UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): May 8, 2018
MYRIAD GENETICS, INC.
(Exact name of registrant as specified in its charter)
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Delaware |
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0-26642 |
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87-0494517 |
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(State or other jurisdiction of incorporation) |
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(Commission File Number) |
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(IRS Employer Identification No.) |
320 Wakara Way
Salt Lake City, Utah 84108
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (801) 584-3600
Not Applicable
(Former name or former address, if changed since last report)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):
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☐ |
Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
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☐ |
Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |
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☐ |
Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |
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☐ |
Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§ 230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§ 240.12b-2 of this chapter).
Emerging growth company ☐
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
On May 8, 2018, Myriad Genetics, Inc. (“Myriad”) announced its financial results for the three and nine months ended March 31, 2018. The earnings release is attached hereto as Exhibit 99.1 to this Current Report on Form 8-K and incorporated herein by reference.
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ITEM 7.01 |
Regulation FD Disclosure. |
On its earnings conference call for the three and nine months ended March 31, 2018, Myriad also delivered a slide presentation, which is attached hereto as Exhibit 99.2 to this Current Report on Form 8-K and incorporated herein by reference. [The slide presentation will also be available under the “Investors –Events & Presentations” section of Myriad’s website at www.myriad.com.]
FORWARD-LOOKING STATEMENTS
Exhibits 99.1 and 99.2 contain “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995, including statements relating to our business, goals, strategy and financial and operational outlook. These “forward-looking statements” are based on management’s current expectations of future events and are subject to a number of risks and uncertainties that could cause actual results to differ materially and adversely from those set forth in or implied by forward-looking statements. These risks and uncertainties include, but are not limited to: the risk that sales and profit margins of our existing molecular diagnostic tests and pharmaceutical and clinical services may decline or will not continue to increase at historical rates; risks related to our ability to transition from our existing product portfolio to our new tests; risks related to changes in the governmental or private insurers reimbursement levels for our tests or our ability to obtain reimbursement for our new tests at comparable levels to our existing tests; risks related to increased competition and the development of new competing tests and services; the risk that we may be unable to develop or achieve commercial success for additional molecular diagnostic tests and pharmaceutical and clinical services in a timely manner, or at all; the risk that we may not successfully develop new markets for our molecular diagnostic tests and pharmaceutical and clinical services, including our ability to successfully generate revenue outside the United States; the risk that licenses to the technology underlying our molecular diagnostic tests and pharmaceutical and clinical services tests and any future tests are terminated or cannot be maintained on satisfactory terms; risks related to delays or other problems with operating our laboratory testing facilities; risks related to public concern over our genetic testing in general or our tests in particular; risks related to regulatory requirements or enforcement in the United States and foreign countries and changes in the structure of the healthcare system or healthcare payment systems; risks related to our ability to obtain new corporate collaborations or licenses and acquire new technologies or businesses on satisfactory terms, if at all; risks related to our ability to successfully integrate and derive benefits from any technologies or businesses that we license or acquire; risks related to our projections about the potential market opportunity for our products; the risk that we or our licensors may be unable to protect or that third parties will infringe the proprietary technologies underlying our tests; the risk of patent-infringement claims or challenges to the validity of our patents; risks related to changes in intellectual property laws covering our molecular diagnostic tests and pharmaceutical and clinical services and patents or enforcement in the United States and foreign countries, such as the Supreme Court decision in the lawsuit brought against us by the Association for Molecular Pathology et al; risks of new, changing and competitive technologies and regulations in the United States and internationally; and other factors discussed under the heading “Risk Factors” contained in Item 1A of our most recent Annual Report on Form 10-K, which has been filed with the Securities and Exchange Commission, as well as any updates to those risk factors filed from time to time in our Quarterly Reports on Form 10-Q or Current Reports on Form 8-K. All information in the exhibits is as of the date of the exhibits, and Myriad undertakes no duty to update this information unless required by law.
Page 2
(d)
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Exhibit Number |
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Description |
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99.1 |
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Earnings release dated May 8, 2018 for the three and nine months ended March 31, 2018. |
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99.2 |
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The exhibit(s) may contain hypertext links to information on our website or other parties’ websites. The information on our website and other parties’ websites is not incorporated by reference into this Current Report on Form 8-K and does not constitute a part of this Form 8-K.
In accordance with General Instruction B-2 of Form 8-K, the information set forth in Item 2.02 and Item 7.01 and in Exhibits 99.1 and 99.2 shall not be deemed to be “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or otherwise subject to the liability of that section, and shall not be incorporated by reference into any registration statement or other document filed under the Securities Act of 1933, as amended or the Exchange Act, except as shall be expressly set forth by specific reference in such filing.
Page 3
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
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MYRIAD GENETICS, INC. |
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Date: May 8, 2018 |
By: |
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/s/ R. Bryan Riggsbee |
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R. Bryan Riggsbee |
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Executive Vice President, Chief Financial Officer |
Page 4
Exhibit 99.1
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News Release |
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Media Contact: |
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Ron Rogers |
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Investor Contact: |
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Scott Gleason |
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(801) 584-3065 |
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(801) 584-1143 |
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rrogers@myriad.com |
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sgleason@myriad.com |
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Myriad Genetics Reports Fiscal Third-Quarter 2018 Financial Results
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• |
Total Revenues of $193.5 Million |
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• |
GAAP Diluted EPS of $0.16 and Adjusted EPS of $0.31 Up 15 Percent |
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• |
Company Raises Both Revenue and Adjusted EPS Guidance for Fiscal Year 2018 |
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Company Announces Commercial Coverage Decision for GeneSight® |
SALT LAKE CITY, May 8, 2018 – Myriad Genetics, Inc. (NASDAQ: MYGN), a global leader in molecular diagnostics and personalized medicine, today announced financial results for its fiscal third-quarter 2018, provided an update on recent business highlights and raised its fiscal year 2018 financial guidance.
"We saw strong results in the third quarter with financial performance once again exceeding our expectations due to better than anticipated hereditary cancer volumes, strong new product volume growth and the success of our Elevate 2020 program,” said Mark C. Capone, president and CEO, Myriad Genetics. “Our diversification efforts achieved record results in the third quarter, with new products now representing 71 percent of sample volume and 36 percent of revenue. And the landmark GeneSight® clinical trial results have led to our first commercial coverage decision. Given that this new product growth is being built upon a solid hereditary cancer foundation, we are raising our financial guidance for fiscal year 2018.”
