Myriad Genetics shares rise to three-year highs
NEW YORK (AP) — Shares of diagnostic test maker Myriad Genetics Inc. rose to a three-year high Tuesday, as analysts said actions by the Supreme Court and actress Angelina Jolie could both help the company.
THE SPARK: Oscar-winner Jolie disclosed Tuesday that she recently had a preventative double mastectomy after learning she faced a high risk of breast and ovarian cancer because of an inherited genetic mutation. Myriad makes a test called BRACAnalysis that looks for that mutation, and the test is the source of most of the company's revenue.
On Monday the U.S. Supreme Court upheld Monsanto Co.'s claim that a farmer in Indiana violated one of its patents on soybean seeds. The patents covered genetic modification that made the seeds resistant to Monsanto's Roundup herbicide. The high court recently heard a legal challenge to some of Myriad's genetic patents, and analysts said Monday's ruling could be good news for Myriad.
THE BIG PICTURE: BRACAnalysis looks for mutations on the breast cancer predisposition gene, or BRCA. Women with mutations on that gene have a three-to-seven times greater risk of developing breast cancer and also a higher risk of ovarian cancer. In the first quarter of 2013 almost three-quarters of Myriad's revenue came from BRACAnalysis testing.
In the U.S. 5 to 10 percent of breast cancer cases are thought to be linked to BRCA genes. Women of Eastern European Jewish descent are more likely to have faulty copies of the BRCA gene. Women who have inherited the gene are about five times more likely to get breast cancer.
In mid-April the Supreme Court heard a case related to the patenting of human genes. The case challenges two patents Myriad holds on genes related to the BRACAnalysis test. The American Civil Liberties Union and other groups have argued that the government shouldn't award patents on genes.
The Patent & Trademark office has been awarding such patents for decades. A High Court ruling is expected by June.
Analysts expect Myriad's patents to be upheld and note that even if the Supreme Court invalidates the patents, the company has other patents supporting the test.
THE ANALYSIS: In an email Cowen & Co. analyst Doug Schenkel said there is comparatively little testing of women who, like Jolie, don't have cancer or cancer symptoms but have an increased risk of the disease because of their family history or ethnic background. He said Jolie's story increases awareness of the BRACAnalysis test and of the risk some women face, and that's good news for the company.
William Blair analyst Amanda Murphy said in an email that she believes the Monsanto decision was a bigger factor in Tuesday's stock movement. She said the court recognized the investment that companies like Monsanto have to make in research and development, and that issue was also discussed during oral arguments in the Myriad case.
SHARE ACTION: Myriad shares rose 99 cents, or 3 percent, to close at $34.10. During the day the stock hit $34.70, its highest price since July 2009.