CPHD Cepheid (MM)

Myriad Genetics (MYGN) at present is working on further penetration of its Prolaris test, a product that helps in making better-informed treatment decisions depending on how aggressive the prostate cancer. The company has completed four clinical studies and has three more underway covering over 3,000 prostate cancer patient samples.

In this respect, Myriad should benefit from a recently published study in the British Journal of Cancer. The study demonstrated the ability of the test to accurately predict prostate cancer aggressiveness and consequently the chances of death from the disease.

The study analyzed the Prolaris Score of 349 prostate cancer patients who had been diagnosed by needle biopsy and managed conservatively. It was observed that 81% of prostate cancer patients with lower Prolaris Scores when left untreated had a 5-year survival rate of 93% while the remaining 19% of the patients with higher Prolaris Scores had a 5-year survival rate of only 63% and an even lower 10-year survival rate of 44%.

Myriad is undertaking several steps directed toward commercialization of the Prolaris test. The company has completed extensive market research with physicians and payers and has seen a steady rise in interest. Moreover, the urology sales team has been expanded to approximately 20 field based personnel.

We are impressed with the company’s strategy of diversifying its product suite that will help reduce its dependence on Bracanalysis, its flagship product. In addition to growing existing tests and markets, Myriad is targeting the international market and focusing on pipeline expansion with products for diverse indications including oncology, women’s health, urology, dermatology, autoimmune and inflammatory disease and neuroscience. We expect these strategies to be important growth drivers for the company.

Myriad has made a commedable progress in Europe. The company’s laboratory in Munich, Germany is operational since January and is capable of generating $50 million in annual revenues in the next five years. With its headquarters in Switzerland, the hiring of country managers for the five major markets of Germany, France, Italy, Spain and Switzerland has been completed.

While reimbursement for Bracanalysis, Colaris and Colaris AP have already been received in these markets, Myriad is working on the reimbursemnet for Prolaris. The company is satisfied with the progress made so far in Europe and considers this market to present growth opportunities in the long term. The stock retains a Zacks #2 Rank (Buy) in the short term.

However, we remain concerned about the current economic uncertainty that might curtail patient visits to physicians thus affecting the company. This situation has also affected Myriad’s peers such as Cepheid (CPHD) and Genomic Health (GHDX). Moreover, the current uncertainties in Europe might offer blockages to Myriad’s expansion plans. Over the long term, we are Neutral on Myriad.

 
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