Myriad Genetics (MYGN) has completed the acquisition of Texas based Rules-Based Medicine (RBM) for $80 million in cash. RMB is expected to contribute $2 million in revenue during the fourth quarter of fiscal 2011.
This deal 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.
Recently, 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.
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, the company has got into agreement with Abbott Laboratories (ABT), BioMarin Pharmaceuticals 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 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.
Myriad exited the third quarter with cash and marketable securities of $451.5 million compared to $488.4 million at the end of June 2010. During the last reported quarter, the company repurchased 4.5 million shares for $88 million, thereby improving the bottom line and was left with $50 million of stock repurchase authorization. With a strong balance sheet, Myriad is well placed to expand its product portfolio, targeting new territories and launching new products.
We are currently Neutral on Myriad, which also corresponds to the Zacks #3 Rank (hold) in the short term.
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