As Revenue Pressures Build, Myriad Pushes Infringement Claims
In papers filed at U.S. District Court for the District of Utah, Central Division, Myriad contended Ambry and Gene By Gene are infringing on 10 of 24 patents covering synthetic primers, probes, and arrays, plus testing methods related to BRCA1 and BRCA2. Myriad owns 5 of the 10 patents and licenses the rest from co-plaintiffs University of Utah, University of Pennsylvania, Toronto’s Hospital for Sick Children, and Canadian company Endorecherche.
Myriad noted it spent more than $500 million to develop its BRACAnalysis® diagnostic test for hereditary breast and ovarian cancer, and argued that its rivals’ tests would reduce royalties for the patent holders, now totaling about $57 million: “Myriad has suffered and will continue to suffer substantial damage to its business, including, without limitation, lost profits, loss of business reputation, loss of business opportunities, and loss of market share.”
That’s one reason why it’s hard to divorce economics from Myriad’s patent litigation. Other reasons can be found in the Q4 results and the company’s plans to introduce future tests discussed on the conference call. BRACAnalysis represented 74% of total company revenue in Q4, generating $129.6 million, a 19% increase compared to fiscal year 2012.
The revenue percentage will likely decline over the next fiscal year, as Myriad launches three new gene tests. Starting in September, Myriad will launch myRisk Hereditary Cancer™, a 25-gene panel covering six major cancers (breast, colorectal, endometrial, gastric, ovarian, pancreatic, uterine, and melanoma), at an average selling price of $3,700. The other new tests are myPath Melanoma™ and myPlan Lung Cancer™. By summer 2015, Myriad expects to discontinue several current tests including BRACAnalysis.
Myriad says the launches, plus higher taxes and cost of patent litigation (an expected $10 million this fiscal year), will shrink its FY 2014 projected earnings-per-share (EPS) growth 6–10%, well below its 36% EPS leap this past fiscal year. Given the prospect of reduced growth, Myriad’s assertion of patent rights against competitors is understandable: “We believe that our patents are valid and enforceable, and they’re being infringed,” Ron Rogers, head of communications at Myriad, told GEN.