Myriad’s Smart Prostate Cancer Test – Analyst Blog

A recent study published in ‘Lancet Oncology’ finds that the Prolaris test of Myriad Genetics, Inc. (MYGN) helps determine the aggressiveness of prostate cancer, risk of its recurrence and death in patients who have undergone prostatectomy surgery, employing the patient's cell cycle progression (CCP) gene.  The study says that CCP being the key indicator will also effectively determine proper treatment for patients.

Prolaris is a 46-gene molecular diagnostic assay of Myriad which helps the physician in assessing whether a man’s prostate cancer is aggressive or dormant. It was observed that Prolaris was more useful than the traditional methods used to assess the status of patients with prostate cancer.

The study incorporates the CCP scores of 703 prostate cancer patients, out of which 366 patients had undergone prostatectomy. The rest of the patients had localized prostate cancer, which was diagnosed by transurethral resection (TURP). It was observed that for the TURP patients, CCP score was vital in predicting death. In case of the former group, both CCP score and pre-operative PSA level were significant factors in predicting the recurrence of the condition.

Following the supporting data, Myriad expects Prolaris to support the physician’s in offering an optimal treatment as per the severity of the disease thereby reduce unnecessary financial burden on the health care system. Moreover the study concludes that early aggressive treatment can have side effects and reduce the quality of patient’s life.

The limited abilities of the current markers, act as a significant growth driver for Prolaris to succeed by tapping a widely unexplored market. Earlier in October 2010, a study presented at the European Society for Medical Oncology (ESMO) Congress in Milan, Italy demonstrated that about 25% of the patients had a favorable Prolaris score implying a 98.5% life expectancy over the next 10 years. However, the patients with an unfavorable score had a 42.4% probability of survival.

While Myriad markets several molecular diagnostic products, it derives majority of its revenues from Bracanalysis, which provides a comprehensive analysis of BRCA1 and BRCA2 genes for assessing woman's risk of hereditary breast and ovarian cancers. Bracanalysis recorded an 8.5% year-over-year growth in revenues to $89.2 million in second quarter 2011. Revenue from Oncology increased 5% year-over-year to $69.4 million.

 We are encouraged by Myriad's various initiatives to attain its growth objective. Although the company’s molecular diagnostics business is performing well, we remain concerned about the overall weakness in the economy and the tough competitive scenario in the biotechnology and genetics-testing field. However, with a strong cash balance, the company is well placed to expand its product portfolio and target new territories.

We have a Neutral recommendation on the Zacks #3Rank (Hold) stock.

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