2
The following table summarizes the financial results for the fiscal third-quarter 2018:
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Revenue |
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Fiscal Third-Quarter |
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($ in millions) |
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2018 |
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2017 |
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% Change |
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Molecular diagnostic testing revenue |
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Hereditary cancer testing revenue |
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$ |
123.3 |
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140.8 |
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(12% |
) |
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GeneSight testing revenue |
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30.4 |
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23.9 |
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27% |
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Vectra DA testing revenue |
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15.0 |
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11.2 |
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34% |
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Prolaris testing revenue |
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6.5 |
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3.4 |
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91% |
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EndoPredict testing revenue |
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2.3 |
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2.3 |
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0% |
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Other testing revenue |
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2.2 |
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3.6 |
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(39% |
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Total molecular diagnostic testing revenue |
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179.7 |
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185.2 |
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(3%) |
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Pharmaceutical and clinical service revenue |
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13.8 |
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11.7 |
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18% |
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Total Revenue |
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$ |
193.5 |
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$ |
196.9 |
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(2% |
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Income Statement |
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Fiscal Third-Quarter |
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($ in millions) |
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2018 |
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2017 |
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% Change |
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Total Revenue |
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$ |
193.5 |
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$ |
196.9 |
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(2% |
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Gross Profit |
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149.4 |
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152.6 |
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(2% |
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Gross Margin |
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77.2 |
% |
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77.5 |
% |
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Operating Expenses |
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132.4 |
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144.9 |
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(9% |
) |
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Operating Income |
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17.0 |
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7.7 |
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121% |
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Operating Margin |
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8.8 |
% |
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3.9 |
% |
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Adjusted Operating Income |
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28.6 |
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24.0 |
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19% |
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Adjusted Operating Margin |
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14.8 |
% |
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12.2 |
% |
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Net Income |
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11.4 |
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4.2 |
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171% |
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Diluted EPS |
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0.16 |
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0.06 |
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167% |
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Adjusted EPS |
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$ |
0.31 |
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$ |
0.27 |
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15% |
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Business Highlights
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• |
Hereditary Cancer |
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o |
Achieved the fifth consecutive quarter of year-over-year hereditary cancer volume growth with total hereditary cancer volume exceeding our three percent growth target on a year-over-year basis. |
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o |
riskScore® led to accelerating growth in our preventive care segment over the last two quarters. |
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• |
GeneSight® |
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o |
Revenue increased 27 percent year-over-year to $30.4 million with record volumes in the quarter. |
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o |
Myriad has been notified of a commercial coverage decision from a top-20, mid-Atlantic payer. |
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o |
Presented data from the largest-ever pharmacogenomics clinical study in patients with moderate-to-very severe depression at the American Psychiatric Association annual meeting in New York City, demonstrating that patients were 50 percent more likely to achieve remission and 30 percent more likely to respond to treatment when their medication selection was guided by the GeneSight Psychotropic genetic test. |
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o |
Submitted the randomized controlled trial study manuscript to a peer-reviewed journal and anticipate publication around the end of fiscal year 2018. |
3
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Optum Healthcare Solutions dataset. |
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• |
Vectra DA® |
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o |
Revenue increased 34 percent year-over-year in the quarter with volumes growing in the double-digits on a sequential basis. |
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o |
Initiated plans to move the Vectra DA customer service group and commercial laboratory to our Salt Lake City headquarters with plans to complete both moves by the end of fiscal year 2019. |
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• |
Prolaris® |
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o |
Revenue in the quarter increased 91 percent year-over-year to $6.5 million and test volumes grew 10 percent sequentially. |
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o |
NCCN issued new guidelines supporting Prolaris as standard of care for treatment decisions in patients with low and favorable-intermediate risk prostate cancer. The guidelines also support the broad use of hereditary cancer testing in 40,000 specific prostate cancer patients diagnosed every year in the United States and support the use of biomarkers such as myChoice® HRD Plus to identify prostate cancer patients for targeted therapies. |
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o |
American Association of Clinical Urology and the Large Urology Group Practice Association, that represent 70 percent of urologists in the country, issued a position paper supporting the new NCCN guidelines. |
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o |
Received positive medical policy recommendations for Prolaris in the quarter from 14 Medicaid states, first Blue Cross Blue Shield plan and several regional payers. |
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• |
EndoPredict® |
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o |
Reported $2.3 million in the quarter an increase of 15 percent sequentially. |
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o |
Received final Medicare local coverage decision from Noridian which became effective on January 30 increasing total coverage to approximately 90 percent of the United States market. |
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o |
One of the largest private insurers in the United States has expanded its coverage policy on EndoPredict to aid in the clinical decision of whether or not to extend adjuvant hormonal therapy beyond five years of treatment. |
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• |
Companion Diagnostics |
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o |
Received Food and Drug Administration approval for BRACAnalysis® CDx as a companion diagnostic in conjunction with AstraZeneca’s Lynparza (olaparib) for HER2- metastatic breast cancer. |
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o |
Launched BRACAnalysis CDx to approximately 3,000 oncologists who treat greater than two-thirds of metastatic breast cancer and saw a 70 percent increase in metastatic breast cancer testing in the third quarter compared to the second quarter. |
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• |
International |
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o |
Received a revised draft guidance document from the United Kingdom’s National Institute for Health and Care Excellence (NICE) which includes EndoPredict as one of three approved breast cancer prognostic tests. |
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o |
Initiated a restructuring to shift all laboratory developed testing to United States laboratories which will lead to closing the laboratory in Munich Germany and the sale of the German Clinic. |
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o |
Received pre-market approval from the Japanese Ministry of Health, Labor, and Welfare for our BRACAnalysis CDx test for HER2- metastatic breast cancer. |
4
Fiscal Year 2018 Financial Guidance
Below is a table summarizing Myriad’s fiscal year 2018 financial guidance:
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Revenue |
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GAAP Diluted Earnings Per Share |
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Adjusted Earnings Per Share |
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Fiscal Year 2018
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$771-$773 million |
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$1.87 -$1.89 |
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$1.19-$1.21 |
These projections are forward-looking statements and are subject to the risks summarized in the safe harbor statement at the end of this press release. The Company will provide further details on its business outlook during the conference call today and discuss the fiscal third-quarter financial results, and fiscal year 2018 financial guidance.
Conference Call and Webcast
A conference call will be held today, Tuesday, May 8, 2018, at 7:30 a.m. EST to discuss Myriad’s financial results for the fiscal third-quarter, business developments and financial guidance. The dial-in number for domestic callers is 1-800-699-0623. International callers may dial 1-303-223-4362. All callers will be asked to reference reservation number 21887258. An archived replay of the call will be available for seven days by dialing (800) 633-8284 and entering the reservation number above. The conference call along with a slide presentation will also will be available through a live webcast at www.myriad.com.
About Myriad Genetics
Myriad Genetics Inc., is a leading personalized medicine company dedicated to being a trusted advisor transforming patient lives worldwide with pioneering molecular diagnostics. Myriad discovers and commercializes molecular diagnostic tests that: determine the risk of developing disease, accurately diagnose disease, assess the risk of disease progression, and guide treatment decisions across six major medical specialties where molecular diagnostics can significantly improve patient care and lower healthcare costs. Myriad is focused on five strategic imperatives: build upon a solid hereditary cancer foundation, growing new product volume, expanding reimbursement coverage for new products, increasing RNA kit revenue internationally and improving profitability with Elevate 2020. For more information on how Myriad is making a difference, please visit the Company's website: www.myriad.com.
