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Myriad Focus is on its myRisk Assay

Myriad Focus is on its myRisk Assay

Despite all the noise that has been generated over the recent few weeks with some Blue Cross Blue Shield (BCBS) plans narrowing their networks to exclude Myriad Genetics, management reiterated that it is not seeing any meaningful change to payer networks or pricing and the company has talked to most of its payers at this point. Given differences in turnaround times among the providers, market share movements seem to have stabilized.

Ultimately, Myriad s focus is on its myRisk assay, which is a more-comprehensive assay for hereditary breast and ovarian cancer. Payers have thus far reacted positively (United recently indicated it will cover myRisk), and the company indicated that it now has 50 million lives under coverage, which suggests that it has secured some additional payer contracts. Despite concern to the contrary, there are also no restrictions around the UnitedHealthcare contract; all United patients who meet the criteria for BRCA1/2 testing can now get the myRisk assay. UnitedHealthcare also indicated that it would pay for additional screening (the myRisk update) for patients who have already had BRCA1/2 testing.

The company has not disclosed the ASP of its MyRisk update assay (other than to say that it is at a discount to the BRCA1/2 assay). Myriad will be limited by capacity for the MyRisk test, at least initially, with a broader commercial rollout planned for the fall; thus the update will likely not begin to benefit revenue until the broader myRisk commercial rollout later in the year.

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It is our understanding that the contract with UnitedHealthcare was signed at the prompting of Myriad; given the timing (the contract was signed relatively early in the rollout of myRisk), we continue to believe the contract was not signed at unfavorable terms to Myriad (although we assume some discount on the legacy BRCA1/2). In the upcoming quarter, management will provide fiscal 2015 guidance. In our view, the bear case suggests that revenue could be down in 2015 (pricing pressure in the base BRCA business and failure of myRisk to offset); however, we believe guidance could imply growth that is better than suggested by consensus (5%) next year potentially in the high-single digits at the midpoint.

The impact from Angelina Jolie s announcement that she had undergone a preventive double mastectomy because she carried the BRCA1 gene was roughly $55 million to $65 million; the Crescendo acquisition should offset most of that benefit and leave the company flat year-overyear. Colaris guideline expansion should add some benefit (we calculate on an annual basis this could add $20 million in revenue). We assume MyRisk revenue ramps up to about $100 million in 2015 (up from $43 million in 2014), suggesting the base business has to be flat in 2015, which we believe is achievable given our perspective that price deterioration in BRCA1/2 will take a while to flow through the P&L enabling Myriad to ramp up myRisk to help offset it.

Myriad Focus is on its myRisk Assay

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