Shares of Myriad Genetics Inc. (MYGN) registered a steep decline of 9.3%, closing the session at $26.98 on Dec 2, 2013. The downfall continued the following day with a fall of 5.3% and closed at $25.55. The two heavy setbacks pulled down the stock price of the company that is presently trading way below its 52-week high of $38.27.
Two recent developments can be primarily held accountable for this disappointing performance of Myriad’s stock.
The Centers for Medicare & Medicaid Services (CMS) recently proposed to pay $1,438 to Myriad for each BRACAnalysis test conducted by the company. CMS, an agency in the US Department of Health & Human Services, is attempting to introduce several key healthcare reform measures. The considerable reduction from the previously paid amount of $2,795 is expected to put a heavy burden on the company. BRACAnalysis is a popular breast cancer test, used to identify people who are highly susceptible to developing breast and ovarian cancer.
Further on, in a move by Invitae Corporation, Myriad Genetics has been sued by the former over its genetic testing patents. The lawsuit filed by Invitae is in response to a previous lawsuit filed by Myriad regarding Invitae’s BRCA and MUTYH genetic tests. Invitae has dismissed the allegations of infringement and promised to resolve the issue aggressively.
The suit filed by Invitae in the U.S. District Court for the Northern District of California is based on the fact that certain Myriad patents relating to the BRCA1/2 and MUTYH genes are invalid and are not infringed by Invitae. Moreover, the Supreme Court has already stated that naturally occurring DNA and any such related information cannot be patented.
The law suit can deter growth in the BRACAnalysis market, thereby exerting pressure on Myriad's revenues as BRACAnalysis is one of its prime offerings. The company has already suffered a revenue loss of $5 million in the first quarter of fiscal 2014 and expects further market erosion in the forthcoming quarters, due to increased competition.
Currently, Myriad Genetics carries a Zacks Rank #2 (Buy). Investors interested in the industry may also consider stocks like Actelion Ltd. (ALIOF), Heska Corporation (HSKA) and AMAG Pharmaceuticals, Inc. (AMAG). All these stocks carry a Zacks Rank #1 (Strong Buy).
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