Myriad, the Myriad logo, BART, BRACAnalysis, Colaris, Colaris AP, myPath, myRisk, Myriad myRisk, myRisk Hereditary Cancer, myChoice, myPlan, BRACAnalysis CDx, Tumor BRACAnalysis CDx, myChoice HRD, EndoPredict, Vectra, GeneSight, riskScore and Prolaris are trademarks or registered trademarks of Myriad Genetics, Inc. or its wholly owned subsidiaries in the United States and foreign countries. MYGN-F, MYGN-G.
5
MYRIAD GENETICS, INC. AND SUBSIDIARIES
CONSOLIDATED INCOME STATEMENTS (Unaudited)
(in millions, except per share amounts)
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Three months ended |
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Nine months ended |
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December 31, |
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March 31, |
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2018 |
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2017 |
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2018 |
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2017 |
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Molecular diagnostic testing |
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$ |
179.7 |
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$ |
185.2 |
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|
$ |
537.6 |
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$ |
534.2 |
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Pharmaceutical and clinical services |
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13.8 |
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11.7 |
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40.1 |
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36.7 |
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Total revenue |
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193.5 |
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196.9 |
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577.7 |
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570.9 |
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Costs and expenses: |
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Cost of molecular diagnostic testing |
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36.8 |
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37.9 |
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110.7 |
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109.5 |
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Cost of pharmaceutical and clinical services |
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7.3 |
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6.4 |
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20.7 |
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19.1 |
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Research and development expense |
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18.5 |
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17.6 |
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53.1 |
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55.6 |
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Change in the fair value of contingent consideration |
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(1.2 |
) |
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5.2 |
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(61.3 |
) |
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2.0 |
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Selling, general, and administrative expense |
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115.1 |
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122.1 |
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345.5 |
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354.3 |
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Total costs and expenses |
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176.5 |
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189.2 |
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|
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468.7 |
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540.5 |
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Operating income |
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|
17.0 |
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|
|
7.7 |
|
|
|
109.0 |
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|
|
30.4 |
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Other income (expense): |
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|
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|
|
|
|
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|
|
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|
|
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Interest income |
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0.5 |
|
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0.3 |
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1.2 |
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0.9 |
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Interest expense |
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(0.5 |
) |
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(1.5 |
) |
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(2.2 |
) |
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(4.8 |
) |
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Other |
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(0.5 |
) |
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1.5 |
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(1.3 |
) |
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(2.4 |
) |
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Total other income (expense): |
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(0.5 |
) |
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|
0.3 |
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(2.3 |
) |
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|
(6.3 |
) |
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Income before income tax |
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|
16.5 |
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|
8.0 |
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|
106.7 |
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24.1 |
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Income tax provision |
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5.2 |
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3.8 |
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(17.7 |
) |
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|
15.2 |
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Net income |
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$ |
11.3 |
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|
$ |
4.2 |
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$ |
124.4 |
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$ |
8.9 |
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Net loss attributable to non-controlling interest |
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(0.1 |
) |
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- |
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(0.2 |
) |
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(0.1 |
) |
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Net income attributable to Myriad Genetics, Inc. stockholders |
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$ |
11.4 |
