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Myriad Moving Ahead With Five-Year Revenue Growth, Product Diversification Plan

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NEW YORK (GenomeWeb) – During an earnings call this week, Myriad Genetics provided an update on the progress it has made in diversifying its portfolio of tests beyond the hereditary cancer space.

In the next five years, Myriad hopes to double its annual revenue to $1.5 billion, of which its hereditary cancer business would comprise 46 percent, with newer tests making up the rest. Among its newer offerings, the company is hoping that six products — Vectra DA, Prolaris, myPath Melanoma, EndoPredict, myPlan Lung Cancer, and companion diagnostics — will net annual revenues of more than $50 million each.

In fiscal year 2015, Myriad's revenues were $723.1 million. The firm is expecting fiscal 2016 full year revenues of between $753 million and $755 million.

In the fiscal third quarter, during which Myriad reported total revenues of $190.5 million, sales from Prolaris, a test that gauges the aggressiveness of prostate cancer in conjunction with clinical factors, grew 940 percent, bringing in $5.2 million. Based on this performance, Myriad CEO Mark Capone proclaimed during an earnings call this week that Prolaris is now the market-leading prostate cancer prognostic test and highlighted that it has been validated against all endpoints recommended by the National Comprehensive Cancer Network. Prolaris competes with Genomic Health's Oncotype DX Prostate cancer test and GenomeDx's Decipher.

Revenues for Vectra DA, a test for measuring rheumatoid arthritis disease activity, increased 17 percent in Q3, bringing in $12.3 million. Test volume grew 18 percent year over year with around 42,500 tests performed, a faster clip than revenues, because the test is transitioning to a new CPT code, which private payors are still adjusting to, company executives said.

Myriad is also focused on building the evidence base for myPath Melanoma, which in turn will aid in securing reimbursement for the test. The company is hoping to soon publish a second 736-patient validation study, which showed myPath Melanoma is more than 90 percent accurate in differentiating between cancer and benign moles. Additionally, Myriad is planning to present data from a third validation study at an upcoming meeting. With three clinical validity studies, as well as data on analytical validity, clinical utility, and health economics, Myriad is hoping to net reimbursement for this test in fiscal year 2017.

The company also made progress in Q3 on the reimbursement prospects for EndoPredict. Myriad has the rights from Sividon Diagnostics to distribute the breast cancer prognostic test in markets outside the US and China. According to Myriad, the French government has agreed to provisionally reimburse the test at a rate of $2,000. Meanwhile, Myriad will submit data dossiers in Canada and the UK by year end.

In companion diagnostics, Myriad is primarily focused on BRACAnalysis CDx, Tumor BRACAnalysis CDx, and myChoice HRD — a next-generation sequencing test that measures the ability of a patient's cancer cells to repair DNA damage and predicts response to PARP inhibitors and platinum-based chemotherapies. Researchers recently presented data showing that myChoice HRD predicted progression-free survival and overall survival in platinum-treated ovarian cancer patients. This data spurred interest among physicians to use the test as part of an early-access program, Capone said. Currently, doctors at 14 sites are starting to test patients.

In the third quarter, Myriad inked a CDx deal with Tesaro and Merck to use myChoice HRD to identify which ovarian cancer and triple-negative breast cancer patients respond best to Tesaro's PARP inhibitor niraparib and Merck's anti-PD1 therapy Keytruda (pembrolizumab). The company also expanded a collaboration with AbbVie in which it will use Myriad's myChoice HRD companion diagnostic and a menu of tumor tests to identify non-small cell lung cancer patients who will likely respond to AbbVie's PARP inhibitor, veliparib, in combination with chemotherapy.

Tesaro is also using MyChoice HRD in the prospective NOVA study comparing niraparib against placebo in platinum-sensitive ovarian cancer patients. If Myriad is able to achieve US Food and Drug Administration approval for this test as a companion diagnostic for niraparib, it will be a "significant" new market opportunity for Myriad.

"Unlike BRACAnalysis CDx, which primarily cannibalizes our legacy hereditary cancer testing, myChoice HRD would be entirely additive, because ovarian cancer patients will first receive a tumor test and then reflex to a hereditary cancer test," Capone said. "Furthermore, we believe the proprietary nature of myChoice HRD will provide global exclusivity and differentiation from any potential competitor laboratory."

Myriad previously announced the addition of two new products to its CDx suite: a tumor sequencing panel of 80 genes that its pharma partners believe to be clinically actionable in cancer treatment; and a test that can identify potential responders to immunotherapy. Capone noted in February that Myriad has signed two undisclosed collaborations for these products.

Myriad has also focused on growing its international business, and aims by 2020 to have that market comprise around 10 percent of its overall revenues. During the third quarter, international test sales came in at just under 5 percent of revenues.

One of Myriad's strategies to penetrate the complex overseas lab testing market is to offer the myRisk Hereditary Cancer test and companion diagnostics in a reference format, while offering other tests — EndoPredict, Prolaris, myPlan Lung, myPath Melanoma, and myPath Renal — as kits. Myriad is developing Prolaris into a kit through a collaboration with Thermo Fisher Scientific. Development of the kit is slated for completion in fiscal year 2017, Capone said.

In February, Myriad also completed its acquisition of a privately held clinic, Privatklinik Dr. Robert Schindlbeck GmbH & Co. KG, in Munich, Germany. In its 10-Q filing with the US Securities and Exchange Commission, Myriad said this acquisition, which contributed $5.5 million to quarterly revenues, should help it penetrate the German molecular diagnostics market, negotiate reimbursement with government and private payors, and collaborate with hospitals and doctors. 

For the time being, however, Myriad's hereditary cancer testing business, featuring the 25-gene panel myRisk Hereditary Cancer, remains its bread and butter, contributing $156.3 million of $177.4 million in molecular diagnostic testing revenues. During the earnings call, Myriad executives highlighted that the firm's customer service, proprietary database, and the accuracy of its variant classification process, will allow it to deflect competition.

Myriad presented data in March showing that its history-weighting Pheno algorithm was 99.5 percent accurate in upgrading and downgrading variants of unknown significance in high and moderate cancer risk genes to more definitive classifications. Currently, Myriad boasts information on 46,000 genetic variants in its proprietary database, 17,000 of which are BRCA1/2 variants. "We continue to identify over 50 new variants every day in the myRisk genes, and we believe that the size of our database will increase to approximately 90,000 variants by 2020," Capone said.

During the earnings call, Myriad also discussed forthcoming changes in reimbursement policy that stand to broadly impact the molecular diagnostics industry. Recently, Medicare contractor Palmetto GBA determined that labs should bill for NGS panels including BRCA1, BRCA2, and 12 other genes related to hereditary breast cancer risk using CPT code 81432. The interim price of this code is $622.53.

Myriad has indicated that reimbursement for myRisk will not be impacted by this, because it has arrangements with payors that allow it to bill with CPT codes for its legacy tests. Wells Fargo analyst Tim Evans estimated that Myriad is reimbursed more than $2,500 for myRisk. Currently, 62 percent of the firm's hereditary cancer products are under long-term contracts with insurers.

Moreover, Capone highlighted that under the Protecting Access to Medicare Act of 2014, which is slated to go into effect next year, Medicare pricing will be determined based on a volume-weighted median of private payor rates. Such a system would be to Myriad's advantage, Capone said.

The final regulations are "in the hands of the [Office of Management and Budget]," he added. "That's the last step before the PAMA regulations become final. … So, relatively soon we would expect to see those final panel regulations." Capone noted, however, that some market observers have speculated that the law may be delayed until January 2018, instead of going into effect as of Jan. 1, 2017, as originally planned.  

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