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Myriad Genetics Betting on Hereditary Cancer, Prenatal Testing Businesses for Continued Future Growth

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NEW YORK (GenomeWeb) – Myriad Genetics outlined its strategy to continue growth in the prenatal testing market this week during a call to discuss fiscal 2019 second quarter earnings.

During the quarter, growth in Myriad's hereditary cancer and newly acquired prenatal testing businesses helped bolster revenues by 15 percent to $216.8 million, and cushioned the negative impact from the GeneSight pharmacogenetic test, which had 24 percent lower sales compared to Q2 2018. During an earnings call this week, Myriad CEO Mark Capone outlined the company's plans for continuing the growth seen in these high performing segments. 

In the profitable but crowded prenatal testing space, Myriad plans to differentiate its tests, garnered last summer through the acquisition of Counsyl, by continually improving its product capabilities, flooding the market with its sales reps, and launching an application to streamline physician workflow and improve customers' experience with its tests.

"We have seen technology solutions revolutionize industries like ride-hailing and online shopping," said Capone. "We believe technology advances in molecular diagnostics can significantly increase our penetration and market share."

In terms of product improvements, during the second quarter, Myriad enhanced its Prequel noninvasive prenatal screening test to allow for the detection of trisomies in patients below a 4 percent fetal fraction level. In Q3, the company will make further changes to this test so it can analyze 23 chromosome pairs, instead of just three chromosomes typically assessed by other labs. Capone estimated that this will increase aneuploidy detection by 30 percent.

Myriad is also developing a microdeletion panel that leverages intellectual property from its hereditary cancer tests. "These are examples of the ongoing innovations that we expect to bring to our prenatal products, much like we have done in hereditary cancer testing to create competitive advantages relative to other laboratories," Capone said.

A big part of Myriad's strategy to further capture the Ob/Gyn market is through a tripling of its sales force. At the annual JP Morgan Healthcare Conference in January, Capone said that most noninvasive prenatal testing companies have concentrated on maternal fetal medicine, which tends to be focused on high-risk pregnant women, since NIPT tests are reimbursed in this setting. But Myriad will focus on testing for average-risk pregnancies, which is increasingly supported by guidelines and payors. 

Myriad's large sales force is "now accessing physicians accountable for more than 80 percent of the market potential for our women's health products," Capone said.

As the leader in the hereditary cancer testing space, Myriad also has strong brand recognition among doctors. However, the company will now use an app to make inroads with doctors and patients in newer markets it is entering, such as prenatal testing. Myriad acquired an application through Counsyl, and rebranded in January as Myriad Complete, through which it hopes to simply the workflow for doctors, and to make life easier for patients through tools that provide education, test cost information, and counseling resources.

Capone highlighted, for example, that the app would take into account patients' insurance plans and deductible status and give a cost estimate for tests, which in turn would reduce pressure on doctors to discuss out-of-pocket costs with their patients. The application also has automated alerts aimed at increasing male compliance in carrier screening when a woman is a carrier for one of the conditions assessed by the Foresight test.

"Physicians understand this represents the true clinical utility of the test, but they are often too busy to follow through on this additional testing," Capone said. Early indicators suggest that physicians like the support they're getting through this app. He noted that within the first few weeks of launching Myriad Complete, 740 new sites employing 3,500 doctors signed on to the application.

Myriad plans to use this app not just in prenatal testing but for all the products in this portfolio. The company's large sales team is similarly identifying opportunities for cross marketing of products between market segments.

According to Capone, prenatal sales calls have increased 209 percent and hereditary cancer calls have increased 17 percent since implementing the bigger sales force. Reps have found that some prior customers of Myriad's myRisk NGS test for hereditary cancer predisposition testing have switched to prenatal testing and vice versa.

While the prenatal and hereditary cancer segments fared well in Q2, there are several pressure points for the company that market analysts are keeping their eyes on. For example, one of the factors impacting Myriad's prenatal testing revenues in Q1 was UnitedHealthcare's decision to deem Counsyl out-of-network.

Capone at the time had characterized the issue, which led to lower-than-expected revenues during the quarter, as "transitory." During the earnings call this week, he indicated that Myriad had been having "productive" conversations with UHC about getting its prenatal tests back in-network, but did not venture to guess if or when the matter might be resolved.

In projecting fiscal year 2019 revenues of between $855 million and $865 million, the company has assumed "modest growth" in the second half of the year in its prenatal testing business. "If we see an impact from the expanded sales force, the Myriad Complete application, or favorable UnitedHealthcare network decision, then it will represent upside to our guidance," said Myriad CFO Bryan Riggsbee during the call.

In Q2, sales of Myriad's hereditary cancer tests jumped 4 percent to $126.7 million from $122.2 million a year earlier, marking the first time this segment increased in revenues since fiscal year 2014. The revenue guidance for the full fiscal year also assumes hereditary cancer risk test pricing to remain stable into 2020, which Capone said provides "the opportunity for continued revenue growth" as test volumes increase.

But a recent event that could impact hereditary cancer test reimbursement not just for Myriad, but across the industry, is the Centers for Medicare & Medicaid Services' recent indication that it would only cover NGS germline testing for assessing hereditary cancer predisposition when it was performed for advanced cancer patients. 

Capone acknowledge that the genetic testing industry was "quite surprised" by this development, but noted there is no chance that commercial payors would follow Medicare's lead. "There is zero chance, and I mean absolute zero chance, that commercial payors would in any way preclude any early-stage breast cancer patient from hereditary cancer testing," he said, noting that guidelines from the National Comprehensive Cancer Network and the US Preventive Services Task Force support coverage for BRCA1/2 testing in this setting.

As for Medicare policy, Capone noted, as other stakeholders have, that CMS is applying the coverage terms for NGS testing for somatic variants to germline variants. Myriad is engaged in discussions to clear up this confusion, he said. 

Reimbursement experts have pointed out that if CMS maintains this policy, it wouldn't restrict coverage of cancer risk testing in early-stage patients using Sanger sequencing or PCR. In recent years, Myriad has transitioned the majority of its hereditary cancer testing volume to the myRisk NGS panel. However, its legacy BRACAnalysis test, which is now largely used as an FDA-approved companion diagnostic to personalize cancer treatments, uses Sanger and PCR. "So, for us, none of this has changed what we've been doing," Capone said.