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$ |
4.2 |
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$ |
124.6 |
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$ |
9.0 |
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Earnings per share: |
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Basic |
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$ |
0.16 |
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$ |
0.06 |
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$ |
1.80 |
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$ |
0.13 |
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Diluted |
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$ |
0.16 |
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$ |
0.06 |
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$ |
1.74 |
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$ |
0.13 |
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Weighted average shares outstanding: |
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Basic |
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69.8 |
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68.1 |
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69.2 |
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|
68.1 |
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Diluted |
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|
72.4 |
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68.3 |
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71.7 |
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68.5 |
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6
Consolidated Balance Sheets (Unaudited)
(in millions)
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March 31, |
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June 30, |
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ASSETS |
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2018 |
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2017 |
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Current assets: |
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Cash and cash equivalents |
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$ |
97.4 |
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$ |
102.4 |
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Marketable investment securities |
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59.9 |
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48.3 |
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Prepaid expenses |
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10.1 |
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12.7 |
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Inventory |
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33.4 |
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42.2 |
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Trade accounts receivable, less allowance for doubtful accounts of $10.3 March 31, 2018 and $8.2 June 30, 2017 |
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|
123.7 |
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|
|
105.6 |
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Prepaid taxes |
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3.7 |
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0.2 |
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Other receivables |
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3.3 |
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5.7 |
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Total current assets |
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331.5 |
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|
317.1 |
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Property, plant and equipment, net |
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48.2 |
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|
51.1 |
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Long-term marketable investment securities |
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|
51.3 |
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|
48.5 |
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Intangibles, net |
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467.3 |
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|
|
491.6 |
|
|
Goodwill |
|
|
320.2 |
|
|
|
316.1 |
|
|
Total assets |
|
$ |
1,218.5 |
|
|
$ |
1,224.4 |
|
|
LIABILITIES AND STOCKHOLDERS' EQUITY |
|
|
|
|
|
|
|
|
|
Current liabilities: |
|
|
|
|
|
|
|
|
|
Accounts payable |
|
$ |
20.2 |
|
|
$ |
22.0 |
|
|
Accrued liabilities |
|
|
64.1 |
|
|
|
65.6 |
|
|
Short-term contingent consideration |
|
|
7.4 |
|
|
|
127.3 |
|
|
Deferred revenue |
|
|
2.6 |
|
|
|
2.6 |
|
|
Total current liabilities |
|
|
94.3 |
|
|
|
217.5 |
|
|
Unrecognized tax benefits |
|
|
27.9 |
|
|
|
25.2 |
|
|
Other long-term liabilities |
|
|
6.8 |
|
|
|
7.2 |
|
|
Contingent consideration |
|
|
9.6 |
|
|
|
13.2 |
|
|
Long-term debt |
|
|
69.3 |
|
|
|
99.1 |
|
|
Long-term deferred taxes |
|
|
62.2 |
|
|
|
84.4 |
|
|
Total liabilities |
|
|
270.1 |
|
|
|
446.6 |
|
|
Commitments and contingencies |
|
|
|
|
|
|
|
|
|
Stockholders’ equity: |
|
|
|
|
|
|
|
|
|
Common stock, 69.9 and 68.4 shares outstanding at March 31, 2018 and June 30, 2017 respectively |
|
|
0.7 |
|
|
|
0.7 |
|
|
Additional paid-in capital |
|
|
889.6 |
|
|
|
851.4 |
|
|
Accumulated other comprehensive income (loss) |
|
|
1.8 |
|
|
|
(5.5 |
) |
|
Retained earnings (deficit) |
|
|
56.2 |
|
|
|
(68.4 |
) |
|
Total Myriad Genetics, Inc. stockholders’ equity |
|
|
948.3 |
|
|
|
778.2 |
|
|
Non-Controlling Interest |
|
|
0.1 |
|
|
|
(0.4 |
) |
|
Total stockholders' equity |
|
|
948.4 |
|
|
|
777.8 |
|
|
Total liabilities and stockholders’ equity |
|
$ |
1,218.5 |
|
|
$ |
1,224.4 |
|
7
Consolidated Statement of Cash Flows (Unaudited)
(in millions)
|
|
|
Nine months ended December 31, |
|
||||||
|
|
|
2018 |
|
|
2017 |
|
|||
|
CASH FLOWS FROM OPERATING ACTIVITIES: |
|
|
|
|
|
|
|
|
|
|
Net Income attributable to Myriad Genetics, Inc. stockholders |
|
$ |
124.6 |
|
|
|
8.9 |
|
|
|
Adjustments to reconcile net income to net cash provided by operating activities: |
|
|
|
|
|
|
|
|
|
|
Depreciation and amortization |
|
|
39.3 |
|
|
|
35.0 |
|
|
|
Non-cash interest expense |
|
|
0.1 |
|
|
|
0.4 |
|
|
|
Loss (gain) on disposition of assets |
|
|
0.1 |
|
|
|
(0.2 |
) |
|
|
Share-based compensation expense |
|
|
20.0 |
|
|
|
22.7 |
|
|
|
Impairment of cost basis investment |
|
|
— |
|
|
|
2.4 |
|
|
|
Bad debt expense |
|
|
23.2 |
|
|
|
27.3 |
|
|
|
Loss on extinguishment of debt |
|
|
— |
|
|
|
1.3 |
|
|
|
Deferred income taxes |
|
|
(24.9 |
) |
|
|
2.0 |
|
|
|
Unrecognized tax benefits |
|
|
2.7 |
|
|
|
0.9 |
|
|
|
Change in fair value of contingent consideration |
|
|
(61.3 |
) |
|
|
2.0 |
|
|
|
Payment of contingent consideration |
|
|
(20.8 |
) |
|
|
— |
|
|
|
Changes in assets and liabilities: |
|
|
|
|
|
|
|
|
|
|
Prepaid expenses |
|
|
2.7 |
|
|
|
10.9 |
|
|
|
Trade accounts receivable |
|
|
(42.3 |
) |
|
|
(40.3 |
) |
|
|
Other receivables |
|
|
4.1 |
|
|
|
(3.2 |
) |
|
|
Inventory |
|
|
8.9 |
|
|
|
(6.5 |
) |
|
|
Prepaid taxes |
|
|
(3.7 |
) |
|
|
3.6 |
|
|
|
Accounts payable |
|
|
(2.0 |
) |
|
|
2.0 |
|
|
|
Accrued liabilities |
|
|
(2.6 |
) |
|
|
(0.6 |
) |
|
|
Deferred revenue |
|
|
(0.1 |
) |
|
|
1.0 |
|
|
|
Net cash provided by operating activities |
|
|
68.0 |
|
|
|
69.6 |
|
|
|
CASH FLOWS FROM INVESTING ACTIVITIES |
|
|
|
|
|
|
|
|
|
|
Capital expenditures |
|
|
