myRisk: Test Yourself for 8 Hereditary Cancers
In a recent article, we discussed a hereditary breast cancer test for women called the BRACAnalysis. Statistically, it seems that the majority of women would not benefit from taking this test. The BRACAnalysis genetic test is the leading revenue stream for the company that sells it, Myriad Genetics (NASDAQ:MYGN), but has been sharply decreasing over the past year. In Q3 of this year, the BRACAnalysis only represented 44% of total revenues at $73 million. In Q3 of last year, Myriad took in just over double of that amount in BRACAnalysis revenues at $149 million or 74% of total revenues. In just a year, the revenues for BRACAnalysis have halved. The reason for this seems to be their new “myRisk” testing product which is cannibalizing BRACAnalysis with revenues of $54 million in Q3 2014 having had zero revenues in Q3 2013.
myRisk Hereditary Cancer Test
myRisk is a 25-gene genetic test that identifies an elevated risk for eight important cancers using just a simple blood sample:
The results are provided in 2 weeks and also contain information about preventative measures. The test is currently priced between $4,000 and $4,500 with a turnaround time of 2 weeks. Presuming the test is subject to the same insurance parameters as the BRACAnalysis, 90% of the tests would receive health insurance coverage, and the average reimbursement would be more than 90%. Should you take the test? Take this “hereditary cancer quiz” to find out then see your doctor if you think you should.
A question investors may be asking is at what revenue number will the market for hereditary cancer testing plateau? One way to determine this is to look at the prevalence of hereditary cancer. The below statement was taken from Cancer.org:
Some gene changes that lead to cancer may be inherited from a parent, but most are not. Only about 5% to 10% of all cancers are thought to be related to an inherited gene change that strongly affects a person’s risk for a certain type of cancer. Most cancers start because of gene mutations that happen sometime during a person’s lifetime.
While the overall occurrences of hereditary cancer may be low, the consequences of having an inherited gene that may cause cancer are disturbing. The increased likelihood of catching that type of cancer is very significant as seen below:
Who will take a test then becomes a function of who thinks they should take a test. Myriad’s online screening tool expects that you know if any close family members (parent, sibling, child, uncle, aunt, great uncle, great aunt, nephew, niece, grandparent, grandchild, great grandparents, half-sibling, or first cousin) ever had 6 different types of cancer and if they were diagnosed before a certain age. Does anyone actually know their family’s past medical history that well to be able to say with certainty that none of these numerous individuals, living and deceased, would have had or will have any of the 6 different cancer types listed? If you didn’t know your family history that well, wouldn’t you want to know for sure in case you had hereditary cancer so you could take preventative measures? Considering that 90% of the cost will most likely be covered by medical insurance, it seems likely more people would opt to take the test just for the peace of mind. This makes it very difficult to figure out just when revenues for hereditary cancer testing will plateau and also suggests a much higher number than would be expected.
Myriad Genetics provides some of their own estimates of potential revenues in this exhaustive investor presentation which really shows just how much potential there is for myRisk. In the meantime, the Company seems to be thinking well ahead and is looking to diversify their revenue streams by developing tests across multiple diseases. Myriad Genetics (NASDAQ:MYGN) is a profitable company with gross profit margins last quarter of 79.4%. The company has been experiencing strong historical revenue growth over the past years (revenue in millions):
The successful commercialization of the BRACAnalysis test and now the myRisk test enable them to use their current sales channels to sell additional types of tests on the back of their already successful brands. The same infrastructure in place that allows a physician to navigate myRisk results over the web can easily be adopted to support multiple new tests. In future articles, we’ll look to highlight more of Myriad’s new and existing test offerings.
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