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Myriad Genetics Inc. Reports Operating Results (10-Q)

May 05, 2009 | About:
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Myriad Genetics Inc. (MYGN) filed Quarterly Report for the period ended 2009-03-31.

Myriad Genetics Inc. uses gene-based medicine to develop therapeutic and molecular diagnostic products. They employ a variety of proprietary proteomic technologies to discover disease genes and to understand the role these genes and their related proteins play in the onset and progression of disease. They have integrated these technologies using bioinformatics and robotics systems to conduct their research efforts on a high-throughput basis. This has enabled them to identify numerous proteins as targets for new drugs and molecular diagnostic tests. Myriad Genetics Inc. has a market cap of $3.59 billion; its shares were traded at around $37.74 with a P/E ratio of 37.2 and P/S ratio of 10.7.

Highlight of Business Operations:

Our molecular diagnostic business focuses on the analysis of genes and their alterations to assess an individuals risk for developing disease later in life (predictive medicine) and to assess a patients risk of disease progression, disease recurrence, drug toxicity or drug response (personalized medicine). To date we have launched seven commercial molecular diagnostic products, including both predictive medicine and personalized medicine products. We market these products through our own 250-person sales force in the United States and we have entered into marketing collaborations with other organizations in selected foreign countries. Molecular diagnostic revenue was $86.5 million and $240.5 million for the three and nine months ended March 31, 2009, an increase of 47% and 52% over revenues of $59.0 million and $158.2 million for the same periods in the prior year.

We have devoted substantially all of our resources to undertaking our drug discovery and development programs, operating our molecular diagnostic business, and continuing our research and development efforts. We have three reportable operating segments: (1) research, (2) molecular diagnostics, and (3) pharmaceutical development. See Note 5 Segment and Related Information in the notes to our condensed consolidated financial statements (unaudited) for information regarding these operating segments. Our revenues have consisted primarily of sales of molecular diagnostic products and research payments. For the three and nine months ended March 31, 2009, we had net income of $25.3 million and $61.0 million compared to a net loss of $4.6 million and $17.7 million for the same periods ended March 31, 2008. As of March 31, 2009, we had an accumulated deficit of $143.6 million.

Molecular diagnostic cost of revenue for the three months ended March 31, 2009 was $11.2 million, compared to $8.3 million for the same three months in 2008. This increase of 36% in molecular diagnostic cost of revenue is primarily due to the 47% increase in revenue from our molecular diagnostic products, partially offset by technology improvements and efficiency gains in the operation of our molecular diagnostic laboratory. Our gross profit margin was 87% for the three months ended March 31, 2009 compared to 86% for the same three months in 2008. Our gross profit margins may fluctuate from quarter to quarter based on the introduction of any new molecular diagnostic products, changes in our costs associated with such products, and any new technologies and operating systems in our molecular diagnostic laboratory. There can be no assurance that molecular diagnostic gross profit margins will continue to increase or remain at current levels.

Interest income for the three months ended March 31, 2009 was $2.9 million, compared to $3.3 million for the same three months in 2008. The decrease was due primarily to a decrease in interest rates. The tax expense for the three months ended March 31, 2009 represents a credit of $0.1 million for a tax refund received for overpayment of our fiscal 2008 tax liability.

Cash, cash equivalents, and marketable investment securities increased $114.7 million, or 27%, from $420.1 million at June 30, 2008 to $534.8 million at March 31, 2009. This increase is primarily attributable to cash generated from our molecular diagnostic revenue, research collaboration payments and proceeds from the exercise of stock options. This increase was partially offset by expenditures for our ongoing clinical trials, internal research and drug development programs, acquisition of capital assets, sales and marketing expense for our molecular diagnostic products, and other expenditures incurred in the ordinary course of business.

Net cash provided by operating activities was $45.1 million during the nine months ended March 31, 2009, compared to $8.1 million used in operating activities during the same nine months in 2008. Trade accounts receivable increased $19.0 million between June 30, 2008 and March 31, 2009, primarily due to increases in molecular diagnostic sales. Accrued liabilities decreased by $21.8 million between June 30, 2008 and March 31, 2009, primarily due to payments made following the discontinuance of our former Alzheimers disease drug candidate as well as an $11 million payment for a sublicense fee due to Encore related to the Lundbeck co-marketing agreement. Deferred revenue decreased by $2.0 million between June 30, 2008 and March 31, 2009, primarily due to the completion of research collaborations.

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