Weeks ago, Myriad Genetics ($MYGN) alarmed investors when news broke that Medicare reimbursement for its signature predictive cancer test would be slashed nearly in half. Now, in the wake of stellar financial results and news of a major acquisition, investors are in the midst of an ongoing "happy dance."
Myriad's stock shot up to $33.72 during initial trading on Feb. 7, up 10.3% from the previous close. For the week, that number caps a jump of more than 22%. The Utah company's stock initially spiked on Feb. 5 after a double shot of good news. Myriad generated more than $204 million in fiscal 2014 revenue and $50.4 million in net income during its fiscal 2014 second quarter, jumps of 37% and 44%, respectively, over the same period the year before. Separately, the company announced it would pay $270 million for Crescendo Bioscience, a California operation that has focused on commercializing a promising rheumatoid arthritis molecular diagnostic.
Myriad's BRACAnalysis test screens for BRCA1 and BRCA2 mutations to gauge a patient's risk for breast or ovarian cancer. And investors were initially upset late last year that Medicare would slash reimbursement rates by nearly 50%. Private insurers often follow suit, and the test already faces challenges from rivals in the wake of a U.S. Supreme Court decision last summer that invalidated some Myriad patents. Myriad is suing all of its rivals for patent infringement, and the future of those lawsuits remains uncertain. Myriad has made strides there, however, recently settling litigation with one rival--Gene By Gene--that allows Gene By Gene to keep selling its BRCA1 and BRCA2 offerings outside of North America, Genome Web reported.
But Myriad's stellar financial results this week showed that the company continues to gain ground with BRACAnalysis and is making some progress launching new products. That, plus a move to acquire Crescendo and expand into the rheumatoid arthritis space, signals to investors a concerted effort to diversify and reduce market vulnerabilities in the future.
- here's Genome Web's coverage (reg. req.)