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One of Utah's leading medical technology companies, Myriad Genetics, is settling lawsuits related to several of its patents on genes related to breast and ovarian cancers, opening up competition it has not seen in nearly 15 years.
Following an adverse appeals court ruling, Salt Lake City-based Myriad has settled five of seven lawsuits that were launched after a landmark U.S. Supreme Court decision that invalidated parts of Myriad's patents related to genes known as BRCA1 and BRCA2, the mutation of which is linked to a high risk of breast and ovarian cancers. The company is in settlement talks on the remaining two lawsuits, according to a regulatory filing.
The companies that have settled with Myriad continue to sell tests of the so-called BRCA1 and BRCA2 gene tests in competition with Myriad, according to their websites and spokespersons.
In addition, Myriad said that CEO and President Peter Meldrum has announced his retirement and will be replaced by Mark C. Capone, president of the company's largest wholly owned subsidiary, Myriad Genetic Laboratories Inc.
The company's shares fell 9 percent on Wednesday, the day after it announced lower earnings and reduced its financial forecast for the rest of its fiscal year.
In January, Myriad settled five lawsuits among seven, most of which it initiated after the companies announced they were entering the BRCA testing market with products of their own.
Those actions followed a June 2013 Supreme Court decision that held that parts of Myriad patents related to genetic material isolated from their location in the body are not eligible for patents. The decision stemmed from a lawsuit led by the American Civil Liberties Union, which argued that genes were not eligible for patents because they are products of nature, not human invention.
The month after the Supreme Court ruling, Myriad sued Ambry Genetics of Aliso Viejo, Calif., in federal court in Utah after it announced it was offering testing that competes with Myriad's. Myriad claimed that Ambry was infringing on its patents that remained intact after the ruling, while Ambry said the decision meant other Myriad patents also were invalid.
The Ambry suit was followed by those against other companies and by two actions filed by others against Myriad in other courts.
U.S. District Judge Robert Shelby in March of last year denied Myriad's motion for a preliminary injunction against Ambry, ruling the Utah company was unlikely to prevail on patent claims that he ruled were based on genetic materials or processes that are not eligible for protection.
Shelby's decision was upheld in December by the U.S. Court of Appeals for the Federal Circuit in Washington, D.C. Myriad and Laboratory Corp. of America Holdings filed a stipulation for dismissal six days later and four others followed in short order.
A spokesman for Myriad said that the parties had agreed not to make public statements.
But Ramji Srinivasan, CEO of Counsyl Inc. of South San Francisco that settled a lawsuit with Myriad, said in a statement that his company will continue to offer the gene cancer test.
"We're pleased this lawsuit has been fully resolved and will continue to focus on our work to make actionable health information affordable, understandable and accessible to everyone," Srinivasan said.
The ACLU, which filed friend of the court briefs in the lawsuits, also hailed the settlements.
"Patients who need access to life-changing genetic testing should not be caught in the legal battle that Myriad Genetics has unfairly waged against competing laboratories, nor should scientists face the threat and cost of patent litigation," Sandra Park, attorney with the ACLU's Women's Rights Project, said in a statement. "Myriad's decision reinforces the basic principle that patents should never permit one company to lock up a product of nature, such as our own genetic information."
Myriad Genetics has dominated commercial testing of the BRCA1 and BRCA2 genes since it and others discovered their exact location in the 1990s and then filed for patent protections.
With the price of the testing kits at around $3,500, Myriad has earned about $2 billion in revenue from the sale of the tests, according to court documents. In its fiscal second quarter that ended Dec. 31, 89 percent of the company's revenues came from testing genes for cancer risks.
But the Supreme Court decision and now the settlements of most the recent lawsuits have opened up the area for competition. One other factor in the settlements is that Myriad's patents begin to expire this year.
On Tuesday, the company reported second fiscal quarter revenues of $184.4 million, down from $204.1 million in the same period of last year. The decline was due primarily to a one-time spike in revenue in 2014 because of publicity over actress Angelina Jolie's decision to undergo a double mastectomy following tests that showed she carried a BRCA gene mutation, the company said.
The company lowered its revenue projections for the rest of the fiscal year by about $70 million but Meldrum said those predictions were not related to an expected decrease in revenues from its genetic tests.
On Tuesday, Meldrum told financial analysts that the market for testing of hereditary cancers is growing.
"We feel that we have retained the vast majority of that market and have not seen serial additional market share loss in that segment," he said, according to a transcript.
With its history of genetic testing, Myriad also has the advantage of having a large database that it uses to analyze its test results.
Meldrum has been at Myriad for 24 years. When he fully retires on June 30, the company agreed to pay him nearly $1.3 million, according to a regulatory filing.
Capone, 52, has been at Myriad for 13 years. He previously was at Eli Lilly and Co. for 17 years. He will receive an annual base salary of $800,000 and will be eligible to receive a bonus of up to 100 percent of his base salary, a filing shows.