Myriad Genetics (MYGN) Plunges After a Partial Supreme Court Victory

Shares of diagnostic test maker Myriad Genetics (MYGN) plunged nearly 14% last Friday, after the company received a partial victory in its patent battle over its test for genes associated with breast and ovarian cancer, which ended four years of litigation. Salt Lake City, Utah-based Myriad currently sells a popular test for the BRCA 1 and BRCA 2 genes linked to hereditary breast and ovarian cancer. The test is the only one available on the market due to Myriad's patents.

This has led a group of scientists to challenge Myriad's patents, despite the U.S. Patent and Trademark Office's common practice of awarding patents on human genes for nearly three decades. Daily Chart
In response to the challenge, the Supreme Court ruled that genes naturally found in the body can't be patented, but those synthetically created, known as complementary or cDNA, can be. This invalidates only five of Myriad's patents, which include naturally occurring genes, but did not affect the other 19. Myriad's general counsel, Rick Marsh, stated, "The balance of our patent estate is still valid and enforceable," Marsh said. "We are very pleased with the outcome." That distinction reportedly allows Myriad to preserve its revenue from its best-selling BRACAnalysis test, which was launched in 1996 and has been used by over a million women. However, other scientists claimed that it would open the door for competing tests and allow scientists to perform other gene-related disease research on non-synthetic DNA without restraints. They also claim that researchers will now be able to perform gene-sequencing experiments to better understand diseases without the fear of being sued by companies like Myriad. In the end, new diagnostic tests developed through non-synthetic sequencing could become a viable alternative to Myriad's BRCA test. Some scientists also believe that the ruling will allow better gene-based treatments for cancer and other serious diseases, which could create "custom" tests and medicine based on individual needs. However, Erik Gordon, a professor at University of Michigan's Ross School of Business noted that it will take competing companies a very long time to duplicate Myriad's BRCA tests, which are considered the industry standard, without infringing on their patents. Therefore, Myriad shareholders should realize that a big change is not in the foreseeable future, despite the Supreme Court's confusing and dramatic ruling. Many investors were puzzled by the ruling's implications, and the stock initially surged 10% to a four-year high of $38.27 on Friday before plunging. The company's trading volume on Friday was 15 times the daily average, indicating high interest in the stock. Shares of Myriad currently trade at 14.8 times forward earnings with a 5-year PEG ratio of 1.2. The stock does not currently pay a dividend. Other News About MYGN Myriad Genetics Shares Retreat on Court Decision Myriad investors get confused by the Supreme Court decision. Will Supreme Court's Take on Gene Patents Help Myriad? What does the future hold for genetic research? Other Stocks in the News Is the Second Screen Overrated? Will second screens be the future of TV and video games? Will "Super Camera" Smartphones Be the Next Big Thing? Will Nokia and Samsung's "cameraphones" succeed where others have failed? Copyright 2013 by, Inc. InvestorGuide has no control over the sites we link to, is not affiliated with these sites, and cannot take responsibility for their quality or suitability. The news, analysis, commentary and profile information is not meant to be comprehensive, and the data provided is not guaranteed to be accurate. WebFinance Inc., the publisher of this newsletter, is not a registered investment advisor or a broker/dealer. This is not a stock recommendation newsletter but rather a source for investment ideas, and we encourage you to fully research any company before considering investing. The opinions expressed herein are those of the author and do not necessarily represent the views of nor are they endorsed by WebFinance Inc. No employee of WebFinance has owned or currently owns any shares in the company described above. The above is neither an offer nor solicitation to buy or sell any securities. The trading of securities may not be suitable for all potential readers of this newsletter, and the purchase of stocks mentioned in this newsletter may result in the loss of some or all of any investment made. We recommend that you consult a stockbroker or financial advisor before buying or selling securities or making investment decisions. We are not responsible for claims made by advertisers and sponsors. Anyone who makes decisions based on what they read here does so at their own risk and cannot hold WebFinance Inc. (DBA, Inc.) or its employees responsible.

Published on Jun 21, 2013
By Leo Sun
Leo Sun
Leo Sun is a freelance finance writer and position trader. He focuses on a combination of value and momentum investing, with a strong interest in the trading philosophies of Warren Buffett and Peter Lynch. Leo also has experience writing articles to help small business owners acquire loans and manage their finances. He regularly contributes to the Stock of the Day analysis.

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