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Myriad Genetics Is a Biotech Buy

Breakthrough cancer screening tests put Myriad on a growth track

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Myriad Genetics (NASDAQ:MYSG) makes tests that analyze genes and their mutations to assess a person’s risk of developing a certain disease, as well as how the disease may progress and its chances for recurrence. The tests also enable “personalized medicine” by helping doctors know which drugs are best suited for a particular patient’s genetic makeup, and they can also help determine optimal dosing and reduce side effects.

Myriad has nine tests on the market. The most important by far is its BRACAnalysis, which brings in 88% of the company’s revenues. The test costs $3,340, and it is covered by all major insurance companies and health maintenance organizations in the United States.

BRACAnalysis analyzes the BRCA1 and BRCA2 genes to assess a woman’s risk of developing hereditary breast and ovarian cancers. A woman who tests positive for a mutation in the genes (called a “deleterious mutation”) has an 82% likelihood of developing breast cancer and a 44% risk of developing ovarian cancer.

Those are scary numbers, but here’s the good news – and to me, compelling evidence of the great value in diagnostic tests: A woman who has a mutation can take steps to significantly decrease the chances that she gets cancer.

Women with a high risk of developing breast cancer but who have no symptoms can reduce their risk by about 50% with appropriate preventive therapies, according to The Journal of the National Cancer Institute. Similarly, research published in the New England Journal of Medicine showed that women with genetic mutations who have not developed symptoms of ovarian cancer can lower their risk by approximately 60% with preventive therapies.

Myriad has one other major testing product called Colaris, which analyzes genes for mutations that increase a person’s risk of developing colorectal cancer or uterine cancer. Patients who have a mutation in one of the colon cancer genes have a greater than 80% likelihood of developing the disease, and women with a mutation in the uterine cancer genes have a 71% chance of developing the cancer.

Colon cancer is very preventable thanks to early screening and polyp removal. Uterine cancer is a bit tougher to treat, though more aggressive screening can help with early detection, and there is also the option of a hysterectomy.

Myriad’s other testing products look for genetic mutations that can cause melanoma and pancreatic cancer. Its personalized medicine products include OnDose, which helps doctors manage chemotherapy to maximize effectiveness and minimize side effects; Prezeon, which measures loss of function in a gene that helps suppress tumors; and TheraGuide, which assesses a person’s risk of developing a severe reaction to a certain kind of chemotherapy. One product, Prolaris, measures gene expression to help predict disease outcome in prostate cancer.

Three Avenues to Growth

Myriad has a three-pronged approached to growth.

First, they expect to continue growing current products in existing markets (primarily the U.S.) as testing becomes more widely used and demand increases as the population ages.

Second, they want to grow their products internationally. Foreign revenues are minimal right now, so there is plenty of opportunity. Management’s hope is that revenues from outside the U.S. will grow from virtually nothing currently to $15 million by 2015. Myriad has five country managers who recently completed an orientation and training program at the company’s corporate headquarters at Salt Lake City and have returned to France, Germany, Italy, Switzerland and Spain to grow the business in those locations. The company eventually wants to be in Latin America and Asia as well, two strong growth opportunities, and is building its marketing capabilities in Europe.

Third, Myriad continues to develop tests for more and more diseases. MYGN has an industry-leading 13 potential tests in the pipeline. By next year, the company hopes to offer a melanoma test, which will be launched simultaneously with a quantitative PCR test, which is a test that amplifies DNA to help diagnose hereditary diseases.

Article printed from InvestorPlace Media,

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