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Myriad Reports 20 Percent Q1 Revenue Growth, Rising Demand for Colorectal Cancer Test

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By Turna Ray

Myriad Genetics' recent investments to bolster the visibility of its molecular diagnostics products beyond its flagship BRACAnalysis test appear to be paying off.

For the three months ended Sept. 30, the first quarter of the company's 2012 fiscal year, revenues for Myriad's Colaris and Colaris AP tests for gauging the risk of hereditary colorectal cancer increased 35 percent to $9.6 million, outpacing the company's overall revenue growth of 20 percent to $111 million.

The Colaris tests comprised 8.7 percent of Myriad's total first-quarter 2012 revenues, compared to 7.8 percent of Myriad's total revenues in the year-ago period.

Myriad Genetics Laboratories President Mark Capone said that a third of the growth in the Colaris line was due to increased demand driven by continued direct-to-consumer and direct-to-physician marketing efforts and a specialized sales team dedicated solely to the colon cancer products. Two-thirds of the revenue growth was due to the addition of a new gene, PMS2, to the test menu.

Myriad expects double-digit growth for the Colaris tests for the rest of FY2012. To support the growth of these products, Myriad said it plans to continue to reach out to professional societies and medical opinion leaders regarding the clinical utility and the economic value of these tests.

"Payors have been very receptive to this message and approximately 50 percent of our top payors now reimburse for PMS2," Capone said during a call with analysts this week to discuss the company's financial results.

Although Myriad has somewhat reduced its dependence on BRACAnalysis, the test still remains the company's cash cow, generating $89.5 million, or 81 percent of total revenues, in the first quarter; compared to $81 million, or 88 percent of total revenues, in the same period in the prior year.

According to company officials, Myriad is particularly focused on growing the use of BRCA genetic testing among patients with triple-negative breast cancer, ovarian cancer, and ductal carcinoma in situ.

The six remaining molecular diagnostic tests in Myriad's portfolio added $4.9 million to first-quarter revenues, an increase of 20 percent over the year ago period, contributing to 4.4 percent of the total revenue.

In its move to diversify its product portfolio, Myriad acquired Rules-Based Medicine in May (PGx Reporter 5/4/2011). Companion diagnostic services revenue from RBM totaled $6.5 million and represented 5.9 percent of total company revenue in the first quarter. Myriad expects RBM to book between $24 million and $26 million in revenue for fiscal year 2012.

Myriad has prioritized the development of five products in RBM's portfolio, including an early-stage kidney damage detection test for diabetes patients; a differential diagnosis test that may help psychiatrists assess whether patients have major depression or bipolar disorder; a test to gauge the risk of kidney transplant rejection; a test to help doctors differentiate patients who have mild cognitive impairment from those who have Alzheimer's disease; and a blood-based colon cancer diagnosis test.

Myriad CEO Peter Meldrum said that the company has not yet announced the commercialization dates for these five products, but noted that the next product Myriad expects to launch — likely at the end of its 2012 fiscal year — is a molecular diagnostic for melanoma. "That product will allow dermatologists to determine whether a skin lesion is cancerous or benign," Meldrum said. "Current pathology analysis is unable to determine malignancy in about 300,000 skin biopsies done in the US each year."

Myriad has previously highlighted its expansion into European markets as a source of future growth. Officials said this week that the company has set up its European headquarters in Zurich and has finished building a lab facility in Munich.

The Munich lab will be certified soon, which will enable Myriad to start recording European revenues starting in January 2012. In the next five years, the company expects to generate $50 million per year in revenues from the European sales of its molecular tests.

Eyeing molecular diagnostics for autoimmune diseases, Myriad recently made a $25 million debt investment in Crescendo Bioscience and secured a three-year option to purchase the diagnostics developer (PGx Reporter 9/14/2011). The potential acquisition of Crescendo would add rheumatology as a sixth disease specialty to Myriad's portfolio of products, which currently includes oncology, preventative care, urology, dermatology, and neuroscience.

Myriad's net income for the quarter was $25.1 million, compared to $22.5 million in the prior-year quarter. R&D spending increased around 47 percent to $8.5 million from $5.8 million, and SG&A expenses rose 17 percent to $46.1 million from $39.5 million.

Myriad finished the quarter with $401.7 million in cash, cash equivalents, and marketable investment securities. The company reiterated its earlier guidance for fiscal-year 2012 revenues of $445 million to $465 million.


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