Recently, Myriad Genetics (MYGN) licensed proprietary technology for the early detection of cancer from California based Chronix Biomedical. Under the agreement, Myriad will gain rights to commercialize the test for the early detection of breast, colon and prostate cancer in North America, South America, and Europe.
Against these, the company is liable to pay upfront fees, milestone payments, and royalty payments based on the achievement of certain benchmarks.
In the June 2010 meeting of the American Society of Clinical Oncology (ASCO), data from a study on 575 individuals using Chronix’s technology were presented. The technology could detect the presence of prostate or breast cancer with 92% sensitivity and 100% specificity. Successful development of the test will be of huge benefit to the patient population as early detection could lead to better clinical outcomes.
According to the National Cancer Institute, patients diagnosed at an early stage of cancer have more than 90% probability of surviving up to five years. However, detection at a later stage reduces this chance of survival drastically to 30%.
According to estimates of the American Cancer Society, there were 570,000 newly diagnosed cases of breast, colon, or prostate cancer in 2010. Furthermore, over 70 million breast, colon, and prostate screening tests are performed each year in the US alone.
Myriad derives a majority of its revenues from Oncology, which increased 13.5% year over year to $73 million during the latest reported quarter. Revenues from woman’s health grew 11% to $29.3 million.
While Myriad markets several molecular diagnostic products, the company’s flagship product is Bracanalysis, which studies BRCA1 and BRCA2 genes for assessing woman’s risk of developing hereditary breast and ovarian cancers. This test recorded a 13.2% growth in revenues to $90.3 million.
Moreover, revenues derived from Colaris and Colaris AP, which assess a patient’s risk of developing hereditary colorectal and uterine cancers, increased 7% to $7.4 million.
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 also encouraged by the company’s various initiatives to diversify its portfolio. However, we remain concerned about the tough competitive scenario in the biotechnology and genetics-testing field.
We have a Neutral recommendation for the stock, which also corresponds to the Zacks #3 Rank (Hold) in the short-term.
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