Myriad Genetics Outlines Strategy for Driving Long-Term Value From MDx Pipeline

NEW YORK (GenomeWeb) – Although Myriad Genetics' forecasted revenues for fiscal year 2017 fell short of Wall Street's expectations, the company yesterday outlined its plan for diversifying its product portfolio and achieving long-term growth.

The company reported FY2016 revenues of $753.8 million, a 4 percent increase from the prior year, and said it is expecting revenues of between $740 million to $760 million in FY2017. Analysts were expecting $755.5 million in revenues for FY2016 and had modeled $788.9 million for the coming 12 months. 

Myriad executives explained during an earnings call with analysts that the company's fourth quarter revenues decreased by 2 percent sequentially and 7 percent year over year to $186.5 million due to market share loss in the oncology segment and pricing declines associated with long-term payor contracts. Myriad CFO Bryan Riggsbee said the company is assuming "marginal declines in hereditary cancer revenue in fiscal 2017 of a magnitude similar" to Q4 FY2016.

Myriad's FY2016 financial results sent the company's stock tumbling, and several analysts downgraded shares of the firm. 

While Myriad is still the leading provider of hereditary cancer genetic testing, the firm now competes with a number of companies, including Invitae, GeneDx, and Ambry Genetics. Invitae this week reported $5.6 million in revenues for the three months ended June 30, compared to $1.8 million in the year ago period, falling short of the consensus Wall Street estimate of $5.8 million. Approximately 80 percent of Invitae's testing volume is in oncology, mainly in hereditary breast and ovarian cancer. 

Myriad's hereditary cancer testing franchise centers on myRisk Hereditary Cancer, a test that gauges 28 genes associated with risk for eight cancers. In FY2016, Myriad converted all its targeted physician customers from ordering older disease-specific prognostic tests, such as BRACAnalysis for hereditary breast and ovarian cancer, to myRisk. 

Going forward, the company plans to keep myRisk up to date with treatment guidelines and add three new genes related to colon cancer risk. It also plans to launch a service that allows genetics experts to receive customized analysis for specific genes on the panel.

Myriad CEO Mark Capone said the firm had submitted data to the National Comprehensive Cancer Network to expand indications for testing breast and pancreatic cancer patients, and cited a number of favorable changes to guidelines in prostate, colon, and endometrial cancer that could expand the market for myRisk and positively impact FY2017 revenues.

Myriad has long-term contracts with payors accounting for 65 percent of its revenues. The company has retained in-network status with Blue Shield of California and is having conversations with payors that are evaluating their genetic testing portfolios in hereditary cancer testing.

The company is highlighting to payors data from the PROMPT registry that shows a 26 percent discrepancy in 603 genetic variants interpreted by more than one commercial lab. The PROMPT registry is being advanced by multiple cancer institutions and genetic testing labs that are hoping to improve understanding of cancer susceptibility genes.

Capone told analysts that discrepancy data suggest "that close to 10 percent of patients are receiving information that would lead them to pursue the wrong decision," which can increase healthcare costs and negatively impact patients. "Only Myriad offers the innovative myVision variant interpretation program to ensure accuracy when it comes to variant classification," he added.

Capone did not elaborate during the call on how the interpretation conflicts were resolved in the PROMPT study, and which tests yielded the correct interpretation in each case. Researchers led by Susan Domcheck from University of Pennsylvania Perelman School of Medicine presented the discrepancy data from PROMPT in an abstract at the American Society of Clinical Oncology's annual meeting in June. They also concluded in that abstract that "collaborative efforts are needed to identify the reasons for discrepancies in variant classification and for homogenization of their interpretation." 

Myriad is also focusing on long-term growth of other tests, specifically the prostate cancer aggressiveness test Prolaris, the rheumatoid arthritis test Vectra DA, the breast cancer recurrence test EndoPredict, and the pharmacogenetic test GeneSight.