(6.6 |
) |
|
|
(5.4 |
) |
|
|
Acquisitions, net of cash acquired |
|
|
— |
|
|
|
(216.1 |
) |
|
|
Sale of cost basis investment |
|
|
— |
|
|
|
2.6 |
|
|
|
Purchases of marketable investment securities |
|
|
(79.4 |
) |
|
|
(74.6 |
) |
|
|
Proceeds from maturities and sales of marketable investment securities |
|
|
65.5 |
|
|
|
142.9 |
|
|
|
Net cash used in investing activities |
|
|
(20.5 |
) |
|
|
(150.6 |
) |
|
|
CASH FLOWS FROM FINANCING ACTIVITIES: |
|
|
|
|
|
|
|
|
|
|
Net proceeds from common stock issued under share-based compensation plans |
|
|
18.2 |
|
|
|
1.3 |
|
|
|
Net proceeds from revolving credit facility |
|
|
53.0 |
|
|
|
204.0 |
|
|
|
Repayment of revolving credit facility |
|
|
(83.0 |
) |
|
|
(37.0 |
) |
|
|
Net proceeds from term loan |
|
|
— |
|
|
|
199.0 |
|
|
|
Repayment of term loan |
|
|
— |
|
|
|
(200.0 |
) |
|
|
Payment of contingent consideration recorded in purchase accounting |
|
|
(42.4 |
) |
|
|
— |
|
|
|
Fees paid for extinguishment of debt |
|
|
— |
|
|
|
(0.6 |
) |
|
|
Repurchase and retirement of common stock |
|
|
— |
|
|
|
(31.6 |
) |
|
|
Proceeds from Non-Controlling Interest |
|
|
0.5 |
|
|
|
— |
|
|
|
Net cash provided by (used in) financing activities |
|
|
(53.7 |
) |
|
|
135.1 |
|
|
|
Effect of foreign exchange rates on cash and cash equivalents |
|
|
1.2 |
|
|
|
1.2 |
|
|
|
Net increase (decrease) in cash and cash equivalents |
|
|
(5.0 |
) |
|
|
55.3 |
|
|
|
Cash and cash equivalents at beginning of the period |
|
|
102.4 |
|
|
|
68.5 |
|
|
|
Cash and cash equivalents at end of the period |
|
$ |
97.4 |
|
|
$ |
123.8 |
|
|
8
This press release contains “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995, including statements relating to the Company’s belief that its strategy to build upon the solid foundation of its hereditary cancer business with new product growth will deliver future revenue and earnings growth; anticipated publication around the end of fiscal year 2018 of the manuscript reporting results of the randomized controlled trial study of Genesight Psychotropic testing; the Company’s plans to move the Vectra DA customer service group and commercial laboratory to its Salt Lake City headquarters and complete both moves by the end of fiscal year 2019; the Company’s restructuring plan to shift all laboratory-developed testing to United States laboratories, including the sale of the Clinic; and the Company’s increased fiscal full year revenue guidance of total revenue of $771 to $773 million, GAAP diluted earnings per share guidance of $1.87 to $1.89, and adjusted earnings per share guidance of $1.19 to $1.21, as further discussed under the captions “Fiscal Year 2018 and Fiscal Third-Quarter 2018 Financial Guidance” and “Reconciliation of GAAP and Non-GAAP for Fiscal Year 2018 and Fiscal Third-Quarter 2018 Financial Guidance”; and the Company’s strategic directives under the caption “About Myriad Genetics.” These “forward-looking statements” are based on management’s current expectations of future events and are subject to a number of risks and uncertainties that could cause actual results to differ materially and adversely from those described or implied in the forward-looking statements. These risks include, but are not limited to: the risk that sales and profit margins of the Company’s existing molecular diagnostic tests and pharmaceutical and clinical services may decline or will not continue to increase at historical rates; risks related to the Company’s ability to transition from its existing product portfolio to the Company’s new tests; risks related to changes in the governmental or private insurers’ reimbursement levels for the Company’s tests or the Company’s ability to obtain reimbursement for its new tests at comparable levels to its existing tests; risks related to increased competition and the development of new competing tests and services; the risk that the Company may be unable to develop or achieve commercial success for additional molecular diagnostic tests and pharmaceutical and clinical services in a timely manner, or at all; the risk that the Company may not successfully develop new markets for its molecular diagnostic tests and pharmaceutical and clinical services, including the Company’s ability to successfully generate revenue outside the United States; the risk that licenses to the technology underlying the Company’s molecular diagnostic tests and pharmaceutical and clinical services tests and any future tests are terminated or cannot be maintained on satisfactory terms; risks related to delays or other problems with operating the Company’s laboratory testing facilities; risks related to public concern over the Company’s genetic testing in general or the Company’s tests in particular; risks related to regulatory requirements or enforcement in the United States and foreign countries and changes in the structure of the healthcare system or healthcare payment systems; risks related to the Company’s ability to obtain new corporate collaborations or licenses and acquire new technologies or businesses on satisfactory terms, if at all; risks related to the Company’s ability to successfully integrate and derive benefits from any technologies or businesses that it licenses or acquires, including but not limited to the Company’s acquisition of Assurex, Sividon and the Clinic; risks related to the Company’s projections about the potential market opportunity for the Company’s products; the risk that the Company or its licensors may be unable to protect or that third parties will infringe the proprietary technologies underlying the Company’s tests; the risk of patent-infringement claims or challenges to the validity of the Company’s patents; risks related to changes in intellectual property laws covering the Company’s molecular diagnostic tests and pharmaceutical and clinical services and patents or enforcement in the United States and foreign countries, such as the Supreme Court decision in the lawsuit brought against us by the Association for Molecular Pathology et al; risks of new, changing and competitive technologies and regulations in the United States and internationally; the risk that the Company may be unable to comply with financial operating covenants under the Company’s credit or lending agreements; the risk that the Company will be unable to pay, when due, amounts due under the Company’s credit or lending agreements; and other factors discussed under the heading “Risk Factors” contained in Item 1A of the Company’s most recent Annual Report on Form 10-K filed with the Securities and Exchange Commission, as well as any updates to those risk factors filed from time to time in the Company’s Quarterly Reports on Form 10-Q or Current Reports on Form 8-K.
9
Statement regarding use of non-GAAP financial measures
In this press release, the Company’s financial results and financial guidance are provided in accordance with accounting principles generally accepted in the United States (GAAP) and using certain non-GAAP financial measures. Management believes that presentation of operating results using non-GAAP financial measures provides useful supplemental information to investors and facilitates the analysis of the Company’s core operating results and comparison of operating results across reporting periods. Management also uses non-GAAP financial measures to establish budgets and to manage the Company’s business. A reconciliation of the GAAP financial results to non-GAAP financial results is included in the attached schedules.
