NEW YORK (GenomeWeb News) – Myriad Genetics' shares were up as much as 15 percent in Wednesday trading after the company said that the US Centers for Medicare and Medicaid Services had increased the reimbursement rate for the sequencing of BRCA1 and BRCA2 genes.
Myriad said in a document filed with the US Securities and Exchange Commission after the close of the market on Tuesday that for Fiscal Year 2014, CMS increased the National Limit Amount for CPT code 81211 to $2,184 from a previous amount of $1,438. The code covers the full sequencing of the BRAC1/2 genes, which is performed as part of Myriad's BRACAnalysis test.
Also, reimbursement for Myriad's Integrated BRACAnalysis test was increased to $2,767 from a prior amount of $2,021, while reimbursement for the company's BART test was unchanged at $583. The new rates took effect on Tuesday.
Investors reacted favorably to the news, pushing up shares of Myriad as high as $40.33 on the Nasdaq amid heavy trading on Wednesday. The Salt Lake City firm's shares were up 12 percent at $39.24 in late afternoon trading.
In late December, CMS slashed the reimbursement level for BRACA testing by almost 49 percent, sending Myriad's stock tumbling and causing some investment analysts to downgrade their ratings for Myriad and to cut their price targets on its shares.
Today, several analysts raised their price targets to take into account the new reimbursement levels. Mizuho's Peter Lawson increased his price target to $40 from $28, while Sung Ji Nam at Cantor Fitzgerald upped her price target to $44 from $42.
Brandon Couillard at Jefferies increased his price target to $33 from $30. In a research note, he said that CMS attributed its revision to new pricing information submitted by Medicare contractors during the early 2014 comment period.
"Specifically, data indicated labs are currently offering BRCA tests for $2,000 to $2,500, which deviated from data used in the initial November 2013 rate cut decision that indicated prices ranged from $995 to $2,800," he said. "We suspect [Myriad's] early February settlement with competitor Gene by Gene, which was advertising its BRCA test at $995, likely contributed to the upward revision."
The settlement between the two firms covers BRCA testing patents held by Myriad, the University of Utah Research Foundation, HSC Research and Development Limited Partnership, Endorecherche, and the Trustees of the University of Pennsylvania.