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Myriad Revenues Inch Up 1 Percent in Q4; Dip 7 Percent in FY15

NEW YORK (GenomeWeb) – Myriad Genetics reported after the close of the market Tuesday that its fiscal fourth quarter revenues inched up 1 percent year over year as it beat analysts' estimate on the top line but fell short on the bottom line.

The Salt Lake City-based molecular diagnostics firm brought in total revenues of $189.9 million for the three months ended June 30, compared to $188.8 million in Q4 2014, and ahead of the consensus Wall Street estimate of $187.8 million.

Myriad's molecular diagnostic testing revenue was $178.8 million for the quarter, a 2 percent dip from $182.9 million in Q4 2014. Hereditary cancer test sales fell 3 percent year over year to $163.8 million, although myRisk Hereditary Cancer testing revenue more than tripled to $100.9 million from $27.3 million in the year-ago period.

Myriad has been converting its hereditary cancer testing customers from older tests to myRisk. At the end of this process, Myriad's flagship BRACAnalysis test will be available as a companion diagnostic. The firm said it finished the quarter with myRisk comprising 72 percent of incoming hereditary cancer testing samples.

Mark Capone, who recently took over as Myriad CEO after Peter Meldrum's retirement, noted during the company's earnings call that the firm is hoping to convert all "targeted physician customers" to myRisk by the end of the first quarter in FY 2016. This will result in myRisk comprising 80 percent of all incoming hereditary cancer test orders, Capone projected.

The remaining 20 percent of orders come from "non-targeted physicians," who prescribe hereditary cancer testing infrequently and have limited interaction with Myriad's sales team, he noted. For this segment, Myriad has an outreach program to inform physicians about myRisk when they order older tests. "Over time we will assess whether to continue offering Colaris [colon cancer testing] and BRACAnalysis through our CLIA laboratory," Capone noted.

Myriad is hoping to double the size of the oncology segment addressed by myRisk by expanding the test's indications in breast cancer, colon cancer, endometrial cancer, and pancreatic cancer. With these additional indications, Myriad projects the market potential for myRisk to be around $1 billion annually. Capone added that the growing myRisk volumes in recent quarters have also enabled Myriad to expand its proprietary variant database, about which the company will provide more details in September.

Myriad is also planning to diversify its product offerings beyond hereditary cancers, and move into the oncology, urology, dermatology, and autoimmune segments. The BRACAnalysis CDx represents Myriad's first foray into the oncology companion testing market, and the firm is also developing myChoice HRD alongside a variety of DNA damaging agents. Company executives noted that Myriad will more broadly commercialize its CDx franchise in coming years.

"We are constructing FDA laboratories for both myChoice HRD and Tumor BRACAnalysis CDx, and plan on submitting [investigational device exemptions] for both tests later in the fiscal year," Capone said. Currently, the Tumor BRACAnalysis CDx is only available in Europe. According to Myriad's own research, Tumor BRACAnalysis was able to pick up 44 percent more deleterious markers in ovarian cancer patients than germline BRCA testing.

During the quarter, volumes of the rheumatoid arthritis test Vectra DA grew 12 percent sequentially to around 40,000 tests ordered and revenues also increased 12 percent sequentially to $11.8 million.

Myriad's pharmaceutical and clinical service revenue increased 88 percent to $11.1 million from $5.9 million in the year-ago period. Capone noted that Myriad is planning to initiate CDx studies with pharma partners in new tumor types.

Myriad's net income for the fourth quarter was $18.7 million, or $.26 per share, compared to $33.7 million, or $.43 per share, in Q4 2014, marking a 45 percent decrease. On a non-GAAP basis, its EPS was $.41, below the average Wall Street estimate of $.42.

Myriad attributed the decrease in Q4 net income to "lower gross margins associated with the transition costs of myRisk Hereditary Cancer testing" and expenses related to launching the Prolaris, myPath Melanoma, and myPlan Lung cancer tests. 

Prolaris prostate cancer test sales volumes increased 10 percent sequentially in Q4. However, Prolaris' market growth has been impacted by administrative delays from the Centers for Medicare & Medicaid Services. "The journey for Prolaris has been a long one," Capone said, noting that Myriad expects Medicare contractor Noridian to issue a local coverage determination for the test by the end of October. Medicare pricing for Prolaris, Capone added, was in line with an average selling price of more than $3,000.

Myriad's Q4 R&D expenses fell 7 percent to $18.7 millionfrom $20.2 million, while its SG&A spending rose 16 percent to $97.5 million from $84.3 million.

Myriad ended the quarter with $144.8 million in cash, cash equivalents, and marketable investment securities.

For fiscal year 2015 Myriad's revenues decreased 7 percent year over year to $723.1 million from $778.2 million in 2014, but beat the consensus Wall Street revenue estimate of $720.6 million.

Its net income for the year was $80.2 million, or $1.08 per share, down from $176.2 million, or $2.25 per share, for FY 2014. On a non-GAAP basis, Myriad had FY 2015 EPS of $1.45, below analysts' consensus estimate of $1.46.

Myriad noted that during the fiscal year it repurchased 1.3 million shares, or $45 million, of its common stock at an average weighted share price of $27.74.

For fiscal year 2016, Myriad projected revenues of between $750 million and $770 million, with adjusted EPS of between $1.60 and $1.65. For fiscal Q1, the company said it expected revenues in the range of $176 million to $178 million, and adjusted EPS of between $.34 and $.36.

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