The earnings reports of the major esoteric laboratories have trended toward higher test volumes and revenues—with one significant exception for now. That would be Myriad Genetics. The Salt Lake City-based laboratory had been flying high through its patent on testing for patients to determine if they had the gene associated with a high likelihood of developing breast cancer. Business was boosted further in spring 2013 when actress Angelina Jolie disclosed she had undergone a preventive mastectomy due to her BRCA test results. But a little more than month after Jolie disclosed her condition and course of treatment, the U.S. Supreme Court ruled that companies cannot hold a patent on a single gene. That opened the market to other labs to offer testing for BRCA1 and BRCA2, and despite ongoing litigation by Myriad, it was quickly plunged into a market where a variety of other labs started offering the same assay, many at far lower price points. For the first quarter of fiscal 2015, which ended on Sept. 30, Myriad reported revenue of $73.7 million for its BRACAnalysis Test, which focuses on the risk of both breast and ovarian cancer. The revenue derived from the test during the first quarter of fiscal 2014 was just under $150 million, or nearly three-quarters of Myriad’s total. Overall, its revenue for cancer testing dropped 20.5 percent, and molecular diagnostic testing revenue declined 15 percent. Although Myriad had shifted its focus to multigene testing, it encountered capacity issues for filling orders for a new test, a hereditary cancer panel call myRisk, whose volume increased 95 percent from the fourth quarter of fiscal 2014 and now accounts for nearly a third of Myriad’s revenues. As a result of these issues, the company reported a 17 percent drop in revenue for the quarter, which declined to $168.8 million from $202.5 million a year ago. Net income was $16 million, down more than 72 percent from $55.5 million. However, company officials remain bullish on Myriad’s growth: Chief Executive Officer Peter Meldrum indicated in a conference call with analysts that the company projects it will report full fiscal year revenues of $800 million to $820 million. That would represent growth of 3 percent to more than 5 percent over the 2014 fiscal year. Foundation Medicine
The Cambridge, Mass.-based Foundation Medicine, which focuses on oncology testing, doubled up on its revenue during its third quarter, ending Sept. 30. The company reported revenue of $16.4 million, compared to $8.2 million for the year-ago quarter, with a 122 percent increase in clinical testing revenue and 75 percent growth in revenue from pharmaceutical firms. Overall test volume was up 149 percent.
|Revenue and Earnings for Major Esoteric Laboratories|
|Company Name||3Q14 Net Income ||3Q13 Net Income ||3Q14 Revenue||3Q13 Revenue|
|Myriad Genetics||$16 Million||$55.5 Million||$168.8 Million||$202.5 Million|
|Foundation Medicine||-$13 Million||-$12.5 Million||$16.4 Million||$8.2 Million|
|NeoGenomics||-$291,000||$900,000||$23.2 Million||$16.9 Million|
|Sequenom||-$6.1 Million||-$28.1 Million||$37.9 Million||$33.3 Million|
|Trovagene||-$5.4 Million||-$4.4 Million||$57,000||$44,000|
|Source: Company Reports|
“Revenue contribution from our pharmaceutical industry partnerships was particularly strong, which highlights one aspect of our diversified revenue streams,” said Foundation Chief Executive Officer Michael Pellini, M.D. “As our clinical business expands further into the community setting, we are learning more about our clients’ needs and are developing programs to expand access to our testing.” The company lost $13 million for the quarter, compared to a $12.5 million loss for the third quarter of 2013.
For the first nine months of the year, Foundation reported a loss of $38.9 million on revenue of $42.4 million. That compares to a loss of $29.9 million on revenue of $19.3 million. NeoGenomics
Florida-based NeoGenomics, which specializes in oncology-related genomics testing, reported revenue of $23.2 million for the quarter ending Sept. 30, up 38 percent from a year ago, when revenue was $16.9 million. Test volumes rose by one-third, although much of that growth was in its lower-priced assays. The company reported a $291,000 loss for the quarter, compared to net income of $900,000 for the third quarter of 2013. One-time expenses of about $571,000 dragged the company into the red. Douglas Van Oort, NeoGenomics’ chief executive officer, noted that the company raised $34.5 million in a public equity offering and was able to terminate its credit facility. Cash collections also added $3.2 million in cash flow. The growth came despite the fact that more than $1.2 million remained uncollected from FISH billings due to the ongoing dispute with Medicare over its National Correct Coding Initiative. Sequenom
San Diego-based Sequenom, which focuses on prenatal genetic tests, narrowed its loss for the third quarter to $6.1 million, compared to $28.1 million during the third quarter of 2013. Revenue rose 14 percent to $37.9 million for the quarter, compared to $33.3 million a year ago. The improved numbers came despite the fact that accessioned patient samples dropped 3.5 percent for the quarter, as operating expenses were cut by $14.2 million, a drop of nearly 40 percent. “We are particularly pleased with the significant improvement in our cash burn compared to the third quarter of the prior year, as we are working toward our goal of positive cash flow,” said Carolyn Beaver, Sequenom’s chief financial officer. The company burned through $6.7 million during the quarter, compared to $26.1 million during the third quarter of 2013. For the first nine months of the year, Sequenom reported a loss of $17.3 million on revenue of $114.8 million, compared to a loss of $88.5 million on revenue of $86.9 million during the first nine months of 2013. Trovagene
Trovagene, a San Diego-based lab that is developing cell-free oncology assays, reported a 30 percent increase in revenue for the third quarter, ending Sept. 30, to $57,000 from $44,000. Virtually all of the company’s revenue is from royalty income rather than from testing, although Chief Executive Officer Tony Schuh said in a conference call with analysts that its urine-based BRAF V600E assay and KRAS mutation assay using next-generation sequencing had become market ready. The former is for monitoring the status of melanoma patients, while the latter may be used for colon, lung, pancreatic, and other solid tumor cancers. Trovagene is also working with the MD Anderson Cancer Center and U.S. Oncology to develop other tests. The company’s net loss rose to $5.4 million from $4.4 million in the third quarter of 2013. For the first nine months of 2014, Trovagene reported a loss of $10.4 million on revenue of $224,000. That compares to a loss of $7.8 million on revenue of $212,000 during the first nine months of 2013. Takeaway: The continuing growth of personalized medicine is reflected in the earnings being reported by the major esoteric laboratories.