Amid the commotion surrounding Myriad Genetics Inc.’s (MYGN - Free Report) much hyped Supreme Court ruling, the company has shifted focus on its companion diagnostics business. Recently, Myriad announced that it has inked an agreement with TESARO Inc. (TSRO - Free Report) to carry out BRCA1 and BRCA2 mutation testing on patients to be enrolled under two different Phase III clinical studies with niraparib.
As per the agreement, TESARO will commence two Phase III clinical studies with niraparib, novel, orally active poly (ADP-ribose) polymerase or PARP inhibitor. TESARO plans to initiate one of the Phase III study in platinum sensitive, high grade serous ovarian cancer patients. Enrollment for this study is expected to begin in mid 2013.
Alongside, a Phase III clinical study will enroll metastatic breast cancer patients with germline BRCA mutations. The study is scheduled to commence in the second half of 2013.
As per the agreement, TESARO will utilize Myriad’s flagship Bracanalysis test as a companion diagnostic to distinguish patients in the former’s pivotal clinical trials for niraparib. Management at Myriad asserts that the use of its Bracanalysis test in the studies will uphold its ‘gold standard’ in the companion diagnostic market.
Management at Myriad is sanguine that the collaboration with TESARO will seamlessly strengthen the company’s foothold in the companion diagnostics market. The company is consistently asserting itself as a strong player in the companion diagnostic market as evident from its strategic deals with several pharmaceutical majors.
In the third quarter of fiscal 2013, Myriad’s alliance with Sanofi (SNY - Free Report) yielded positive results as revenue from companion diagnostic tests were up 25% year over year. In the last quarter, the companion diagnostics franchise contributed 5% to the total revenue. We are positive that such strategic agreements will further bolster revenues going forward.
Last week, Myriad’s wholly owned subsidiary Myriad RBM, entered into a strategic liaison with DaVita Labs, the dialysis division of DaVita HealthCare Partners Inc. (DVA - Free Report) . In our opinion, coherent focus on the RBM franchise could position Myriad as a leader in this arena based on its proprietary protein technology and range of immunoassays.
We believe that these developments should augur well for the long-term development of the company. The earnings magnitude has also been moving upward with estimates for the ongoing and next fiscal moving higher for Myriad. Moreover, with three consecutive positive earnings surprises, this Zacks Rank #2 (Buy) stock is worth considering.