EndoPredict and GeneSight came under Myriad with its acquisitions of Sividon Diagnostics and Assurex, respectively, and Riggsbee noted that in FY2017 the company will focus on integrating these two businesses into Myriad's operations. Myriad expects Sividon to be neutral to its FY2017 earnings and accretive the following fiscal year, and expects Assurex to be dilutive in FY2017 and accretive in early FY2018.

Myriad will continue efforts to improve Vectra DA's adoption and reimbursement and further realize a $3 billion global market that the test has penetrated only 3 percent. The company is communicating to payors data from a new study demonstrating the test's ability to predict sustained remission and the risk of flares after patients stop taking the drug Humira. Another study showed the test can predict clinical remission rates in patients when they start a new treatment. This evidence is starting to sway payors, according to Capone.

Similarly, more private payors began covering Prolaris in FY2016, and Myriad has been in discussions with Medicare to expand the test's local coverage determination for intermediate risk patients. Currently, the LCD for the prostate cancer aggressiveness test provides coverage when it is used for patients defined as low and very low risk by the National Comprehensive Cancer Network. 

Myriad is planning to launch the breast cancer recurrence test EndoPredict in the second half of FY2017. The company is hoping the test's adoption will be boosted by a recent publication that showed that EndoPredict outperformed Genomic Health's Oncotype DX. Specifically, in the nearly 1,000-patient retrospective study, less than 6 percent of patients deemed low risk by EndoPredict experienced recurrence over a decade, while 10 percent of patients deemed low risk by Oncotype DX saw their disease return over that time. 

Capone noted that EndoPredict is already covered by Aetna and Medicare, and Myriad is in discussions with other payors.

For GeneSight, Myriad said it is focusing on expanding the market of the PGx test in patients with depression and among primary care doctors. Assurex has an LCD covering GeneSight only when licensed psychiatrists order it to guide treatment strategies for refractory major depressive disorder patients, but the company is already working on expanding the terms of the LCD to include anxiety and bipolar indications and cover the test when primary care doctors order it.

"If we are successful at obtaining an expanded LCD, we will launch this indication with our current preventive team which would represent upside to our guidance," Capone said.

Finally, Myriad is working on submitting a premarket approval application to the US Food and Drug Administration for its myChoice HRD test as a companion diagnostic for Tesaro's PARP inhibitor niraparib. Tesaro is projecting FDA approval for the drug in the first half of FY 2017, and Myriad is expecting the test will be approved at the same time.

Recently, Tesaro reported the first data from a large, prospective study that showed that ovarian cancer patients with germline BRCA mutations and those with HRD-positive tumors by Myriad's test lived significantly longer without their disease getting worse when they received niraparib compared to patients receiving placebo. 

This study has garnered interest in myChoice HRD among other drug firms, Capone said. He added that Myriad's myPath Melanoma and myPlan Lung Cancer have completed the studies necessary for reimbursement, and the company is starting discussions with payors.

While all these tests could potentially be an upside to Myriad's business, the company has not factored in revenues from myChoice HRD or GeneSight for fiscal year 2017. Neither has it assumed any US revenues for EndoPredict, nor factored in any benefits from the potentially improved reimbursement prospects for Prolaris, myPath Melanoma, and myPlan Lung Cancer.

"We think it's just prudent to reflect for guidance purposes the trend we saw from Q3 to Q4" in the hereditary cancer testing space, Capone told analysts. "It's important to note that we really understand the nature of some that and are obviously working on a number of initiatives to change that trajectory … but for guidance we thought it was prudent not to necessarily expect success from those [initiatives] … as potential upside to guidance."

Riggsbee added that although investing in these opportunities may "dampen" Myriad's short-term profitability, "we remain highly confident in our ability to achieve the goals laid out in our five-year plan, and the recent acquisitions completed by the company only strengthen our longer term outlook." Last year, Myriad outlined its five-year growth plan, aiming to double its annual revenues to $1.5 billion by fiscal year 2020, where 46 percent of revenues are attributable to its hereditary cancer testing business and the remaining to newer tests. 

"Progress in this industry is never made in giant leaps, but we have demonstrated that steady and continual progress is ultimately rewarded," Capone said.