Myriad Genetics (MYGN) has launched its ninth molecular diagnostic product – Panexia, a predictive medicine product for hereditary pancreatic and related cancers. The test assesses a person’s probability of developing pancreatic cancer later in life by analyzing PALB2 and BRCA2 genes.

There are about 43,000 pancreatic cancer patients who are diagnosed each year and it is the fourth leading cause of cancer-related deaths in the US, after lung, colon and breast cancer. It is believed that up to 20% of pancreatic cancer is caused by inherited factors. The test, with a list price of $3,025, will be targeted at those patients whose family has had history of pancreatic cancer.

A patient having a family history of other than pancreatic cancer will need to analyze additional genes. The significance of Panexia lies in the fact that it helps to analyze the hereditary conditions that led to pancreatic cancer, which might increase the probability of other preventable cancers.

At present, Myriad derives 88% 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. Although the company has other tests in its portfolio such as the Colaris franchise, Melaris, OnDose among others, they have yet to make any significant contribution to the top line.

Although it will be a while before Panexia starts contributing to Myriad’s top line, diversification of revenues beyond Bracanalysis is a necessity for long-term growth of the company. In order to further strengthen its portfolio beyond Bracanalysis, earlier this month, Myriad had decided to acquire proprietary technology to detect malignant melanoma from California based Melanoma Diagnostics.

Recommendation

We consider Myriad’s Bracanalysis as a valuable asset for top line growth as it has the potential to tap a widely unexplored market. 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 stock which also corresponds to a Zacks #3 Rank (Hold) in the short-term.

 
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