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Myriad Genetics Q1 Revenues Fall 3 Percent

This article has been updated to include information from Myriad's 10-Q filing and stock pricing information.

NEW YORK (GenomeWeb) – Myriad Genetics reported after the close of the market on Tuesday that its first quarter revenues in fiscal 2017 fell 3 percent, thanks in part to an 11 percent drop in hereditary cancer testing revenues.

For the three months ended Sept. 30, the firm reported total revenues of $177.5 million, compared to $183.5 million in Q1 2016, and beating the consensus Wall Street estimate of $172.9 million. Based on the news, Myriad's stock price fell approximately 13 percent to $16.85 in mid-day trading on Wednesday.

Myriad's molecular diagnostic testing revenue fell 4 percent to $165.1 million from $171.9 million in Q1 2016. Hereditary cancer test sales fell to $139.3 million from $156.7 million a year earlier. In a 10-Q filed with the US Securities and Exchange Commission, the company attributed the $17.4 million reduction in hereditary cancer testing revenues "to reduced volumes and reimbursement." However, this was partially mitigated by increased revenues from other tests, including GeneSight, Prolaris, and EndoPredict. 

"We did see some improvement in the trajectory of our hereditary cancer volumes throughout the first quarter," Myriad CFO Bryan Riggsbee said yesterday during a call with analysts following the release of the earnings. He noted that Myriad has stabilized its oncology sales force, and that the company expects myRisk Hereditary Cancer test volumes to increase sequentially in Q2 and return to normal levels in subsequent quarters.

Myriad CEO Mark Capone added that revenues were in line with expectations, highlighted that the company recently "secured important endorsements from physician networks representing 70 percent of community oncologists," and noted that the firm is taking steps to close the gap between its reimbursed addressable market and real addressable market for its tests.

The firm's Vectra DA rheumatoid arthritis test brought in $11.6 million in revenues, marking a 2 percent increase from $11.4 million a year earlier; its Prolaris prostate cancer test had revenues of $2.9 million, a 314 percent increase from $700,000 in the year ago period; and the EndoPredict breast cancer test netted $1.7 million in revenues, a 113 percent increase from $800,000 in Q1 2016.

The GeneSight pharmacogenetic test, which the company garnered through its acquisition of Assurex, brought in revenues of $7.2 million in September. Test volumes were up 70 percent year-over-year, with 51,000 tests performed in Q1. 

Capone said that GeneSight now represents the company's second largest product, after the myRisk test, and its growth has exceeded his expectations. The addition of GeneSight to the company's product portfolio is helping Myriad diversify its testing business, he added.

In the companion diagnostics space, Myriad has a new test myChoice HRD Plus for assessing which cancer patients are most likely to respond to DNA damaging agents. The original myChoice HRD test detects whether patients have somatic mutations in BRCA1 and BRCA2 genes and other "genomic scars" by measuring heterozygosity loss, telomeric allelic imbalance, and large-scale state transitions. AstraZeneca has agreed to use myChoice HRD Plus, which gauges mutations in an additional 102 genes, in an exploratory study involving its PARP inhibitor Lynparza (olaparib), Myriad announced.

During the quarter, Myriad's pharmaceutical and clinical service revenues increased 7 percent to $12.4 million from $11.6 million in Q1 2016. The company's revenues from international markets were up 43 percent year-over-year and comprised around 5 percent of total product revenue, largely attributable to EndoPredict. Myriad is planning to introduce the test in the US in the second half of 2017.

The firm posted a loss for the first quarter of $1.2 million, or $.02 per share, compared to a net income of $30.3 million, or $.42 per share, in Q1 2016. On an adjusted basis, its EPS was $.23, missing the average Wall Street estimate of $.25.

Myriad's Q1 R&D expenses rose 13 percent to $19.4 million from $17.2 million, while its SG&A spending rose 29 percent to $111.9 million from $86.5 million.

Myriad ended the quarter with $86.9 million in cash and cash equivalents, and $61.5 million in marketable investment securities.

Capone also talked about the significance of getting payor coverage for the company's tests. "We recognize the importance of increased reimbursement to the growth trajectory of the company, and have taken significant steps to change the paradigm around payor coverage for Myriad's broad personalized medicine portfolio," he said.

Riggsbee estimated that 65 percent of hereditary cancer testing revenues are under long term contracts, while 35 percent of the business is with regional payors that are mostly not evaluating their contracts, although a portion may be subject to negotiations. "Despite the fact that we continue discussions, we have been notified of some out of network decisions by payors," he said, adding that even if these decisions remained, the company's revenue expectations would still hold due to the strength in sales of other tests.

The company further highlighted a number of studies it is conducting to establish the clinical utility of its tests. For example, Myriad is getting close to fully enrolling a 1,200-patient study for GeneSight, which will evaluate that test's utility in depression or anxiety patients.

Myriad also announced last month that US Oncology Network has selected it as a preferred provider of hereditary cancer genetic testing. Under the partnership, Myriad will provide testing through the Genetic Risk Evaluation and Testing (GREAT) program, which will be accessible to 800,000 patients who each year receive care from the more than 1,000 community physicians across 350 sites within US Oncology Network. 

In Q2, Myriad is expecting revenues of $188 million to $190 million, and EPS of between $.23 to $.25. For FY 2017 the company maintained its previous revenue guidance of between $740 million to $760 million. Analysts are expecting revenues of $193.4 million and EPS of $.27 in Q2, and FY 2017 revenues of $748.2 million.