Earlier in December, Myriad Genetics ($MYGN) began to feel the wrath of fearful investors for the second time this fall. Once again, they drove the Salt Lake City diagnostics company's stock down by double digits in the wake of news that the Centers for Medicare and Medicaid Services (CMS) could slash reimbursement for BRCA cancer predictive tests by up to 50%. Investor pessimism hasn't let up since.
When Marketwatch reported on the new reimbursement concern on Dec. 3, the stock had plunged over 7% to $25 and even touched double-digit declines in reaction to the CMS news highlighted by a Leerink Swann analyst and others. The price has trended downward ever since, listing at $23.49 in trading early on Dec. 17.
This latest stock slam came after CMS issued its initial report at the end of September noting a 48% reimbursement reduction for the rest of 2013 for Myriad's BRACAnalysis test, which screens for BRCA1 and BRCA2 mutations that boost a patient's risk of getting breast or ovarian cancer. Myriad's stock nose-dived at the time but recovered when Myriad addressed the matter in a regulatory finding that claimed two Medicare contractors erred in their pricing, which should have been at $2,795.09. Earlier this month, a Leerink Swann analyst noted that CMS listed a reimbursement reduction to $1,438 in its new fee schedule released at the end of November, which appeared to counter Myriad's earlier assessment. And so the second stock dive commenced once word got out.
Myriad spokesman Ronald Rogers told FierceMedicalDevices "we are in communication with CMS to better understand what has occurred. We are awaiting a response from CMS but have not heard back from them." Rogers added that once the company hears from CMS, it will release a more detailed public statement on the matter.
If the lower CMS payment stands, it could hurt the company, considering it relies on BRACAnalysis for a large share of its sales.
Myriad has been nothing if not resilient since the U.S. Supreme Court over the summer invalidated some of its patents involving BRCA cancer predictive testing but upheld others. The diagnostics outfit has sued 6 rivals that came out with competing BRCA tests. And it has focused hard on diversifying, unleashing new assays focused on melanoma, early-stage lung cancer, and assessing the risk for a variety of cancers. Just this week, Myriad touted positive results for its HRD test designed to predict the response to cisplatin treatment for patients with triple-negative breast cancer.
All of that is good news. But investors panicked over the BRCA reimbursement issue. It shows that however promising the technology launched by a diagnostic operation, without robust reimbursement to guarantee revenue, these companies can lose their luster in a heartbeat.
- read the Marketwatch piece
- here's Myriad's latest research news
Editor's note: This story has been corrected to note that Myriad has sued 6 rivals who came out with competing BRCA tests, not "dozens" as had been previously stated. We regret the error.