Following is a description of the adjustments made to GAAP financial measures:
|
|
• |
Acquisition – amortization of intangible assets: Represents recurring amortization charges resulting from the acquisition of intangible assets, including developed technology and database rights. |
|
|
• |
Acquisition – integration related costs: Costs related to closing and integration of acquired companies |
|
|
• |
Tax impact related to equity compensation – Changes in effective tax rate based upon ASU 2016-09 |
|
|
• |
Potential future consideration related to acquisitions – Non-cash expenses related to valuation adjustments of earn-out and milestone payments tied to recent acquisitions |
|
|
• |
Impairment of Raindance Investment – One-time impairment charge associated with Myriad’s investment in Raindance Technologies |
|
|
• |
One-time debt restructuring costs – Charges related to the restructuring of the company’s debt from a one-year term loan to a revolving credit facility |
|
|
• |
One-time non-deductible costs – One-time non-deductible tax items |
|
|
• |
Tax reform impact on deferred taxes: One-time non-cash charges associated with change in value of our deferred tax assets due to tax reform |
|
|
• |
Elevate 2020 costs –Expenses tied to Elevate 2020 program |
The Company encourages investors to carefully consider its results under GAAP, as well as its supplemental non-GAAP information and the reconciliation between these presentations, to more fully understand its business. Non-GAAP financial results are reported in addition to, and not as a substitute for, or superior to, financial measures calculated in accordance with GAAP.
10
Reconciliation of GAAP to Non-GAAP Financial Measures
for the Three and Nine Months ended March 31, 2018 and 2017
(Unaudited data in millions, except per share amount)
|
|
|
Three Months Ended |
|
|
Nine Months Ended |
|
||||||||||
|
|
|
Mar 31, 2018 |
|
|
Mar 31, 2017 |
|
|
Mar 31, 2018 |
|
|
Mar 31, 2017 |
|
||||
|
Revenue |
|
$ |
193.5 |
|
|
$ |
196.9 |
|
|
$ |
577.7 |
|
|
$ |
570.9 |
|
|
GAAP Cost of molecular diagnostic testing |
|
$ |
36.8 |
|
|
$ |
37.9 |
|
|
$ |
110.7 |
|
|
$ |
109.5 |
|
|
GAAP Cost of pharmaceutical and clinical services |
|
|
7.3 |
|
|
|
6.4 |
|
|
|
20.7 |
|
|
|
19.1 |
|
|
Elevate 2020 costs |
|
|
(0.2 |
) |
|
|
— |
|
|
|
(0.2 |
) |
|
|
— |
|
|
Non-GAAP COGS |
|
$ |
43.9 |
|
|
$ |
44.3 |
|
|
$ |
131.2 |
|
|
$ |
128.6 |
|
|
Non-GAAP Gross Margin |
|
|
77 |
% |
|
|
78 |
% |
|
|
77 |
% |
|
|
77 |
% |
|
GAAP Research and Development |
|
$ |
18.5 |
|
|
$ |
17.6 |
|
|
$ |
53.1 |
|
|
$ |
55.6 |
|
|
Acquisition - Integration related costs |
|
|
(0.1 |
) |
|
|
(0.1 |
) |
|
|
(0.1 |
) |
|
|
(0.2 |
) |
|
Acquisition - amortization of intangible assets |
|
|
— |
|
|
|
— |
|
|
|
(0.3 |
) |
|
|
(0.2 |
) |
|
Elevate 2020 costs |
|
|
(1.0 |
) |
|
|
— |
|
|
|
(1.1 |
) |
|
|
— |
|
|
Non-GAAP R&D |
|
$ |
17.4 |
|
|
$ |
17.5 |
|
|
$ |
51.6 |
|
|
$ |
55.2 |
|
|
GAAP Contingent Consideration |
|
$ |
(1.2 |
) |
|
$ |
5.2 |
|
|
$ |
(61.3 |
) |
|
$ |
2.0 |
|
|
Potential future consideration related to acquisitions |
|
|
1.2 |
|
|
|
(5.2 |
) |
|
|
61.3 |
|
|
|
(2.0 |
) |
|
Non-GAAP Contingent Consideration |
|
$ |
— |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
— |
|
|
GAAP Selling, General and Administrative |
|
$ |
115.1 |
|
|
$ |
122.1 |
|
|
$ |
345.5 |
|
|
$ |
354.3 |
|
|
Acquisition - Integration related costs |
|
|
(0.3 |
) |
|
|
(1.8 |
) |
|
|
(0.3 |
) |
|
|
(12.8 |
) |
|
Acquisition - amortization of intangible assets |
|
|
(9.2 |
) |
|
|
(9.2 |
) |
|
|
(27.5 |
) |
|
|
(23.6 |
) |
|
Elevate 2020 costs |
|
|
(2.0 |
) |
|
|
— |
|
|
|
(4.7 |
) |
|
|
— |
|
|
Non-GAAP SG&A |
|
$ |
103.6 |
|
|
$ |
111.1 |
|
|
$ |
313.0 |
|
|
$ |
317.9 |
|
|
GAAP Operating Income |
|
$ |
17.0 |
|
|
$ |
7.7 |
|
|
$ |
109.0 |
|
|
$ |
30.4 |
|
|
Acquisition - Integration related costs |
|
|
0.4 |
|
|
|
1.9 |
|
|
|
0.4 |
|
|
|
13.0 |
|
|
Acquisition - amortization of intangible assets |
|
|
9.2 |
|
|
|
9.2 |
|
|
|
27.8 |
|
|
|
23.8 |
|
|
Elevate 2020 costs |
|
|
3.2 |
|
|
|
— |
|
|
|
6.0 |
|
|
|
— |
|
|
Potential future consideration related to acquisitions |
|
|
(1.2 |
) |
|
|
5.2 |
|
|
|
(61.3 |
) |
|
|
2.0 |
|
|
Non-GAAP Operating Income |
|
$ |
28.6 |
|
|
$ |
24.0 |
|
|
$ |
81.9 |
|
|
$ |
69.2 |
|
|
Non-GAAP Operating Margin |
|
|
15 |
% |
|
|
12 |
% |
|
|
14 |
% |
|
|
12 |
% |
|
GAAP Net Income Attributable to Myriad Genetics, Inc. Stockholders |
|
$ |
11.4 |
|
|
$ |
4.2 |
|
|
$ |
124.6 |
|
|
$ |
9.0 |
|
|
Acquisition - Integration related costs |
|
|
0.4 |
|
|
|
1.9 |
|
|
|
0.4 |
|
|
|
13.0 |
|
|
Acquisition - amortization of intangible assets |
|
|
9.2 |
|
|
|
9.2 |
|
|
|
27.8 |
|
|
|
23.8 |
|
|
Elevate 2020 costs |
|
|
3.2 |
|
|
|
— |
|
|
|
6.0 |
|
|
|
— |
|
|
Potential future consideration related to acquisitions |
|
|
(1.2 |
) |
|
|
5.2 |
|
|
|
(61.3 |
) |
|
|
2.0 |
|
|
Tax impact related to equity compensation |
|
|
0.1 |
|
|
|
(0.1 |
) |
|
|
(0.3 |
) |
|
|
2.9 |
|
|
One-time debt restructuring costs |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
1.3 |
|
|
One-time non-deductible costs |
|
|
— |
|
|
|
(1.5 |
) |
|
|
— |
|
|
|
2.7 |
|
|
Tax reform effect on deferred taxes |
|
|
— |
|
|
|
— |
|
|
|
(32.6 |
) |
|
|
— |
|
|
Impairment of Raindance Investment |
|
|
— |
|
|
|
(0.1 |
) |
|
|
— |
|
|
|
3.3 |
|
|
Tax effect associated with non-GAAP adjustments |
|
|
(0.8 |
) |
|
|
(0.7 |
) |
|
|
(1.8 |
) |
|
|
(6.3 |
) |
|
Non-GAAP Net Income |
|
$ |
22.3 |
|
|
$ |
18.1 |
|
|
$ |
62.8 |
|
|
$ |
51.7 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
GAAP Diluted EPS |
|
$ |
0.16 |
|
|
$ |
0.06 |
|
|
$ |
1.74 |
|
|
$ |
0.13 |
|
|
Non-GAAP Diluted EPS |
|
$ |
0.31 |
|
|
$ |
0.27 |
|
|
$ |
0.88 |
|
|
$ |
0.75 |
|
|
Diluted shares outstanding |
|
|
72.4 |
|
|
|
68.3 |
|
|
|
71.7 |
|
|
|
68.5 |
|
11
(Unaudited data in millions)
|
|
|
Three Months Ended |
|
|
Six Months Ended |
|
||||||||||
|
|
|
Mar 31, 2018 |
|
|
Mar 31, 2017 |
|
|
Mar 31, 2018 |
|
|
Mar 31, 2017 |
|
||||
|
GAAP cash flow from operations |
|
$ |
11.5 |
|
|
$ |
41.1 |
|
|
$ |
68.0 |
|
|
$ |
69.6 |
|
|
Capital expenditures |
|
|
(2.9 |
) |
|
|
(1.5 |
) |
|
|
(6.6 |
) |
|
|
(5.4 |
) |
|
Free cash flow |
|
$ |
8.6 |
|
|
$ |
39.6 |
|
|
$ |
61.4 |
|
|
$ |
64.2 |
|
|
Elevate 2020 costs |
|
|
3.2 |
|
|
|
— |
|
|
|
6.0 |
|
|
|
— |
|
|
Acquisition - Integration related costs |
|
|
0.4 |
|
|
|
1.9 |
|
|
|
0.4 |
|
|
|
9.8 |
|
|
Cash paid for contingent consideration in operating cash flows |
|
|
20.8 |
|
|
|
— |
|
|
|
20.8 |
|
|
|
— |
|
|
Cash paid at closing to Assurex vendors |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
6.8 |
|
|
Tax effect associated with non-GAAP adjustments |
|
|
(0.8 |
) |
|
|
(0.7 |
) |
|
|
(1.8 |
) |
|
|
(6.4 |
) |
|
Non-GAAP Free cash flow |
|
$ |
32.2 |
|
|
$ |
40.8 |
|
|
$ |
86.8 |
|
|
$ |
74.4 |
|
Reconciliation of GAAP to Non-GAAP for Fiscal Year 2018
The Company’s future performance and financial results are subject to risks and uncertainties, and actual results could differ materially from guidance set forth below. Some of the factors that could affect the Company’s financial results are stated in the safe harbor statement of this press release. More information on potential factors that could affect the Company’s financial results are included under the heading "Risk Factors" contained in Item 1A in the Company’s most recent Annual Report on Form 10-K filed with the Securities and Exchange Commission, as well as any updates to those risk factors filed from time to time in the Company’s Quarterly Reports on Form 10-Q or Current Reports on Form 8-K.
