Myriad Genetics' CEO Discusses F1Q12 Results - Earnings Call Transcript

Gartner, Inc. ( MYGN)

FQ1 2012 Earnings Call

November 1, 2011 04:30 pm ET


Pete Meldrum – President and CEO

Mark Capone – President, Myriad Genetic Laboratories

Jim Evans – Chief Financial Officer

Rebecca Chambers – Director of Investor Relations


Scott Gleason – Stephens, Inc.

Jon Wood – Jefferies & Company

Amanda Murphy – William Blair & Company

Tycho Peterson – JP Morgan

Michael Yee – RBC Capital Markets

Isaac Ro – Goldman Sachs

Dave [Kler] – Piper Jaffray

Ashim Anand – Natixis Bleichroeder

Peter Larson – Mizuho Securities

Laura McGuigan – B. Riley



Welcome to Myriad Genetics’ FQ1 Earnings Call. (Operator instructions.) As a reminder, this conference is being recorded Tuesday, November 1, 2011. I would now like to turn the conference over to Rebecca Chambers, Director of Investor Relations. Please go ahead, ma’am.

Rebecca Chambers

Thank you, Lindsey. Good afternoon, everyone, and welcome to the Myriad Genetics’ FQ1 2012 Earnings Call. During the call we will review the financial results we released today and the progress we have made on our strategic directives, after which we will host a question-and-answer session. If you have not had a chance to review the earnings release it can be found in the Investor Relations section of our website at

Presenting today will be Pete Meldrum, President and Chief Executive Officer; Mark Capone, President, Myriad Genetic Laboratories; and Jim Evans, our Chief Financial Officer. This call can be heard live via webcast along with the slide presentation at The call is being recorded and will be archived in the Investor section of our website.

Please note that some of the information presented here today may contain projections or other forward-looking statements regarding future events or the future financial performance of the company. These statements are based on management’s current expectations and the actual events or results may differ materially and adversely from these expectations for a variety of reasons. We refer you to the documents the company files from time to time with the Securities and Exchange Commission, specifically the company’s annual report on Form 10(k), its quarterly reports on Form 10(q), and its current reports on Form 8(k). These documents identify important risk factors that could cause the actual results to differ materially from those contained in our projections or forward-looking statements.

With that, I’ll now turn the call over to Pete.

Pete Meldrum

Thank you , Rebecca. Myriad’s strategy is to become a leader in the commercialization of transformative molecular diagnostic tests that save lives and improve the quality of life for patients with chronic diseases. In an effort to implement this strategy we are focusing on three strategic directives: one, to grow existing tests and markets; two, to develop an international presence; and three, to launch new tests – both as a result of investment in in-house research and development and through the acquisition of new test and technologies which expand our disease focus. We believe the successful implementation of these directives will position Myriad as an international molecular diagnostic leader with transformative tests across all disease indications.

Today I will discuss the company’s key initiatives to introduce new tests and to expand internationally, each of which I believe will move us closer toward achieving our goal. Mark will provide an update on our first strategic directive to grow our existing tests and markets. In September, Myriad announced a significant deal with Crescendo Biosciences, a molecular diagnostic company focused on autoimmune and inflammatory diseases. Myriad loaned Crescendo $25 million and secured an exclusive three-year option to acquire all of their outstanding shares at a predetermined formula price based on Crescendo’s revenues and growth rate at the time the option is exercised.

The loan is secured by Crescendo’s intellectual property rights in the United States and carries an interest rate of 6% with interest payable annually. If Crescendo is successful with its commercial plans and Myriad exercises its option to acquire Crescendo, the loan will be applied to the purchase price. If Myriad decides against the acquisition the loan is payable at the end of the six-year term. We believe this transaction is an attractive, low-risk strategy to position Myriad in the autoimmune and inflammatory disease markets.

Crescendo’s initial product, Vectra DA, is the only blood-based molecular diagnostic test on the market that determines the level of disease activity in patients with rheumatoid arthritis. There are over 1.5 million Americans living with this debilitating disease, and 100,000 additional Americans will be diagnosed with rheumatoid arthritis this year. Vectra DA goes beyond the outward signs and symptoms of the disease to provide a deeper biological understanding of disease activity. This insight will enhance the healthcare management of all patients with rheumatoid arthritis.

This deal has the potential to complement Myriad’s expanding disease focus by adding autoimmune and inflammatory disease products to our current portfolio of tests in oncology, women’s health, urology, dermatology and neuroscience. No other molecular diagnostic company has Myriad’s breadth of opportunities in development across multiple disease indications.

Complementing our strategy of diversifying across disease indications, we continue to make progress with the integration of Myriad RBM in Austin, Texas. We have projected Myriad RBM’s companion diagnostic services revenue for this fiscal year to be between $24 million and $26 million. Therefore, we were pleased that the companion diagnostic service revenue for FQ1 was $6.5 million, which is trending toward the upper end of our guidance. Initially, five of the candidates in their product pipeline, which have the most significant commercial potential, are being developed and are proceeding toward future commercialization.

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