Molecular diagnostics and personalized medicine major Myriad Genetics, Inc. MYGN recently closed the company’s earlier announced acquisition of Assurex Health, the Mason, Ohio-based personalized medicine company and a popular name in the field of genetic testing for psychotropic medicine selection. The takeover of Assurex Health (effective from Aug 31) is a major stepping stone by Myriad Genetics towards establishing itself as a prominent player in the field of neuroscience.
Deal Details
Earlier, Myriad Genetics declared that it has agreed to acquire this informatics-based precision medicine company for $225 million upfront payment with the potential for additional $185 million based on achieving certain performance-based milestones.
A Strategic Fit?
At present, with more than 76 million people suffering from mental disorders, we believe this acquisition is a perfect fit for Myriad Genetics to tap into the growing opportunity in the neuroscience market. We are all the more optimistic about Myriad’s scope of growth in this field based on the current available data. This data shows that the U.S. spends more than $150 billion in direct healthcare costs, or 6% of overall healthcare spending, in treating these disorders.
Myriad is particularly hopeful about Assurex Health’s prime product GeneSightPsychotropic, that evaluates 12 genes known to play a significant role in psychotropic drug response. This is a stage three product and has been recognized as one of the fastest growing new molecular diagnostic tests in the history of the multi-billion dollar global market.
Assurex has already submitted a LCD (local coverage determination) expansion request to Medicare in order to get approval for primary care physicians to order GeneSight. Given that this market is relatively more dense in having 16,000 high-prescribing primary care physicians responsible for 40% of the antidepressant prescriptions, we are looking forward with expectation to this expanded LCD approval. Based on this approval, Myriad can launch this indication and add a meaningful value to its future growth.
Notably, Assurex Health is pursuing two very important indication expansions, in both anxiety and bipolar disorder. These two indications, in combination, are projected to more than double the current GeneSight addressable market opportunity. With its current penetration in each of these markets in single digits only, Myriad bears significant growth opportunities in these spaces.
Our View
We are highly impressed with the Assurex Health acquisition by Myriad Genetics’. The acquisition will not only put the company in a strong position to secure benefits in the huge and expanding market of mental health, but, it is also expected, the company will leverage Myriad’s commercial infrastructure. In the process, the acquisition will drive greater long-term value for the company’s investors.
GeneSight, before being part of Myriad Genetics’ portfolio, already has a market potential of more than $2 billion. This product, post integration, has unparalleled prospects ahead, including leveraging Myriad Genetics’ existing preventive care business unit.
Key Picks in the Sector
At present, hit by a dismal fourth quarter, Myriad Genetics currently bears a Zacks Rank #5 (Strong Sell). However, some of the better-ranked stocks in the medical sector are Heska Corp. HSKA, ANI Pharmaceuticals, Inc. ANIP and Anika Therapeutics Inc. ANIK, each sporting a Zacks Rank #1 (Strong Buy).
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