|
|
|
Fiscal Year 2018 |
|
Diluted net income per share |
|
|
|
GAAP diluted net income per share |
|
$1.87 - $1.89 |
|
Acquisition - amortization of intangible assets |
|
0.52 |
|
Change in contingent consideration |
|
(0.85) |
|
Tax reform impact on deferred taxes |
|
(0.44) |
|
One-time expenses |
|
0.09 |
|
Non-GAAP diluted net income per share |
|
$1.19 - $1.21 |
Myriad Genetics Fiscal Third-Quarter 2018 Earnings Call 05/08/2018 Exhibit 99.2
Forward Looking Statements Some of the information presented here today may contain projections or other forward-looking statements regarding future events or the future financial performance of the Company. These statements are based on management’s current expectations and the actual events or results may differ materially and adversely from these expectations. We refer you to the documents the Company files from time to time with the Securities and Exchange Commission, specifically, the Company’s annual reports on Form 10-K, its quarterly reports on Form 10-Q, and its current reports on Form 8-K. These documents identify important risk factors that could cause the actual results to differ materially from those contained in the Company’s projections or forward-looking statements. In this presentation, the Company’s financial results and financial guidance are provided in accordance with accounting principles generally accepted in the United States (GAAP) and using certain non-GAAP financial measures. The Company’s financial measures under GAAP include substantial one-time charges related to its acquisitions and ongoing amortization expense related to acquired intangible assets that will be recognized over the useful lives of the assets and charges related to executive severance. Management believes that presentation of operating results that excludes these items provides useful supplemental information to investors and facilitates the analysis of the Company’s core operating results and comparison of operating results across reporting periods. Management also uses non-GAAP financial measures to establish budgets and to manage the Company’s business. A link to reconciliation of the GAAP to non-GAAP financial guidance is provided above. Forward Looking Statements Non-GAAP Financial Measures Financial Guidance Fiscal Year 2018 GAAP diluted earnings per share $1.87 - $1.89 Acquisition – amortization of intangible assets $0.52 Change in contingent consideration ($0.85) Tax reform impact on deferred taxes ($0.44) One time charges $0.09 Non-GAAP diluted earnings per share $1.19- $1.21 For additional information on GAAP to non-GAAP reconciliation see: https://www.myriad.com/investors/gaap-to-non-gaap-reconciliation/ Copyright © 2018 Myriad Genetics, Inc., all rights reserved. www.Myriad.com.
FY 2018 Third-Quarter Financial Results Significantly Exceed Expectations 3Q18 Actual Results 3Q17 Actual Results YoY Change Revenue (in mil.) $193.5 $196.9 (2%) GAAP EPS $0.16 $0.06 167% Adjusted EPS $0.31 $0.27 15% Copyright © 2018 Myriad Genetics, Inc., all rights reserved. www.Myriad.com.
Critical Success Factors to Achieving Strategic Goals Grow new product volume STRATEGIC GOALS CRITICAL SUCCESS FACTORS >10% Revenue Growth >30% Operating Margin 7 Products >$50M >10% International Revenue Expand reimbursement coverage for new products Increase RNA kit revenue internationally Improve profitability with Elevate 2020 Copyright © 2018 Myriad Genetics, Inc., all rights reserved. www.Myriad.com. Build upon solid hereditary cancer foundation
Solid Hereditary Cancer Foundation 5th Straight Quarter With Year-Over-Year Volume Growth Hereditary cancer revenue exceeds expectations 5th straight quarter with YoY volume growth Exceeded three percent year-over-year volume target Successful riskScore™ launch led to accelerating growth in Preventive Care the last two quarters Copyright © 2018 Myriad Genetics, Inc., all rights reserved. www.Myriad.com. U.S. Oncology & ION Customizable Panels Digital Integration riskScore® Competitor Quality Concerns Key Drivers of Volume Trends
Grow New Product Volume New Products Set Record With 71% of Volume and 36% of Revenue Double-digit YoY Growth ≈29% ≈71% New products comprise ≈71% of test volume New product YoY volume grew at double-digit rate New products set new record at 36% of total revenue Record GeneSight volume Prolaris and Vectra DA grow at double-digit rate sequentially Copyright © 2018 Myriad Genetics, Inc., all rights reserved. www.Myriad.com.
Expand Reimbursement Coverage For New Products Several Key Reimbursement Catalysts in Fiscal Year 2018 Current U.S. Reimbursement Final Medicare LCD for EndoPredict became effective Jan. 30 New NCCN guidelines for Prolaris AACU and LUGPA position paper provides further support for Prolaris GeneSight trial showed 50% improvement in remission rates and 30% improvement in response rates Commercial coverage decision for GeneSight from top-20 Mid-Atlantic payer GeneSight RCT, IMPACT study, and Optum health economic study submitted for publication Potential NCCN guidelines for myPath Melanoma Copyright © 2018 Myriad Genetics, Inc., all rights reserved. www.Myriad.com.
International Restructuring and Approvals Kit-Based Strategy With Global LDT Laboratory Shift LDT testing to single U.S. based laboratory Selling German clinic and closing Munich laboratory Continue with kit manufacturing and laboratory in Cologne Germany Received pre-market approval for BRACAnalysis CDx in Japan for HER2- metastatic breast cancer = 15,000 patients per year Revised NICE draft guidance document on breast cancer prognostics recommends EndoPredict as one of three approved diagnostic tests Copyright © 2018 Myriad Genetics, Inc., all rights reserved. www.Myriad.com.
Improve Profitability With Elevate 2020 3rd Straight Quarter of Operating Expense Declines Adjusted Operating Expenses FY18 Targeted Savings = $17M Copyright © 2018 Myriad Genetics, Inc., all rights reserved. www.Myriad.com.
FY 2018 Third-Quarter Revenue By Product Product 3Q18 3Q17 YoY Growth Hereditary Cancer $123.3 $140.8 (12%) GeneSight $30.4 $23.9 27% Vectra DA $15.0 $11.2 34% Prolaris $6.5 $3.4 91% EndoPredict $2.3 $2.3 0% Other $2.2 $3.6 (39%) Total Molecular Diagnostic Revenue $179.7 $185.2 (3%) Pharmaceutical & Clinical Services $13.8 $11.7 18% Total Revenue $193.5 $196.9 (2%) (in millions) Copyright © 2018 Myriad Genetics, Inc., all rights reserved. www.Myriad.com.
Fiscal Third-Quarter Financial Results Adjusted Earnings Per Share Increase 15% Over Q3 FY2017 3Q18 3Q17 YoY Growth Total Revenue $193.5 $196.9 (2%) Gross Profit $149.4 $152.6 (2%) Gross Margin 77.2% 77.5% -30 bps Operating Income $17.0 $7.7 121% Adjusted Operating Income $28.6 $24.0 19% Adjusted Operating Margin 14.8% 12.2% +260 bps Net Income $11.4 $4.2 171% Diluted EPS $0.16 $0.06 167% Adjusted EPS $0.31 $0.27 15% Copyright © 2018 Myriad Genetics, Inc., all rights reserved. www.Myriad.com.
Comparison of Adjusted EPS and FCF/Share Adjusted EPS Significantly Understates Cash Earnings Power Copyright © 2018 Myriad Genetics, Inc., all rights reserved. www.Myriad.com. TTM FCF/Share = $1.72
FY18 Financial Guidance Raising FY18 Financial Outlook Again Metric Fiscal Year 2018 Revenue $771 to $773 million GAAP Diluted EPS $1.87 to $1.89 Adjusted EPS $1.19 to $1.21 Copyright © 2018 Myriad Genetics, Inc., all rights reserved. www.Myriad.com.
