Myriad Study to Benefit Colaris - Analyst Blog

Myriad Genetics (MYGN) recently made a presentation at a conference, which concluded that proper diagnostic test for Lynch syndrome, a hereditary form of colon cancer, should include the PMS2 gene.

This research finding should benefit the company’s Colaris test, which identifies genetic mutations in the MLH1, MSH2, MSH6, and PMS2 genes and assesses a person's risk of developing colorectal and endometrial cancer. A patient who tests positive with the Colaris test faces almost 82% chance of developing colorectal cancer and up to about 71% chance of developing endometrial cancer.

The study, using Myriad’s Colaris test in 327 patients, found cancer causing mutations in the PMS2 gene in about 14% of patients with personal and family histories suggestive of Lynch syndrome. Moreover, cancer causing mutations were also found in the MSH2 (38%), MLH1 (30%), and MSH6 (18%) genes.

With only about 7% penetration (in a market with more than $450 million of annual market opportunity), revenues from Colaris products recorded a substantial 56% upside during the last reported quarter due to the inclusion of the PMS2 gene, increased demand and market share gain.

Although Bracanalysis is Myriad’s flagship product, the company is trying to reduce its dependence on it. To meet this objective, the company is currently focusing on the companion diagnostic market and collaborating with several pharmaceutical companies, the latest being with Cephalon, a subsidiary of Teva Pharmaceuticals (TEVA).

Myriad has also made commendable progress with respect to its expansion in Europe. The company’s laboratory in Munich, Germany, which became operational since January this year, is capable of generating $50 million in revenues each year, over a period of next five years. With its headquarters in Switzerland, the company’s task of hiring country managers for the five major markets of Germany, France, Italy, Spain and Switzerland is nearly complete. While reimbursements for Bracanalysis, Colaris and Colaris AP have already been received in these markets, Myriad is endeavoring to obtain reimbursement for Prolaris as well.

However, European expansion and pipeline development have pushed up operating expenses, fostering pressure on margins. Over the long term, we are Neutral on Myriad. The stock retains a Zacks # 3 Rank (Hold) in the short term.

 

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