Recently, Rules-Based Medicine (RBM) achieved a significant milestone in a companion diagnostic development program with Roche (RHHBY). A biomarker pattern was identified using samples from a clinical trial conducted by Roche that could predict disease progression or monitor the effectiveness of a compound in its CNS pipeline.
Based on the positive results so far, Roche has decided to continue with the commercial development of the product and could result in future milestone and royalty payments to RBM.
Earlier, in April 2011 Myriad Genetics’ (MYGN) decided to acquire Texas based, privately-held RBM for $80 million in cash. This deal, expected to close by the end of May, would expand Myriad’s portfolio to take into its ambit psychiatric disorders, infectious diseases and inflammatory diseases.
According to Myriad, apart from strengthening its strong oncology pipeline it would also have access to RBM’s pipeline that includes tests for anti-psychotic drug safety, hepatitis C drug response and detection of kidney damage in diabetes patients.
Myriad is aiming at establishing itself as a strong player in the companion diagnostic market. To establish Bracanalysis as a companion diagnostic for PARP inhibitors, Myriad has got into agreement with Abbott Laboratories(ABT), BioMarin Pharmaceuticals (BMRN) and AstraZeneca(AZN). PARP inhibitor is a promising oncology drug candidate under development and these drugs could be on the market within the 2012-2013 timeframe.
The proposed acquisition of RBM would place Myriad as a leader in this arena based on the former’s proprietary protein technology and its 550 immunoassays. RBM has provided custom assay development and companion biomarker discovery for several pharmaceutical companies. Through these collaborations, RBM has obtained companion diagnostic rights to many of the drugs under development.
We consider Myriad’s Bracanalysis as a valuable asset for top line growth as it has the potential to tap a widely unexplored market. We are encouraged by the company’s various initiatives to achieve this objective. Although the company’s molecular diagnostics business is performing well, any hiccup in the economic recovery could have a negative impact on patient sample volume. We also remain concerned about the tough competitive scenario in the biotechnology and genetics-testing field.
We are currently Neutral on Myriad, which also corresponds to Zacks #3 Rank (hold) in the short term.
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