NEW YORK (GenomeWeb) – Investment firm Piper Jaffray last night upgraded its rating on Myriad Genetics' stock to overweight and increased its price target on the shares to $53, citing commercial payors' growing willingness to cover several tests in its portfolio.
In a note to investors, Piper Jaffray analyst William Quirk estimated that Myriad's prostate cancer test Prolaris (as well as Genomic Health's competing test Oncotype DX Prostate) have 18.4 million commercial covered lives; and its pharmacogenetic test GeneSight has 4.4 million commercial covered lives, which may increase in the next 12 months following publication of additional evidence on the test.
Quirk estimated GeneSight could add $400 million to revenues and $4.45 to EPS if the test is fully reimbursed at $2,000 per test, and Prolaris could add $70 million or $.78 to EPS. Modeling Myriad's rheumatoid arthritis test as having no private payor covered lives at the moment, Quirk wrote that the test fully covered at the Medicare reimbursement rate could generate $140 million in incremental revenue and $1.54 in EPS.
Myriad also added a non-invasive prenatal screening test to its portfolio with its acquisition of Counsyl this year.
"Adding in the incremental NIPT potential revenue suggests potential earnings power of $9.00/share," he wrote. "Obviously not all of these reimbursement hurdles will be cleared in 2019; however, we believe GeneSight and NIPT remain the nearest-term milestones and should help power earnings upside in the years to come."
In response to the upgrade, shares of Myriad jumped 8 percent to $46.60 in Wednesday morning trade on the Nasdaq.
Separately, Myriad also announced today that it has signed a new lab services agreement with Pfizer.
Under the terms of their agreement, Myriad will provide BRACAnalysis CDx testing within a Phase II study evaluating Pfizer's PARP inhibitor talazoparib for the neo-adjuvant treatment of triple negative breast cancer patients with germline BRCA1 and BRCA2 mutations.
Talazoparib is already under priority review at the US Food and Drug Administration as a treatment for HER2-negative advanced breast cancer patients with BRCA mutations. Myriad earlier this year submitted a supplementary premarket approval application with the agency for BRACAnalysis CDx to be used to identify best responders to the drug. The FDA is expected to issue a decision on talazoparib for this indication by December.
The FDA previously approved Myriad's BRCA test as a companion diagnostic for AstraZeneca's PARP inhibitor Lynparza (olaparib) when used as a maintenance therapy for platinum-sensitive ovarian cancer; and as a complementary diagnostic for Tesaro's Zejula (niraparib), when used as a maintenance treatment for recurrent epithelial ovarian, fallopian tube, or primary peritoneal cancer. Myriad is also working with Clovis Oncology to use BRACAnalysis CDx to identify best responders to its third-line advanced ovarian cancer drug Rubraca (Rucaparib) as part of a post-marketing commitment for the drug.