On Dec 21, 2015, we issued an updated research report on Utah-based molecular diagnostics provider – Myriad Genetics, Inc. MYGN.The companyemploys a number of proprietary technologies to target the genetic basis of varied human diseases and the role these genes might play in the onset, progression and treatment of the respective diseases.
During the fiscal first quarter, Myriad emphasized on commercializing four new products as part of its five-year plan, namely, Vectra DA, myPath Melanoma, Prolaris and myPlan Lung cancer tests. While Vectra DA exhibited a global addressable market potential of $3 billion and witnessed strong volumes (approximately 38,000 tests); Prolaris improved 16% quarter over quarter upholding global addressable market prospects worth $1.5 billion.
Meanwhile, 22% of the U.S. dermapathologists ordered for Myriad’s myPath Melanoma test in the first quarter. The test presents a global addressable market potential of $600 million in the first two years post its launch.
In the context of pipeline expansion, Myriad continued to make significant progress with its RNA kit initiative in coordination with its instrument partner, Thermo Fisher Scientific, during the reported quarter. Development work is also progressing rapidly for Prolaris, myPlan Lung Cancer and myPlan Renal Cancer. Also, Myriad currently has agreements with 20 varied pharmaceutical companies, which collectively reflect a market potential of over $1 billion for the company in the field of diagnostics and companion diagnostics.
In terms of reimbursement, Myriad made progress through September in contracting with payers on the new colon and endometrial cancer NCCN guidelines. The company now has approximately 45% of insurance plans that have expanded coverage policies to the broader criteria. These additional colon cancer and endometrial cancer indications will increase the total addressable market by $250 million per year once contracting is completed.
We take a note that, Myriad in its fiscal 2016, exceeded the Zacks Consensus Estimate on both lines. On the profitability front, while the company posted an impressive year-over-year performance, both operating and gross margins deteriorated.
However, as Myriad currently does not utilize hedging strategies to mitigate foreign currency risk, it remains highly exposed to fluctuating currency headwinds. Moreover, emerging competitors and pricing pressure may plague Myriad’s stock in the near future. Additionally, macroeconomic uncertainty and higher expenses owing to an extensive pipeline of tests pose concern.
Currently, Myriad carries a Zacks Rank #3 (Hold).
Key Picks in the Sector
Some better-ranked med-biomed/generic stocks are Anika Therapeutics Inc. ANIK, Baxalta Incorporated BXLT and Heska Corporation HSKA. All the three stocks hold a Zacks Rank #1 (Strong Buy).
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