On August 9, 2016 Myriad Genetics, Inc. (NASDAQ:MYGN) reported financial results for its fiscal fourth-quarter 2016, provided an update on recent business highlights and provided fiscal first-quarter 2017 and fiscal year 2017 financial guidance (Press release, Myriad Genetics, AUG 9, 2016, View Source [SID:1234514554]).
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"Fourth-quarter performance met our expectations, and we continue to make substantial progress on advancing our product portfolio and growing Myriad into a larger, more diversified personalized medicine company," said Mark C. Capone, president and CEO of Myriad. "Myriad is on track to deliver on its five year strategic goals. We continue to be the worldwide leader in hereditary cancer testing, and our portfolio diversification efforts are accelerating with substantive volume growth and reimbursement for new commercial products, pivotal validations for our pipeline products, the acquisitions of Assurex Health and Sividon, and significant international expansion. Given the multibillion dollar market opportunity for our portfolio, we remain confident that we can deliver better health outcomes for patients and significant long-term value for shareholders."
Financial Highlights
Below are tables summarizing the financial results and revenue by product class for our fiscal fourth-quarter 2016 and full fiscal-year 2016:
Revenue
Fiscal Fourth-Quarter Fiscal Year
($ in millions) 2016 2015 % Change 2016 2015 % Change
Molecular diagnostic testing revenue
Hereditary cancer testing revenue $ 152.8 $ 163.8 (7 %) $ 632.3 $ 638.3 (1 %)
Vectra DA testing revenue 12.7 11.8 8 % 47.8 43.7 9 %
Prolaris testing revenue 3.5 0.7 400 % 11.3 2.1 438 %
Other testing revenue 4.8 2.5 92 % 14.3 11.4 25 %
Total molecular diagnostic testing revenue 173.8 178.8 (3 %) 705.7 695.5 2 %
Pharmaceutical and clinical service revenue 12.7 11.1 14 % 48.1 27.6 74 %
Total Revenue $ 186.5 $ 189.9 (2 %) $ 753.8 $ 723.1 4 %
Income Statement
Fiscal Fourth-Quarter Fiscal Year
($ in millions) 2016 2015 % Change 2016 2015 % Change
Total Revenue $ 186.5 $ 189.9 (2 %) $ 753.8 $ 723.1 4 %
Gross Profit 146.5 152.4 (4 %) 596.5 575.7 4 %
Gross Margin 78.6 % 80.3 % 79.1 % 79.6 %
Operating Expenses 110.8 116.2 (5 %) 429.7 441.5 (3 %)
Operating Income 35.7 36.2 (1 %) 166.8 134.2 24 %
Operating Margin 19.1 % 19.1 % 22.1 % 18.6 %
Adjusted Operating Income 39.0 48.2 (19 %) 179.5 167.3 7 %
Adjusted Operating Margin 20.9 % 25.4 % 23.8 % 23.1 %
Net Income 23.4 18.7 25 % 125.3 80.2 56 %
Diluted EPS 0.32 0.26 23 % 1.71 1.08 58 %
Adjusted EPS $ 0.36 $ 0.41 (12 %) $ 1.63 $ 1.45 12 %
Business Highlights
myRisk Hereditary Cancer
Myriad signed a new agreement with Blue Shield of California, retaining Myriad’s previous network status. Myriad ended the quarter with 65 percent of revenue under long-term contracts for its hereditary cancer business.
A new study in the New England Journal of Medicine demonstrated that in patients with advanced prostate cancer, the rate of deleterious mutations in myRisk genes was approximately 12 percent. This is consistent with other cancers that have genetic testing guidelines. Every year in the United States approximately 25,000 patients are diagnosed with advanced prostate cancer.
Myriad made the first content additions to myRisk adding three additional genes including GREMM1, POLE and POLD-1. These genes were recently added to the NCCN guidelines on genetic testing based upon their role in hereditary colon cancer.
Myriad announced the ability to customize the myRisk panel for genetics experts who are interested in ordering a subset of the myRisk genes on the full panel.
Vectra DA
Vectra DA volumes were up five percent year-over-year in the fiscal fourth-quarter with approximately 41,300 tests performed.
Myriad signed three additional private payer contracts for Vectra DA that collectively cover approximately one million lives in the United States.
