NEW YORK (GenomeWeb) – Myriad Genetics has a five-year plan for growing and diversifying its molecular diagnostics business, which involves maintaining a leadership role in the hereditary cancer testing market, developing new products for common conditions such as bipolar disorder, and refining its strategy to penetrate markets outside the US.
By fiscal year 2020, if it is able to implement its five-year growth plan, Myriad anticipates its annual revenues could more than double, to $1.5 billion — 46 percent coming from its hereditary cancer testing business and the remaining coming from a range of new tests that the company is currently validating. For fiscal year 2015, Myriad's revenues were $723.1 million.
“We were founded 25 years ago, and really for the first 20 years, we were largely a one-product-in-one-country company,” Myriad CEO Mark Capone said during the company's Analyst Day, held here yesterday. Seven years ago, after Myriad decided to spin off its pharmaceutical division to focus on molecular diagnostics, it freed up the firm to focus on new tests and on entering markets outside the US.
In the last couple of years, Myriad has worked toward these goals, and grown its hereditary cancer testing business revenues annually by 6 percent. The firm has managed to ink long-term pricing arrangements with payors that account for 45 percent of its revenues, according to Capone. Myriad's international revenues have also grown, by 300 percent, over the last two years, and at the end of fiscal year 2015, ex-US markets comprised 4 percent of total revenues.
Capone further noted that Myriad has “essentially completed” transitioning all of its older, single-disease hereditary cancer tests to its myRisk Hereditary Cancer next-generation sequencing panel. Approximately 80 percent of more than 200,000 tests per year are now orders for myRisk, a test that gauges 25 genes associated with an increased risk for eight cancer types.
Looking ahead to 2020, Myriad's goals are to net 10 percent compound annual revenue growth; achieve 30 percent operating margins; bring in more than $50 million in revenues from seven diagnostic products; and expand its international business so it comprises 10 percent of total revenues. Specifically with the international markets in mind, Myriad announced it has signed a letter of intent with Thermo Fisher Scientific to translate five RNA expression tests into kit format on the QuantStudio PCR platform.
Over the next five years, Myriad hopes to increase the market for its hereditary cancer test by between 7 percent and 15 percent. The firm expects to keep an advantage over competitors in terms of variant interpretation accuracy by continuing to add to its proprietary database, which Capone projected will double to 80,000 variants by 2020.
Despite competition following the US Supreme Court's invalidation of several of its BRCA testing patent claims, Myriad executives highlighted that the company continues to hold 90 percent of the market in the hereditary cancer testing space. “This market has been more durable than some investors have anticipated,” Capone said. Myriad has had to lower its average selling price for hereditary cancer testing by 6 percent, largely due to mandated Medicare price reductions, he added.
However, in its five-year modeling, the company has assumed between a 0 percent and a 40 percent decline in pricing. Following the Supreme Court's decision in Association for Molecular Pathology v. Myriad in 2013 many companies launched competing hereditary breast and ovarian cancer risk diagnostics. These tests are currently available at significant discounts to Myriad's approximately $4,000 list price for the myRisk Hereditary Cancer NGS panel. However, Myriad believes its competitors won't be able to sustain their pricing advantage for long.
“We're negotiating long-term contracts that are three years in length,” Capone said. “After that three-year time frame, you're going to be entering an [US Food and Drug Administration] regulated space that will impact competition.”
Alexander Ford, President of Myriad Genetic Laboratories, further estimated that the total costs necessary to launch a high-quality hereditary cancer panel test, after factoring in the cost of providing patient services, lab operations, clinical support, and administration, amounts to at least $2,500 per test. This cost will be a barrier for any company new to the hereditary caner testing space, since "they are just not at the scale that Myriad has achieved,” Ford told analysts.
Moreover, Capone believes Myriad's business will benefit from the Protecting Access to Medicare Act of 2014, which in the next few years stands to establish Medicare rates based on a “weighted median” of payment that labs received from private payors. This payment calculation, some experts have said, will favor labs that have significant economies of scale that smaller labs are not capable of achieving.
The seven products that Myriad is currently getting or is working on getting reimbursement for include myRisk Hereditary Cancer, Prolaris, Vectra DA, EndoPredict, BRACAnalysis CDx, and Tumor BRACAnalysis CDx. The company is in the process of validating myPath Melanoma, myPlan Lung, myChoice HRD for gauging response to platinum-based therapies and PARP inhibitors, and myPlan Renal Cancer. Myriad has five tests in the discovery phase: myPath Bipolar, myPath Pancreatic Cancer, myPath Psoriatic Arthritis, myPath Prostate Cancer, and myPath Endometriosis.
