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Myriad Grows Internationally, Hereditary Cancer Revenues Soft

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On Mar 18, we issued an updated research report on Myriad Genetics, Inc. (MYGN - Free Report) . The company is making significant progress in its portfolio expansion. Emerging competitors and pricing pressure might prove detrimental to Myriad’s stock in the near future. The stock carries a Zacks Rank #4 (Sell), at present.

Of late, within companion diagnostics, the company has been witnessing significant progress with both BRACAnalysis CDx and myChoice CDx. Last December, the company attained FDA approval for BRACAnalysis CDx in pancreatic cancer. Around the same time, it received the FDA’s nod for myChoice CDx as the companion diagnostic in ovarian cancer patients.

This January, the company submitted its application for BRACAnalysis CDx in castrate resistant metastatic prostate cancer, with the FDA approval anticipated to come in the latter half of fiscal 2020. These developments are expected to result in a clinical impetus for patients of these two cancer types, which comprise approximately 90,000 incident patients in the United States per year.

Fortifying its global foothold, the company has been receiving encouraging response for BRACAnalysis CDx in Japan for metastatic breast cancer. In this regard, the company has received Japan’s approval for BRACAnalysis CDx as the companion diagnostic in first line ovarian cancer with olaparib. The company is optimistic about the scope of this test in Japan based on the fact that every year roughly 22,000 cancer patients in Japan are eligible for companion diagnostic testing.  The company also recently filed for the regulatory approval of myChoice CDx in Japan for its potential use in ovarian cancer, which comprises approximately 9000 patients per year.

Myriad Genetics has, so far, made a significant progress with its five strategic imperatives that include transition and expansion of the hereditary cancer market, diversifying revenues by commercializing its new products, ramping up the company’s international contribution by investing in large countries, gaining reimbursement for the launched products, increasing international RNA kit revenues and enhancing profitability with Elevate 2020. It is important to note here that the Elevate 2020 program — introduced by Myriad Genetics — targets $50 million in incremental operating income by fiscal 2020.

However, Myriad Genetics witnessed a decline in Hereditary Cancer, GeneSight, Vectra as well as Prenatal revenues in second-quarter fiscal 2020. Management is anticipating a $10-million sequential decline in hereditary cancer revenues due to seasonality and PAMA. The company incurred operating loss during the quarter. The slashed fiscal 2020 guidance indicates continuation of this sluggish trend. Foreign-exchange headwinds and escalating expenses continue to be dampeners.

Shares of this Salt Lake City, UT-based molecular diagnostics provider have underperformed the broader industry over the past three months. The stock slumped 64.3% compared with the industry’s 16.1% rally.

Meanwhile, Myriad Genetics faces acute competition in the key BRACAnalysis market. The company expects the same to intensify with newer advancements of this technology. We believe tough headwinds might reduce the prices of expensive tests provided by the company. This might, in turn, impede the stock’s margin improvement.

Key Picks

A few better-ranked stocks in the broader medical space include ResMed Inc. (RMD - Free Report) , Chemed Corporation (CHE - Free Report) and Hill-Rom Holdings, Inc. (HRC - Free Report) .

ResMed has an estimated long-term earnings growth rate of 14.4%. It currently carries a Zacks Rank of 2.

Chemed’s long-term earnings growth rate is estimated at 11.5%. The company presently flaunts a Zacks Rank of 1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Hill-Rom’s long-term earnings growth rate is projected at 11.1%. It currently holds a Zacks Rank #2.

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