Myriad Aims to Protect its Remaining Patents

  • Posted by
  • on October 15th, 2013

 

Here’s a good quick read by Forbes discussing the entrance of Quest Diagnostics ($DGX) into the BRCA gene testing arena, and the ongoing tug-o-war over Myriad’s ($MYGN) surviving BRCA gene patents.

The bearish case for owning MYGN is that other players in the industry can mimic the tests and compete directly with MYGN, potentially driving prices down. The bullish case is that SCOTUS upheld many of Myriad’s BRCA related patents, and if competitors are infringing on those valid patents, lawsuits may be in order.

The stock has taken a beating over the last few months as most investors have jumped on the bear bandwagon (and have been right to-date). But if you’re like us and want to take the other side of this trade, consider this point from the article:

Not everyone agrees that a race to the bottom is in the works. Myriad has several advantages over other players: it has other patents that were not touched by the Supreme Court decision; it controls a proprietary database of which variants in the BRCA1 and BRCA2 genes increase the risk of breast and ovarian cancer, and by how much; and it has developed a good reputation among cancer doctors and gynecologists, who have no reason to switch to a new test just because it is cheaper so long as insurers pay for the old one. Myriad has reason to fight, because it gets much of its $613 million in annual sales from sales of the BRCA tests.

 

We’re currently long MYGN.  They report Q1 on 11/4.

 

 


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