Capone estimated that all these products, which are in various stages of development, represent more than $30 billion in market potential.
In the companion diagnostics setting, Myriad is currently conducting 22 studies for tests around DNA damaging agents and 15 studies for Vectra DA in the autoimmune space. In FY2016, Myriad plans to complete building out labs for running myChoice HRD, as well as for Tumor BRACAnalysis CDx — a test that is currently available in Europe as a companion to AstraZeneca's PARP inhibitor Lynparza (olaparib) – according to FDA regulations. Also during FY2016, the company plans to make investigational device exemption submissions to the FDA for both these tests and a premarket approval submission for myChoice HRD, which Myriad will introduce through an early-access program in the next three months.
For Vectra DA, a test that determines whether rheumatoid arthritis patients are at risk for joint damage, Myriad estimated that 40 percent of rheumatologists currently order the test to assess an average of 11 patients per month. One of the barriers to adoption has been that 24 percent of rheumatologists do not have in-office blood collection facilities. However, Myriad said that it has recently signed an agreement that allows it to use Laboratory Corporation of America's 1,700-patient service centers to draw blood for the test.
The company is currently working on bolstering reimbursement for Prolaris, a test for gauging prostate cancer aggressiveness. This year, Medicare contractors Palmetto GBA and Noridian issued final local coverage decisions for the test when used for low-risk and very low-risk prostate cancer patients. Myriad announced during the Analyst Day that after evaluating the latest data from studies showing that the test can place 60 percent of prostate cancer patients into active surveillance, Tufts Health Plan has agreed to reimburse the test for all patients with localized disease.
Myriad has completed a second validation study involving myPath Melanoma, a test that helps doctors distinguish between malignant and benign moles. The firm also finished the first validation study for myPlan Renal Cancer, a test to assess whether patients are at high or low risk for the disease. In addition, the company is in the initial stages of developing an early detection test for pancreatic cancer, called myPath Pancreatic, for which it plans to finalize the biomarker set in FY2016.
Myriad Chief Scientific Officer Jerry Lanchbury offered analysts a peak at early data for myPath Biopolar, Myriad's first internally developed protein diagnostic for differentiating between bipolar disease and major depression. The test runs on the Myriad-RBM Luminex platform and analyzes 18 protein analytes from blood. Researchers have conducted a discovery study involving 150 bipolar and major depression patients that showed the test could differentiate between these groups, and Myriad plans to initiate a validation study in mid-FY2016 for this test, involving 300 patients.
Lastly, Myriad is developing a urine-based test for early diagnosis of prostate, kidney, and bladder cancer, based on proprietary technology that the company is not yet prepared to describe in detail. According to Lanchbury, in a discovery set of 139 tumor samples, the test was able to differentiate between cancer patients and healthy controls with 90 percent accuracy.
Capone described this as a “true liquid biopsy test” that will take advantage of NGS. Myriad hopes to advance the test first in prostate cancer.
Myriad is hoping that a larger slice of its revenues — around 10 percent — will come from outside the US by 2020. In the near term, the company is focusing on growing its presence in six European Union countries and Canada, and longer term, the firm hopes to penetrate Japan, China, and Brazil.
“What we have recognized is that we need to offer products in two different formats,” reference laboratory tests and kits, Capone said. “For reference laboratories, those will be focused on complex tests that are difficult to run for labs associated with the institutions that exist internationally.”
Myriad will offer overseas labs myRisk and its companion tests in a reference format, while developing its RNA expression diagnostics — EndoPredict, Prolaris, myPlan Lung, myPath Melanoma, and myPath Renal — into a kit. “The preferred format in the international market [is] kit products,” Capone noted. “Those can be run directly by the institutions' laboratories.”
Myriad said that it has signed a letter of intent with Thermo Fisher Scientific to translate the five RNA expression tests into kit format on the QuantStudio PCR platform. This is primarily a deal aimed at allowing Myriad to expand into the international space.
Gary King, executive VP of international operations, added that kits also provide “a faster path to reimbursement,” and labs running the test can expect to see a profit from reimbursement. As an example, King cited that more than 40 sites globally have adopted Myriad's EndoPredict breast cancer prognostic test in their labs, and they prefer the kit format because the results are “more transparent to the clinician and available faster.”
The company is in discussions with potential partners to translate several protein tests, including Vectra DA, myPath Bipolar, and myPath Pancreatic, into a single platform as well.