Thursday’s biggest winner in the markets was a medium-sized biotech company that most investors likely haven’t heard of.
Shares of Myriad Genetics (NASDAQ: MYGN) jumped by 58 percent on Thursday after news came out that one major insurance provider will be covering a specific genetic test meant to predict whether an individual is at risk for depression or anxiety disorders, and which drugs they would best respond to.
This news came as a big surprise, as the test previously under performed in a key study, leaving many to conclude that no insurance provider would ever cover it.
Myriad Genetics covered by insurance
Myriad Genetics filed a filing with the U.S. Securities and Exchange Commission that disclosed that medical insurance provider UnitedHealthcare (NYSE: UNH) will begin covering the company’s GeneSight Psychotropic test as of October this year. The genetic test, which costs $2,000 to order, would provide users insight on which drugs they would respond best to for the treating of psychiatric disorders.
An earlier major study for the GeneSight test ended up failing to meet its primary endpoint, which led to analysts dismissing the possibility that insurance providers would cover the test. All the more reason for today’s surge, as Wall Street analysts were completely wrong in this regard. With UnitedHealthcare making this decision, investors are now optimistic that other major insurers will follow suit and cover the test as well.
For the first nine months of fiscal 2019, Myriad reported that the GeneSight tests generated around $82.8 million in revenue, making them the second-most important product behind their cancer testing platform. However, they ended up failing to secure insurance reimbursement which ended up slowing down growth for the product. The $82.8 million figure ends up working out to a 9 percent decline in overall revenue from a year ago.
However, this surprise move from UnitedHealthcare would likely reverse this decline, possibly pushing the GeneSight testing product as the top revenue producer for Myriad, especially if other insurance providers end up covering the test as well. Often times, if one insurance companies begin covering a particular test, others follow suit, so more speculative investors now expect that the company will rise in the following months.
Shares of Myriad Genetics have spiked by 54.5 percent today in response to the news. However, over the past six months, shares have stayed relatively the same, hovering between $25 and $35 per share.
From a longer-term perspective, thanks to today’s spike, Myriad has now returned back to where it was trading earlier in 2018, regaining all of its former losses over that period of time. The company currently has a market cap of $3.3 billion and is trading at a reasonable 32.7 price to earnings ratio.
Myriad Genetics Company Profile
Myriad Genetics is a molecular diagnostics company that provides testing services designed to assess an individual’s risk of developing a disease or tailor treatment for already diagnosed patients.
The firm produces myRisk, a 28-gene panel with the capability to identify the elevated risk of developing eight types of cancer. Other diagnostic products include BRACAnalysis CDx, GeneSight, Vectra DA, and Prolaris. The firm also offers biomarker discovery and companion diagnostic services to pharmaceutical and biotechnology companies. – Warrior Trading News
