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Myriad Genetics' Q1 Revenues Up 8 Percent

By a GenomeWeb staff reporter

NEW YORK (GenomeWeb News) – Sales of women's health products helped drive Myriad Genetics' total revenues up 8 percent in the company's fiscal first quarter for 2011, but short of analysts' estimates.

For the three months ended Sept. 30, total revenues increased to $91.9 million, compared to $85.1 million a year ago, helped by an 18 percent jump in revenues related to woman's health products to $25.8 million from $21.8 million, the company reported after the close of market on Tuesday.

Wall Street had a consensus estimate of $92.8 million for the quarter.

Net income tumbled 26 percent to $22.5 million, or $0.24 per share, compared to $30.4 million, $0.31 per share in the year-ago period. Analysts had estimated an EPS at $0.23.

Oncology revenues, the market segment comprising the bulk of Myriad's business, rose 4 percent to $66 million during the quarter from $63.3 million in the fiscal first quarter of 2009.

Revenues from the firm's BRACAnalysis test, the company's flagship diagnostic product, were $80.7 million, up 7 percent from $75.3 million a year ago.

In March, the US District Court for the Southern District of New York handed down a decision finding Myriad's BRCA gene patents invalid.

Myriad is appealing the case, and last week, the US Department of Justice filed an amicus brief for the case with the US Court of Appeals in which it stated its opposition to gene patents.

In a conference call following the release of its earnings, Peter Meldrum, CEO of Myriad, played up DOJ's support of three of Myriad's composition of matter patent claims on the cDNA sequences of the BRCA1 and BRCA2 genes.

He added that DOJ "appears to also agree" with Myriad that Judge Robert Sweet, who handed down the decision in the March case, "erred in invalidating six of Myriad's method patent claims by indicating that 'methods of identifying, isolating, and using such DNA molecules may be patented as may any new and useful alterations to those molecules through human intervention.'"

Myriad, though, is "disappointed" that DOJ's position against gene patenting is contrary "to decades of prior policy as well as to the current US Patent and Trademark [Office's] guidelines, which clearly state that because an isolated DNA molecule does not occur in that isolated form in nature and has new utilities, it can be the basis of a patent," Meldrum said.

"In this regard, Myriad strongly disagrees with the rationale of the DOJ," he said.

Earlier this week, a USPTO spokesperson told GenomeWeb Daily News' sister publication Pharmacogenomics Reporter that the office "will maintain the status quo while this matter is pending resolution by the Federal Circuit."

Myriad said also that Colaris and Colaris AP test revenues increased 14 percent to $7.13 million from $6.3 million. Those tests assess a patient's risk of developing hereditary colorectal and uterine cancers.

Other product revenues rose 14 percent to $4.1 million, compared to $3.6 million a year ago.

Meldrum said that the first-quarter revenues are in line with Myriad's revenue guidance for full-year fiscal 2011 of between $380 million and $400 million.

Overall revenues for Q1 were affected by fewer visits to physicians, with office visits to obstetricians and gynecologists down 7 percent in July year over year, and down 4 percent in August, Meldrum said, citing statistics from Thomson Reuters.

In the predictive medicine market, Mark Capone, president of Myriad, outlined four initiatives to grow the BRACAnalysis business. The oncology market, in which BRACAnalysis has about a 50 penetration rate, is a mature segment for the product, he said, but in other cancer market segments, the company sees opportunity.

The first initiative targets ovarian cancer, for which BRACAnalysis has about a 25 percent penetration rate. That market, Capone said, represents a $90 million opportunity. The second initiative targets triple negative breast cancer patients, which represents a $50 million market.

Myriad also sees a $50 million market in carcinoma in situ. During the first quarter, a retrospective study was completed, which indicated an increased prevalence of BRCA mutation in CIS patients. The study included 65,000 patients and has been submitted for publication.

"We believe this data will be instrumental in updating future testing criteria guidelines to include CIS as a component of hereditary breast and ovarian cancer," Capone said.

Lastly, Myriad continues to explore opportunities for BRACAnalysis as a companion diagnostic for PARP inhibitors. Last week, it and Abbott announced a deal in which Myriad will conduct BRCA testing on patients enrolled in an Abbott Laboratories drug study. Capone did not put a dollar figure on this opportunity but said it was "significant."

Capone also announced Myriad's plans to launch its ninth molecular diagnostic product, a predictive test for hereditary pancreatic cancer. The test, which will list for $3,025, will be positioned "for those patients [who] are part of exclusively pancreatic families," and will include the BRCA2 and PALB2 genes.

During the quarter, Myriad repurchased 1.8 million shares of its stock at a share price of $16.23 for a total of $28.6 million. It also invested $2 million in equipment and lease hold improvements.

During the fiscal first quarter, Myriad's R&D inched up to almost $5.8 million from $5.7 million a year ago, while its SG&A costs rose to $39.5 million, up from $38.7 million a year ago.

As of Sept. 30, the company had $508.4 million in cash, cash equivalents, and marketable investment securities, it said.

In early Wednesday trade on the Nasdaq, shares of Myriad were up 7 percent at $21.03.

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