Biotechs to Boom on Gene Patent Ruling

Brian Hicks

Updated June 17, 2013

When Supreme Court Justice Clarence Thomas recently wrote, “Myriad did not create anything…”, it marked a momentous turn of events in the leading biotech story of our times.

Myriad Genetics (NASDAQ: MYGN), which received patents for the BRCA1 and BRCA2 genes back in the 1990s, suffered a significant setback when the Supreme Court recently overturned key aspects of those patents. According to the ruling, DNA molecules that are artificially engineered (and this includes synthetic cDNA) may be viewed as eligible for patents.

gene patent pending sidebar
Source: LifeWise

But Myriad did not invent the BRCA genes and thus does not have any right to patent them. Per the ruling, five of Myriad’s claims covering isolated DNA are no longer patentable.

This is wonderful news for the biotech sector at large, and the response has been immediate and widespread. Already, the University of Washington and Ambry Genetics have stated their intent to offer expanded testing that includes the BRCA genes in question, according to Bloomberg.

Quest Diagnostics, Inc. (NYSE: DGX), another biotech company, has also decided to unveil BRCA testing sometime later this year.

The impact of the Supreme Court decision cannot be overstated. By striking down Myriad’s broad-ranging patent claims, the Court has now empowered biotech companies and labs all over the nation to develop newer and more efficient testing solutions for all known cancer risks (and this, of course, includes testing for the BRCA genes).

More importantly for the public, the cost of screening—which used to reach up to $4,000 for Myriad’s more comprehensive BRCA screening option—is almost certain to come down sharply as competing versions of the test proliferate.

Major Advance for Genetic Cancer Testing

Breast cancer is a national concern, and the BRCA1 and BRCA2 genes are seen as a crucial player in this fight. Women with BRCA mutations are as much as five times more likely to develop breast cancer—meaning almost 60 percent of women with BRCA mutations are likely to develop breast cancer compared to a mere 12 percent of women overall.

Most recently, this conversation took on a high profile when noted Hollywood star Angeline Jolie wrote an op-ed in the New York Times discussing her decision to go under the surgical knife in order to control her chances of breast cancer. Gene testing played a crucial role there.

Now that Myriad no longer controls access to the BRCA genes, it’s likely that the public will have far greater access to breast cancer gene testing at more attractive rates.

ABC News quotes the American Medical Association’s enthusiastic response:

“The U.S. Supreme Court’s unanimous rejection of patenting human genes is a clear victory for patients that will expand medical discovery and preserve access to innovative diagnosis and treatment options,” the AMA said in a statement today.

Myriad has made a good amount of coin off its long-held patents. In 2012, Myriad listed $496 million in sales, based primarily off sales for BRCA testing. Interestingly, that aspect alone supported an 87 percent profit margin as of last December.

Myriad’s response has mostly been to shrug off the setback, claiming what mattered more was the Supreme Court’s support for its cDNA patents. Myriad will also release a more wide-ranging cancer gene test later this year; the test will examine 25 genes to check for risk levels for a variety of cancers.

Competition is bound to advance at a rapid clip, and prices for the test will fall. Ambry is likely to offer its version for $2,200 (per Bloomberg), while Gene By Gene Ltd., based in Houston, has said it will offer its version at just $995.

Either way, the market for BRCA gene testing just got turned around on its head, and once the dust settles, we’ll have some stability.

The steep cost of the Myriad test had been a significant barrier for many. While insurance did cover some patients – provided they met certain criteria that positioned them as “high-risk” for breast cancer – not all were covered. Those who weren’t would have had to cough up the full cost, which was a major deterrent.

What’s encouraging is that the technology for carrying out such comprehensive tests has been around for a long time. It’s just Myriad’s patents that prevented widespread use and acceptance of the tests.

After the decision, Myriad shares fell 14 percent to $27.59 on Friday in New York – the lowest level since January 2011.


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