WASHINGTON, D.C. ( TheStreet) -- The U.S. Supreme Court ruled Thursday that human genes are derived from nature and therefore cannot be patented. However, synthetic genetic material was patent eligible because it is not naturally occurring.
Shares of Myriad Genetics (MYGN - Get Report) were up 10 percent to $37.29 on the court ruling mainly because the worst-case scenario -- justices ruling that all genetic material was ineligible for patent protection -- did not come to pass.
The case focused on the legitimacy of patents held by Myriad for two genes -- BRCA1 and BRCA2 -- which are used to determine the risk for developing breast and ovarian cancer.
RBC Capital analyst Michael Yee, in a note to investor clients, called the court's ruling a positive for Myriad:SCOTUS ruling of cDNA being patent-eligible is in line with our base case assumption that cDNA claims will be upheld and at least in line or better than consensus and certainly the bear case, which was fear that all patents would get overturned and the stock could have big pullback. We have repeatedly stated this is a win fundamentally for MYGN given 1) barriers to entry for competitive commercial BRCA-testing (accuracy, speed of processing), and 2) MYGN's launch of pan-cancer test (25 genes for 6 cancers) this year to convert BRAC Analysis revs to a newer, better test now. -- Reported by Adam Feuerstein in Boston. Follow Adam Feuerstein on Twitter.