At the European League Against Rheumatism (EULAR) annual meeting, Myriad presented new data showing the ability of Vectra DA to predict sustained clinical remission after discontinuation of Humira. In patients with a low Vectra DA score, 57 percent had sustained clinical remission following discontinuation of Humira. In patients with a high Vectra DA score, 60 percent experienced flare within one year of discontinuation of Humira.
In a second study presented at EULAR of 180 treatment naïve patients, the Vectra DA score was a statistically significant predictor of clinical remission with 12-month remission rates meaningfully higher in patients with a greater reduction in Vectra DA score versus those with a smaller reduction.
Prolaris
Prolaris volume increased 91 percent year-over-year and 11 percent sequentially with approximately 4,750 tests ordered.
At the American Urological Association annual meeting, Myriad presented the first study validating Prolaris exclusively in a low-risk only patient population. In 440 patients with a Gleason score of six or less, patients with a high Prolaris score had three times the rate of prostate specific mortality and eight times the rate of biochemical recurrence relative to patients with a low Prolaris score.
Myriad signed three additional private payer contracts for Prolaris that collectively cover approximately one million lives in the United States.
Companion Diagnostics
Myriad presented data from the first prospective validation of myChoice HRD in concert with TESARO’s NOVA study. In the study, which evaluated platinum-sensitive ovarian cancer patients, myChoice HRD positive patients receiving niraparib demonstrated a 9.1 month increase in progression free survival relative to patients receiving placebo.
Sividon Diagnostics Acquisition
Myriad completed the acquisition of Sividon Diagnostics during the fiscal fourth quarter and gained United States and Chinese distribution rights to EndoPredict, a best-in-class breast cancer prognostic test. Myriad announced plans to launch EndoPredict in the United States in the second half of fiscal year 2017.
A large head-to-head study comparing EndoPredict with Oncotype Dx was recently published in the Journal of the National Cancer Institute. The study, which evaluated 928 women from the TransATAC study, showed that EndoPredict "markedly outperformed" Oncotype Dx with a prognostic power that was more than four times greater. Also, EndoPredict low-risk patients had a 10-year rate of distant metastases of 5.8 percent versus low risk Oncotype Dx patients at 10.1 percent.
Assurex Health Acquisition
In August, Myriad signed a definitive agreement to acquire Assurex Health, a personalized medicine company providing treatment decision support to healthcare providers for their patients with mental health disorders. Assurex’s lead product, GeneSight Psychotropic, evaluates 12 genes known to play a significant role in psychotropic drug response and is used in patient treatment selection. Assurex performed over 150,000 GeneSight tests in Myriad’s fiscal year 2016 and generated more than $60 million in total revenue. The acquisition is subject to the satisfaction of customary closing conditions.
International
International revenues were up 93 percent year-over-year in the fourth quarter and accounted for approximately six percent of total product revenue in the quarter.
Myriad recently signed an agreement with BMI Healthcare in the United Kingdom covering Myriad’s complete testing portfolio including EndoPredict, Prolaris, Tumor BRACAnalysis CDx and hereditary cancer testing. BMI Healthcare is the largest private hospital group comprised of 59 hospitals and clinics across the UK, servicing 1,500,000 outpatient visits per year.
Share Repurchase
During the quarter, the Company repurchased approximately 1.6 million shares, or $55 million, of common stock under our share repurchase program and ended the quarter with approximately $195 million remaining on our current share repurchase authorization.
Fiscal Year 2017 and Fiscal First-Quarter 2017 Financial Guidance
Below is a table summarizing Myriad’s fiscal year 2017 and fiscal first-quarter 2017 financial guidance:
Revenue Adjusted
Earnings Per
Share GAAP Diluted
Earnings Per
Share
Fiscal Year 2017 $740-$760 million $1.00-$1.10 $0.47 – $0.57
Fiscal First-Quarter 2017 $168-$170 million $0.25-$0.27 $0.14 – $0.16
Myriad’s fiscal year 2017 financial guidance includes the impact of the Assurex Health acquisition which Myriad expects to close at the end of the fiscal first-quarter 2017.
These projections are forward-looking statements and are subject to the risks summarized in the safe harbor statement at the end of this press release. The Company will provide further details on its business outlook during its conference call today to discuss the fiscal fourth-quarter financial results and fiscal year 2017 and fiscal first-quarter 2017 financial guidance.