GeneSight® Psychotropic for the management of major depressive disorder 14
Burden of MDD More than 1 out of 20 Americans1 Leading cause of disability in the U.S. for ages 15 to 442 6.7% U.S. adults experienced episode in last 12 months (>16 million)2 16.6% lifetime prevalence, equating to ~33 million U.S. adults3 Pratt LA, Brody DJ. Depression in the U.S. household population, 2009–2012. NCHS data brief, no 172. December 2014. Anxiety and Depression Association of America (ADAA). Facts and Statistics. 2017. Kessler RC, et al. Archives of General Psychiatry 2005; 62(6):617-27. Mrazek D, et al. Psychiatr Serv 2014 Aug 1;65(8):977-87. Donohue JM, Pincus HA. Pharmacoeconomics 2007; 25(1):7. Greenberg PE, et al. J Clin Psychiatry 2015; 76(2): 155-62. 7. A Review of the Clinical, Economic, and Societal Burden of Treatment-Resistant Depression: 1996–2013, PsychServ 2014 8. Prospective Service Use and Health Care Costs of Medicaid Beneficiaries with Treatment-Resistant Depression Personal Economic > $100 billion annual economic cost4 > 250 million antidepressant and antipsychotic prescriptions annually5 27.5% increase between 2005 and 2010 in direct medical and pharmaceutical costs6 Depressed patients cost >$20,000 per year7,8 15
Remission is the Treatment Goal Treatment in the acute phase (6-12 weeks) should be aimed at inducing remission of the major depressive episode.” – American Psychiatric Association Depression Treatment Guidelines [T]he most robust body of evidence would support continuation or maintenance of pharmacotherapeutic regimens […] that resulted in remission during the acute phase.” – Florida Medication Guidelines for MDD 2017 The target goal for acute treatment should be remission: a resolution of depressive symptoms.” – Canadian Network for Mood and Anxiety Treatments (CANMAT) Guidelines for Depression 16 Remission and response included in HEDIS quality measures used by the National Committee for Quality Assurance to assess health plans
Historical Outcomes for Approved Antidepressant Studies 40 consecutive antidepressant studies submitted to FDA in past 20 years Statistically significant improvement was only observed over placebo Only 13% of trials showed statistically significant improvement in remission over placebo Only 30% of trials showed statistically significant improvement in response over placebo Only 70% of trials showed statistically significant improvement in symptoms over placebo No drug showed statistically significant results compared to the active drug arm 17
GeneSight Weighs Combined Influence of Multiple Genes Genotype Analysis (PK/PD) Weighted Genetic Profile Created (>300,000) Pharmacology Integrated Actionable Report FDA Approved Labels Published Literature Clinical Pharma-cology Unique Algorithm Research 18
Largest Double-Blind RCT of Pharmacogenomics in Mental Health Compared ~1,200 patients with MDD who have failed one previous medication receiving GeneSight-guided therapy to those receiving treatment-as-usual (TAU) (patient scores were ≥11 on the QIDS-C16 at screening and baseline) Primary evaluation of Hamilton Depression Rating Scale 17 (HAM-D17) scores from baseline to eight weeks using blind central rater Remission (HAM-D17 score ≤7) Response (HAM-D17 reduction ≥50%) Symptom improvement (reduction in HAM-D17) Secondary evaluation of Intent to Treat (ITT) analysis for three depression surveys (HAM-D17, QIDS, PHQ9) for same three key endpoints 60 study sites including many of the nation’s leading academic institutions 19
n = 2,004 Screening Visit (Eligibility Criteria Evaluated) Did not meet I/C criteria n = 606 n = 1,398 Randomized Screening, Randomization & PGx Testing GeneSight RCT Study Schema Study schema and participant enrollment in the peer-protocol cohort Treatment as Usual (TAU) Guided-Care Arm n = 456 Week 24 n = 457 Week 24 Double-Blind Un-Blinding Open-Label n = 607 Week 8 Lost to Follow-Up n = 48 n = 648 Week 4 Lost to Follow-Up n = 41 n = 717 Week 0 baseline Lost to Follow-Up n = 69 n = 559 Week 12 Lost to Follow-Up n = 103 Lost to Follow-Up n = 65 n = 681 Week 0 baseline n = 616 Week 4 Lost to Follow-Up n = 56 n = 560 Week 8 Lost to Follow-Up n = 37 n = 523 Week 12 Lost to Follow-Up n = 66 20
RCT Results Comparing Two Active Treatment Arms p=0.013 p=0.007 Outcome Measures at Week 8 50% improvement in remission n=560 n=607 p=0.107 30% improvement in response 21 14% improvement in symptoms
Stratification at baseline Symptom Improvement Stratified by Entering Medications 22
GeneSight Congruent vs Incongruent Treatment Congruent Green- or yellow-bin medications ‘Use as directed’ or ‘use with caution’ test categories YELLOW-BIN GREEN-BIN RED-BIN Incongruent Red-bin medications ‘Use with increased caution and with more frequent monitoring’ test category 23
Change in Incongruence by Study Arm Baseline Week 8 Baseline Week 8 9% relative increase in incongruence 57% relative decrease in incongruence 24
Outcomes for Patients Switching From Incongruent Medications Baseline Week 8 Baseline Week 8 25 Remission Symptom Improvement Response
GeneSight-Driven Outcomes are Durable Over 6 months durability Remission doubled during open-label period HAM-D17 Score Percent Improvement 26
Positive ROI with GeneSight MORE THAN $1,000 Drug Spend Savings1 MORE THAN $1,500 Healthcare Savings2 MORE THAN $3,275 Potential Savings Annually + = + UP TO $775 Productivity Savings2 Payer Employer Winner JG, et al. Curr Med Res Opin 2015; 31(9):1633-43. (Medco) (n=2168; n=10,880 for TAU group; 5-to-1 match) Winner JG, et al. Transl Psychiatry 2013; 3:e242. (Union Health Service) (n=96) 27
Evidence Supports Coverage of GeneSight Level 1 evidence1 Improves remission by >50% by guiding medication selecton1 Reducing gene-drug interactions drives overall outcomes1 Efficacy is durable and continues to increase over time1 Greden JF, et al. Publication pending. (Current RCT) Winner JG, et al. Transl Psychiatry 2013 Mar 19; 3:e242. (Union Health Service) Winner JG, et al. Curr Med Res Opin 2015 Sep; 31(9):1633-43. (Medco) MolDX: GeneSight® Assay for Refractory Testing (L35443). Magellan Healthcare, Inc. 2017 Handbook for the National Provider Network. Decreases treatment resistance to MDD1 Total savings of more than $3,275 per patient per year2,3 Supported by Medicare and behavioral health organizations4,5 First commercial coverage decision from top-20 Mid-Atlantic payer 28