Quest Introduces Breast-Cancer Gene Test Rivaling Myriad

Quest Diagnostics Inc. (DGX), the biggest U.S. operator of medical labs, will sell a test for two breast cancer genes starting today, providing competition for Myriad Genetics Inc. (MYGN) and potentially helping to reduce costs for women fearful they are at risk of the disease.

Quest will sell the most comprehensive version of its test for the BRCA1 and BRCA2 genes for $2,500, said Richard Bender, a consultant for the Madison, New Jersey-based company. The price compares with almost $3,400 that Medicare pays for the most comprehensive version of a test from Myriad. About 85 percent of the Salt Lake City-based company’s $613.2 million in revenue came from BRCA testing in the fiscal year ended June 30.

Myriad held a U.S. monopoly over the BRCA tests until June, when the U.S. Supreme Court invalidated parts of its gene patents. Immediately afterward, Ambry Genetics Corp. and another closely held company said they were entering the BRCA market. Quest is the largest competitor to move into the field.

Quest’s test “will certainly be comparable to if not better than the data provided by Myriad” in its ability to identify a harmful mutation, Bender said by telephone. “We would suspect the volume is going to be quite considerable.”

Quest declined 1.3 percent to $57.90 at the close in New York. Myriad dropped 2.6 percent to $23.24.

Mutations in the BRCA1 and BRCA2 genes, the most common cause of hereditary breast and ovarian cancer, are present in roughly 1 in 400 women and give women an elevated risk of ovarian cancer as well as a higher breast cancer risk.

Price Drop

Private insurer re-evaluation may drive down the price for Myriad’s BRCA test “by as much as 50 percent over the next two years,” Amit Hazan, an analyst for SunTrust Robinson Humphrey Inc., wrote in an Oct. 10 note to clients. Rivals “can make fairly quick strides to replicate Myriad’s database of mutations within less than two years,” he wrote.

Myriad’s test is particularly vulnerable at academic medical centers and with genetic counselors, “both of which take a dim view of Myriad’s gene patenting tactics,” he wrote.

Quest’s incursion into the BRCA testing market sets up a potential legal battle with Myriad, which has various remaining patents on its tests.

“We feel we offer a test that is the gold standard in quality,” said Ronald Rogers, a Myriad spokesman, in a phone interview. “We have the fastest turnaround time” and “the lowest” rate of returning ambiguous results, he said.

Myriad Lawsuit

In July, Myriad sued Ambry Genetics and another closely held company, saying their competing BRCA tests violate other Myriad patents not affected by the Supreme Court decision. Ambry, in a countersuit filed in August, said Myriad is misusing its patents to “intimidate and chill competition.”

Quest’s test “does not violate any valid BRCA patent that Myriad Genetics may assert,” said Wendy Bost, a Quest spokeswoman, in an e-mail.

Quest said in an Oct. 10 complaint filed in federal court in Santa Ana, California, that it believes Myriad will bring a patent-infringement lawsuit if it starts selling its BRCA test products. The company seeks a court order that it doesn’t infringe the Myriad patents and the relevant patent claims aren’t valid.

“Myriad’s conduct, including Myriad’s litigation history, threatens Quest’s legal rights and ability to market Quest’s BRCA Assay,” Quest said in the complaint. “Quest, as the largest entrant to the BRCA1/BRCA2 genetic testing market since the Supreme Court’s June decision, has specific reason to believe that it will be the target of a patent infringement lawsuit from Myriad.”

Myriad has not yet been served with Quest’s complaint, said Rogers. “Once we receive that we will read through it and weigh our options,” he said.

Quest’s tests will return results within 14 days using next-generation sequencing technologies, Bender said.

To contact the reporter on this story: Robert Langreth in New York at rlangreth@bloomberg.net

To contact the editor responsible for this story: Reg Gale at rgale5@bloomberg.net

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