Following completion of a spin-off of its drug-development business, the Myriad Genetics diagnostics group plans to spend some of its large cash reserves on product acquisitions, CEO Peter Meldrum said Oct. 21 during a call announcing the company separation.

On Oct. 20, Myriad's board authorized management to proceed with preparations to spin off its research and drug development unit from its core molecular diagnostics business and form two independent companies. Salt Lake City-based Myriad announced in August that it was considering strategic alternatives after its late-stage Alzheimer's candidate Flurizan (tarenflurbil), partnered with Danish drug maker H. Lundbeck, failed in Phase III (¹ Also see "Myriad Weighs Strategic Alternatives" - Pink Sheet, 20 August, 2008.).

The molecular diagnostics business will continue to operate under the name Myriad Genetics, while the research and drug-development business will operate under the name Myriad Pharmaceuticals.

"Myriad is fortunate in this challenging economic environment to have a very strong balance sheet and a very strong cash position," Meldrum said, noting the firm had over $400 million in cash as of June 30. "Our research analysts project that the company will be profitable this year and generate substantial cash on top of that. So this enables us to spin off the pharmaceutical business, provide them with enough cash for them to move forward and achieve their goals, and yet retain a substantial cash position back at the parent company."

Once the spin-off is complete, the companies will operate entirely independent of one another, Meldrum said, with no collaborative agreements or arrangements between them.

The firm achieved profitability for the first time in fiscal 2008, but the Flurizan failure pointed up the high cost of drug development and compelled the company to separate so it could focus more on the rapidly growing diagnostics business, which generated sales of $222.9 million last fiscal year, up 53 percent.

Myriad's key assays include BRACAnalysis for hereditary breast and ovarian cancer; Colaris for hereditary nonpolyposis colon and endometrial cancer; Colaris AP for adenomatous polyposis syndromes, which causes colorectal polyps and cancer; Melaris for hereditary melanoma and pancreatic cancer; and TheraGuide 5-FU for assessing the risk of toxicity due to 5-FU/capecitabine-based chemotherapy.

Opportunity for good deals in tough times

In light of Myriad's strong cash position, the firm has ramped up its business development activities, and has a "very active group internally working on developing products for us" in addition to anticipating a future pipeline that is based, in part, on acquired products.

"Because of the challenging economic times, there are a number of companies that are running out of cash and it's difficult to access the financial markets; this creates a very exciting opportunity for Myriad Genetics to acquire products at an attractive price from these companies," Meldrum noted.

Completion of the proposed spin-off is subject to a number of conditions, Myriad says, including the "filing and effectiveness of a Form 10 with the Securities and Exchange Commission, obtaining solvency and adequate capital surplus opinions, and, if the spin-off can be effected on a tax-free basis, receiving an independent opinion from Myriad's tax advisors that the stock distribution should be tax-free to the company and its shareholders." The SEC Form 10 filing is expected by next June, Myriad says.

Myriad Pharmaceuticals will focus on cancer and infectious diseases

Myriad Pharmaceuticals will retain about 200 employees to pursue research opportunities in cancer and infectious diseases. The firm currently has four candidates in the clinic.

Azixa (MPC-6827), a novel small-molecule that acts as a cytotoxin and a vascular disrupting agent, is in Phase II studies testing it in combination with carboplatin against recurring/relapsing glioblastoma multiforme and with temozolomide against metastatic melanoma of the brain.

Vivecon (MPC-9055), a small-molecule maturation inhibitor, is being developed as a first-in-class oral HIV treatment. It is in Phase I studies.

Also in Phase I, MPC-2130, a broad-acting inducer of apoptosis, is being developed for treatment of advanced metastatic tumors or blood cancers, as well as refractory cancers resistant to multiple other therapies. It is in early clinical studies against blood cancers.

And, MPC-0920, a new chemical entity, is in a Phase I trial testing its antithrombin activity. The firm plans to develop it as a treatment for deep-vein thrombosis and prevention of thromboembolic stroke in chronic atrial fibrillation.

-Ingrid Mezo (i.mezo@elsevier.com)

[Editor's note: This story appears courtesy of the editorial staff of ² 'The Gray Sheet,' your source for coverage of devices and diagnostics. For a sample copy, call customer service at 800-332-2181.]

Newly Independent Myriad Diagnostics Will Pursue Product Acquisitions

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