and BRCA2 mutations as incidental findings and are informing patients of the results. Myriad has maintained that it hasn't exercised its patents to thwart research, often highlighting that 9,000 papers have been published by 18,000 authors on BRCA1 and BRCA2 mutations. However, if researchers discover that a patient in a clinical study harbors deleterious mutations in these genes and inform the patient of their mutation status, then Myriad considers this to be commercial testing and infringing its patent.

In its latest recommendations on how labs should treat incidental findings from clinical exome and genome sequencing, the American College of Medical Genetics and Genomics included BRCA1 and BRCA2 mutations associated with hereditary breast and ovarian cancer on a list of markers that should be reported to the patient even if such testing was ordered for an unrelated disease indication. Although ACMG is a plaintiff in AMP v. USPTO, the release of these guidelines suggest that the diagnostic industry's inevitable shift toward genome sequencing technologies is presenting serious ethical challenges in medicine that don't square with patent restrictions that would bar labs from reporting pathogenic gene mutations they weren't looking for in patients but found anyway due to the advanced nature of the tests.

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."

During cost-conscious times, payors will be tracking competition in the space closely and may start to favor labs that are offering BRCA testing at a discount to Myriad. "A lot will come down to what the pricing is for the other competitors," Divan noted. "If the price of the tests from other labs is 20 percent less, for example, payors may not feel it's worth it to move away from Myriad's test" given its accuracy.

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 that 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.

Europe: A Different Scene

Since Myriad's revenues are so heavily dependent on BRACAnalysis sales, the company began exploring strategies three years ago to bring in revenues from other sources, such as through companion diagnostics partnerships with drug developers, by acquiring other firms with promising diagnostic products, and by launching its tests in European markets. As part of its international expansion efforts, the company has opened a lab in Munich, and has offices in France, Italy, Spain, and Switzerland.

Myriad has previously projected its aim to net $59 million in international revenues by fiscal year 2016. This modest goal is nowhere near what BRACAnalysis alone is bringing in for the company annually in the US, because Myriad's ability to dominate the European BRCA testing market is hobbled by the patchwork of requirements patent holders need to meet to keep their patents active in different countries. As a result, Myriad can't enforce its IP in European countries in the way it has in the US.

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. He said 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.

As a result, Myriad has kept its patents on both BRCA1 and BRCA2 genes active in some geographies, while in other regions, the company may only have certain patents in play. In Belgium, for example, Myriad's BRCA1 patent is not active but its BRCA2 patent is. "So, strictly speaking, our lab could not offer testing for BRCA2 [mutations] but it could offer testing for BRCA1," Matthijs said.

France's National Cancer Institute, INCa, has funded 16 academic labs to conduct testing for BRCA1 and BRCA 2 in the country, and in 2011 the labs tested 7,400 individuals for mutations and large rearrangements in these genes and performed more than 3,000 targeted mutation tests in relatives. "At the present time, no commercial market exists in France for BRCA 1/2 tests" since the government pays labs to perform such testing, said Dominique Stoppa-Lyonnet, head of the genetics department at Institut Curie in Paris. Moreover, beginning this year, most French labs will be using next-generation sequencing to analyze patient's genetic risk for hereditary breast and ovarian cancer, she noted.

Similarly, in the UK — a market Myriad has not yet tried to enter — genetic testing labs under the National Health Service readily perform testing for BRCA1 and BRCA2 mutations, and several labs are evaluating moving from Sanger sequencing to next-generation sequencing. West Midlands Regional Genetics Laboratory at Birmingham Women's Hospital, which issues approximately 1,200 BRCA 1/2 test reports each year, is in the process of validating three target enrichment strategies with Illumina's MiSeq next-generation sequencing platform.

Although Myriad's vigorous enforcement of its patents has essentially barred labs in the US from conducting BRCA testing for hereditary breast and ovarian cancer, in Europe, it seems labs are testing without much fear of hearing from Myriad's lawyers. There are no signs that Myriad has sent any cease-and-desist letters to labs performing BRCA testing in these regions. "I would have heard rumors if [labs] had received letters," said Matthijs, who as a member of the European Society of Human Genetics was among those who, in 2001, took part in challenging a Myriad patent (No. EP 699754) covering methods for detecting BRCA 1 mutations linked to breast and ovarian cancer.

