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Myriad Reports 8 Percent Rise in Q4 Revenues; Stock Drops on Forecast

NEW YORK (GenomeWeb) – Myriad Genetics reported after the close of the market Tuesday that its fourth quarter revenues rose 8 percent year over year.

The Salt Lake City-based molecular diagnostics firm brought in total revenues of $188.8 million for the three months ended June 30, compared to revenues of $174.1 million for the fourth quarter of 2013, beating the consensus Wall Street estimate of $187.7 million.

The firm's shares fell in Wednesday morning trade, however, after Myriad provided guidance for Fiscal Year 2015 below analysts' estimates.

Myriad's molecular diagnostic testing revenue was $182.9 million for the quarter, a 10 percent increase from $166.1 million in the fourth quarter of 2013. Revenue from its women's health market totaled $81.9 million, 24 percent higher than the same quarter last year. Contributions from the company's oncology segment, however, decreased 10 percent over the previous year to $90.2 million.

In a statement Myriad attributed the decline to a non-recurring benefit of celebrity publicity in the previous year's fourth quarter — what some have dubbed the 'Angelina Jolie Effect.' The firm also cited an 18 percent reduction in the Medicare reimbursement rate for its BRACAnalysis test and market competition.

The company's hereditary cancer tests contributed $168.4 million in the fiscal fourth quarter, three percent more than in the same quarter of 2013. Myriad's BRACAnalysis made up $107.4 million of that total, and the company's newer next-generation sequencing-based myRisk hereditary cancer panel, which it launched in September 2013 through an early access program, contributed $27.3 million.

Mark Capone, president of Myriad Genetics Laboratories, said on a conference call following the release of the financial results that Myriad is looking ahead to a broader commercial launch of myRisk this fall.

Though myRisk represented only 15 percent of the company's total hereditary cancer testing in Q4 this year, Capone said that Myriad ended the quarter with orders for myRisk representing closer to 30 percent of its hereditary cancer test volume.

Myriad CEO Peter Meldrum added on the call that he believes that the field now recognizes that the future of hereditary cancer testing is multiplex panels like myRisk.

"We believe this movement will greatly improve Myriad's already strong competitive position in the hereditary cancer market," he said.

Myriad expects to fully convert its comprehensive BRACAnalysis customers to myRisk by the summer of 2015, continuing BRACAnalysis only in the companion diagnostic setting thereafter.

Also contributing to its hereditary cancer testing revenue, the company's BART test brought in $18.9 million and its Colaris and Colaris AP tests returned $14.8 million.

Revenue from Vectra DA, a rheumatoid arthritis test Myriad acquired through its purchase of Crescendo Bioscience in February 2014 was $10.8 million. MDx revenue from Myriad's other tests was $3.6 million, an increase of 15 percent over the fourth quarter of 2013.

The firm's pharmaceutical and clinical service revenue dropped to $5.9 million from $8 million in the previous year Q4, due to the timing of research projects.

During the quarter, Myriad signed a three-year contract with the national Blue Cross and Blue Shield Association, establishing pricing for its myRisk hereditary cancer test. The company said it has already seen this contract accepted by some but not all BCBS member organizations.

Myriad also signed several international contracts for BRCAnalysis testing in Spain, Italy, and Switzerland, and for Prolaris testing in Spain. The company also gained customers for its EndoPredict breast cancer prognostic test in Germany and South Korea, company officials said on the call.

In Q4 the company also presented several studies at the annual meeting of the American Society of Clinical Oncology, including data demonstrating both hits BRACAnalysis CDx and myChoice HRD tests were highly effective at predicting response to platinum-based chemotherapies.

At the meeting, the company also presented its second major clinical validation of myPath Melanoma, which analyzed 437 pigmented lesions, differentiating between benign skin lesions and melanoma with an accuracy greater than 90 percent.

Myriad's net income for the fourth quarter was $33.6 million, or $.43 per share, compared to $44 million, or $.53 per share, for Q4 2013. On a non-GAAP basis, its EPS was $.48, beating the average Wall Street estimate of $.46.

The firm's R&D expense during the quarter was $20.2 million, a 38 percent increase from $14.6 million for the fourth quarter last year. Its SG&A spending rose 18 percent to $84.3 million from $71.5 million year over year.

Myriad ended the quarter with $270.6 million in cash, cash equivalents, and marketable investment securities.

For fiscal year 2014 Myriad's revenues increased 27 percent year over year to $778.2 million from $613.2 million.

Its net income for the year was $176.2 million, or $2.25 per share, up from $147.1 million, or $1.77 per share, for FY 2013. On a non-GAAP basis, Myriad had FY 2014 EPS of $2.43, beating out analysts' consensus estimate of $2.39.

Myriad noted that during the fiscal year it repurchased 10.4 million shares of its common stock for $287.7 million at an average weighted share price of $27.74.

In reference to the US Food and Drug Administration's recent notification of its plan for a draft guidance on laboratory-developed tests, Capone said that Myriad is "actively participating in this process."

"We believe we are one of the best positioned laboratories to work with the FDA given our resources, experience, and the quality of the clinical validations already performed on our tests," he added.

Myriad said that it expects to report FY 2015 revenues between $800 million and $820 million with EPS of $1.90 to $2.00. That forecast is below Wall Street expectations of $815.6 million in revenues and EPS of $2.12.

In early Wednesday trade on the Nasdaq, shares of Myriad dropped 9 percent to $35.55.