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Recently, Myriad Genetics Inc. (MYGN - Analyst Report) inked an expanded, nonexclusive worldwide collaboration agreement with AstraZeneca (AZN - Analyst Report) to offer companion diagnostics for the latter’s pivotal Phase 3 clinical development program for the oncology candidate olaparib. However, specific terms of the expanded agreement remain undisclosed.

This new deal is an extension of an existing collaboration between Myriad and AstraZeneca through which Myriad provided Bracanalysis tests to assist AstraZeneca in its Phase 2 development program for olaparib in breast and ovarian cancer.

Following the expanded agreement, Myriad will execute a laboratory development plan in its Salt Lake City facility. The new laboratory will comply with U.S. Food and Drug Administration (FDA) regulations for companion diagnostic services.

Earlier in June, Myriad filed an Investigational Device Exemption (IDE) with the FDA for the use of Bracanalysis test as a companion diagnostic to distinguish potential responders from non-responders to olaparib therapy in the U.S. The company gained the FDA approval in August.

According to management at AstraZeneca, the collaboration to support the Phase 3 development of olaparib should result in novel treatment options for ovarian and breast cancer patients with BRCA mutations. It should also lead to improved patient outcomes as the diagnostic test will help clinicians identify appropriate patients.

AstraZeneca has already filed a Letter of Intent to submit marketing application with the European Medicines Agency for olaparib for BRCA mutated ovarian cancer. According to Myriad, the European launch is expected in 2015. Accordingly, the annual market size in the European Union for BRCA testing is estimated as $120 million for the company.

The expanded collaboration with AstraZeneca reinforces the fact that Myriad’s BRACAnalysis is considered ‘the gold standard diagnostic test’ to ascertain the presence of a BRCA gene mutation in patients. The companion diagnostic partnership with AstraZeneca is another positive footstep for Myriad to establish leadership in this space.  

Myriad has collaborations with several pharmaceutical majors to assert itself as a strong player in the companion diagnostic market. As per management, these alliances with major pharmaceutical players collectively reflect a market potential of over $1 billion for Myriad in the field of diagnostics and companion diagnostics. We are upbeat about the company’s growth prospects in the companion diagnostics space and believe that these developments should augur well for the long-term development of Myriad.

Currently, Myriad carries a Zacks Rank #2 (Buy). Other attractive picks are Affymetrix Inc. (AFFX - Analyst Report) and Biogen Idec Inc. (BIIB - Analyst Report), carrying a Zacks Rank #1 (Strong Buy).

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