After Myriad was granted the European patent in May 2001, a number of parties, including French research organizations Institut Curie and Institut Gustave-Roussy, and various national centers for human genetics, filed an opposition to the patent with the EPO. That opposition led the patent office to revoke the patent. Myriad appealed the decision, however, requesting that the patent be maintained in a form that restricts the original claims. In 2008, the EPO's appeals board ended the seven-year tussle between Myriad and European research groups by deciding to maintain the patent in an amended form (PGx Reporter 12/03/2008).

In the end, the EPO amended the patent to cover so-called frame-shift mutations — caused by insertions and deletions in a number of nucleotides that alter how the genetic code is translated. But the amended patent no longer covered, for example, mutations where a single nucleotide is altered in BRCA1. According to some estimates, frame-shift mutations comprise approximately 60 percent of pathogenic mutations in BRCA1.

Unable to use the full force of its patent suite to thwart competition, Myriad is trying to garner a competitive advantage and justify premium pricing in European markets based on the turnaround time and accuracy of its test. There are approximately 200 labs across major EU markets with the capability to do BRCA testing, according to figures collected by Labceutics, a company that connects drug and device makers with labs in Europe and Asia to advance personalized medicine products. Of the 60 labs in Labceutics' network that have performed BRCA testing, none use Myriad's test, and they charge around €1,000 ($1,312) per test, with an average turnaround time of about one month. Comparatively, Myriad is charging between €2,000 and €3,000 for its test and has been working to return results from its Munich lab within two weeks.

However, Myriad's test pricing may still not meet cost-effectiveness thresholds for government payors in EU countries. "No one, or very few people, would be ready to pay €3,000 for a genetic test" in France, Stoppa-Lyonnet said. Similarly, Michael Griffiths, director of the West Midlands Regional Genetics Laboratory, doesn't believe Myriad will make much headway in the UK. "Pricing in the UK is competitive," Griffiths said. Given Myriad's test prices, "it will be very difficult to attract customers in the UK."

Finally, Myriad has tried to highlight that, with the help of its proprietary database, the company's lab reports fewer variants of unknown significance, or cases where there is insufficient information to determine whether a variant is pathogenic or benign. At the European Human Genetics Conference in Nuremberg, Germany, last year, Myriad reported that its VUS rate had declined from 12.8 percent a decade ago to 2.9 percent as of 2012. A Myriad spokesperson told PGx Reporter at the time that by comparison European labs doing BRCA testing typically have a VUS rate of between 25 percent to 30 percent (PGx Reporter 6/27/2012).

European labs contest these figures, however. "It's all about how you look at the data," Matthijs said. Lab professionals in Europe have investigated Myriad's VUS numbers and maintain that the firm's VUS rate is artificially low and its estimate regarding the rate of VUS reported by European labs is unjustifiably high.

"If one lists all possible mutations and unclassified variants in a database (which may not be complete, and thus may be biased in one direction or another…), one should also take into account the respective frequency of those mutations and variants in the patient population," he said in an email. For example, he noted that if one just considers that there are eight mutations and two VUS in a database, then it would appear that the VUS rate was 20 percent. But if one considers how frequent each variant is in families, then that would affect the rate of unsolved cases.

West Midlands Regional Genetics Laboratory, on average, issues a VUS report in 8 percent of its cases. Similarly, French labs on average have a VUS finding for 10 percent of unrelated patients. "We consider that this [VUS rate] is not different from Myriad tests," Stoppa-Lyonnet said.

Furthermore, Matthijs, Stoppa-Lyonnet, and Griffiths all recounted how labs in Europe share information on gene variations and discuss interpretations informally and through regional databases. Additionally, there are efforts underway such as the Evidenced-based Network for the Interpretation of Germline Mutant Alleles, or ENIGMA, an international consortium of 100 researchers in 19 countries who are working together to analyze VUS in BRCA1 and BRCA2 genes and interpret their association to disease. As such, Stoppa-Lyonnet doesn't believe that Myriad's proprietary database will give it a significant advantage for much longer. Myriad's database, if shared, "may be useful for the community, but not more than the ongoing database organized by the ENIGMA consortium," she said.

Myriad did not agree to a phone interview for this article and did not respond to emailed questions ahead of press time.

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