Myriad Genetics slips on Supreme Court review
NEW YORK (AP) — Shares of Myriad Genetics Inc. declined Monday after the U.S. Supreme Court agreed to hear a challenge to the practice of issuing patents on human genes.
THE SPARK: On Friday the Supreme Court said it will decide on a case on the patenting of genes. Myriad holds two genetic patents related to its BRACAnalysis test, which detects genetic mutations that are linked to increased risks of breast and ovarian cancer. The U.S. Patent and Trademark Office has been issuing DNA patents for almost 30 years, but the American Civil Liberties Union has challenged the practice.
THE BIG PICTURE: The Salt Lake City reported $405.5 million in revenue from BRACAnalysis testing in the fiscal year ended June 3, or 86 percent of its total revenue. Myriad and analysts say the test is protected by other patents, so Myriad would not immediately lose patent protection on the test if the Supreme Court rules that human genes can't be patented.
The ACLU and other groups have argued that the government shouldn't award patents on genes and that the patents prevent other groups for doing research. In March 2010 a New York district court ruled against Myriad, but the U.S. Court of Appeals for the Federal Circuit has ruled in Myriad's favor twice, most recently in August.
In March 2012 the Supreme Court threw out genetic patents held by Prometheus Laboratories that covered a test designed to help doctors set drug doses for autoimmune diseases like Crohn's disease. Some investors felt that decision was bad news for Myriad, but analysts have said the patents are not very similar to those held by Myriad.
THE ANALYSIS: Jefferies & Co. analyst Jon Wood said in a note Monday Myriad's patents should ultimately be upheld, and no matter what the court rules, the company's other patents should keep generic competition for BRACAnalysis from reaching the market until fiscal 2018. He rates the stock "Buy," with a $33 price target.
SHARE ACTION: Shares of Myriad Genetics lost 73 cents, or 2.5 percent, to $27.99 in midday trading. Earlier the stock fell as much as 6.4 percent. Myriad shares are up 37 percent in 2012.