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Q&A: Myriad's Gary King on Company's New Lab in Germany, European Expansion Strategy


GaryKingPhoto2.jpgName: Gary King
Age: 57
Position: Executive vice president, international operations, Myriad Genetics, since 2010
Experience and Education:
CEO, AverDx, 2007-2010
Vice president of international operations, Biosite, 2002-2007
Division director for Japan, Guidant, 1991-2002
MBA, Stanford University, 1987
BA in zoology, Pomona College, 1978

As part of its strategy
to expand its business to Europe, Myriad Genetics this spring opened a molecular diagnostic testing lab in Martinsried near Munich.

While Myriad is the sole provider of commercial testing for BRCA1 and BRCA2 in the US, the company will face considerable competition for this test — currently its most important one — from a large number of diagnostic labs in Europe.

Clinical Sequencing News recently caught up with Gary King, executive vice president of international operations at Myriad, to talk about the new laboratory in Germany as well as Myriad's strategy for the European market. Below is an edited transcript of the conversation.

Tell us about the new lab. What tests is it going to provide, and in what countries?

The laboratory was opened in March. We had a ribbon-cutting ceremony that was attended by about 100 physicians and business associates, mostly from Germany. The lab is equipped with instruments and processes identical to those in the United States, so any test that we perform in the United States will be able to be transferred to and performed in the laboratory in Germany.

We're taking a phased approach so we can focus on our most important tests first, our BRACAnalysis, Colaris for colorectal cancer, and then Prolaris for prostate cancer. We will introduce these tests into the lab in Martinsried.

The countries that we are covering will be our five focus countries: Germany, France, Italy, Spain, and Switzerland, as well as, eventually, Portugal and Austria.

What's the capacity of the new laboratory, compared to the one in the US?

The US laboratory analyzes about 1,000 samples per day. We anticipate the volume of the new laboratory will be able to support revenue of about $50 million over the next two years, at which point we can look for larger facilities, either in the area, or there are probably expansion opportunities within the current facility by the time we would need the additional capacity.

Can you comment on the choice of location for this lab? Why is it separate from Myriad's European headquarters in Zurich?

We chose Martinsried, which is in the Munich area, because it's a perfect central location for Western Europe. We are able to receive samples very easily into Munich, it's close to many of our scientific collaborators in Southern Germany, there is a great pool of talent for laboratory technicians and physicians in Martinsried, and finally, Germany, our largest single market in Europe, strongly prefers tests to be done in Germany for reimbursement.

We chose Zurich as our headquarters for all of Europe, again, for its central location — it's only about three hours from Martinsried. It's a good central location in Zurich, and it's also a good location from which to recruit multi-national, multi-lingual personnel. We've also found it easy to convince other Europeans to move to Zurich. For example, we have in our headquarters now someone from the Netherlands, Portugal, Italy, the UK, two Americans, and a few Swiss as well. We found it much easier to convince these folks to relocate to Zurich; it would probably be a little more difficult to ask them to relocate to France, Germany, Italy or some of the other potential headquarter locations.

Has the lab already started to receive and test samples, and are revenues from that contributing significantly to Myriad's overall revenues?

I would not use the word "significant." In general, all outside-the-US revenue is less than 1 percent. We have not given out international revenue separately, but we are very pleased with how sample flow is progressing with this initiative.

How does the market for Myriad's tests differ between the Europe and the US, and what does the competition look like?

The European market is potentially much larger than the US market. There are a third more people in the European Union and twice as many in broader Europe.

However, what we found after doing a survey of the market and a survey of the laboratories throughout Europe was that utilization, when compared on a person-by-person basis between the US and Europe, was only about 20 percent in Europe of that in the US for predictive genetic testing. That could be because Myriad has spent at least 15 years working with physicians, key opinion leaders, and patient groups in the US to educate both physicians and patients on the benefits of genetic testing, or it could be slight differences in guidelines and reimbursement.

We believe, however, that now that Myriad is in Europe and that we are establishing a presence in each major country, focused on clinical education and partnering with physicians for education, working with patient groups, that we will be able to grow awareness of the benefits of this kind of testing in Europe, and that the testing volume will increase as a result.

How does Myriad plan to compete in this market, given the differences in IP protection, number of competing labs, and regulations in each country?

Because we are the largest molecular diagnostic laboratory in the world, we have tested more patients and have vastly more experience, and are able to provide significantly higher quality results in much shorter time than any other laboratory in Europe. Our turnaround time for test results is less than two weeks versus an average turnaround time in Europe of between three and 12 months.

More important than that even is the quality of the results. Once you identify a mutation or a polymorphism, you need to tell the physician whether that variation is deleterious or benign for that patient. Because Myriad has tested so many patients and because we have optimized our sequencing and our mutation-calling programs, and have such a large team of professionals analyzing this information every day, we are able to report results with over 97 percent accuracy, or confidence, in our mutation calling, which means our [proportion of] variants of uncertain significance in Western Europeans is about 2.6 percent for the BRACAnalysis test, and it's around 5 to 7 percent for Colaris, which covers five different genes. This compares with a variants-of-uncertain-significance rate of between 20 and 40 percent for other laboratories in Europe, so 20 to 40 percent of patient results are reported out as uncertain, even after waiting between three and 12 months for the result. That difference is due to our large advantage of analyzing so many patients. Myriad will analyze in one day more patients than the next two largest laboratories in Europe will analyze in a year.

How are you planning to compete on pricing in Europe? Can you provide pricing information?

Obviously, we won't share all of our marketing and pricing strategies, but generally, in each of these countries, pricing is set by reimbursement. Myriad does not set pricing; the governments set reimbursement rates for these tests. Both BRACAnalysis and Colaris are reimbursed in our five target countries at various levels. Obviously, because Myriad has the highest quality test in the market, we don't feel a need to compete on price, rather to offer our test at market prices, with a superior turnaround time and quality. The Prolaris test is not currently reimbursed, but we work with reimbursement officials to figure that out.

How is Myriad marketing its tests to European physicians? Will it be a challenge to turn them away from their local testing labs?

We just began the marketing of our tests. We will have direct clinical and medical staff within each country to work with key opinion leaders, with testing networks, and with large universities, many of whom recognize the problems they have in providing fast and accurate results for their patients.

Of course there will be a challenge. But again, the fact that we are able to offer faster results with significantly higher quality, once we focus on the patient, and how Myriad's test is much better to enable the physician to make the correct clinical decision for therapy for the patient, we think we'll be successful.

A number of European diagnostic labs have moved BRCA testing to a next-generation sequencing platform in order to decrease cost and turnaround time. What's Myriad's plan in that area?

As you can imagine, as the largest molecular diagnostic testing laboratory in the US, we are constantly approached by instrument providers to check out their new instruments, and they are always trying to get us to change from Sanger sequencing, but we found nothing that's as accurate, as fast, and as reliable as Sanger sequencing.

While other laboratories also claim to use Sanger sequencing, or the same techniques as Myriad, because we have analyzed nearly a million patients on Sanger sequencing, our team that's worked with this platform for 15 years has optimized that process. Myriad has optimized the chemistry, the primers, the techniques, the automation, the workflow, and especially the bioinformatics back end on what to do with the data, so you really can't compare apples to apples by saying 'we use Sanger sequencing' and a small lab somewhere else in Europe also using the same technology as Myriad. It's vastly different technology, even though the core principle of Sanger sequencing is the same.

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