Health insurance giant UnitedHealthcare has agreed to cover Myriad Genetics’ GeneSight depression test, giving a boost to the diagnostic company’s efforts to grow its sales.
In a filing published on Thursday, Myriad said the decision covers the use of GeneSight in patients with major depressive disorder or anxiety who have tried at least one prior line of therapy without success.
- Analysts at Cowen estimate the coverage decision could add up to $75 million to Myriad’s revenues in 2020. The analysts downgraded Myriad’s stock last month, in part because they lacked "conviction in the outlook for broader GeneSight reimbursement coverage."
The UnitedHealthcare decision adds GeneSight to the list of multi-gene panels it will reimburse. From October 1st, the insurer will reimburse providers that order the test, provided the patient has been diagnosed with MDD or anxiety and has tried at least one treatment. While CMS only permits psychiatrists to order the test, UnitedHealthcare will reimburse requests from all providers.
Securing coverage could boost sales of a product Myriad hopes will drive growth. Prior to the news, Cowen forecast that sales of GeneSight would rise 25% next year. Myriad may now beat that forecast.
"Our revenue forecast now seems conservative based on the positive coverage decision by [UnitedHealthcare] and potential read-through to other private payers," analysts at Cowen wrote in a note to investors.
The analysts estimate the UnitedHealthcare decision could add up to $75 million worth of sales in 2020. Myriad could add even more to its top-line if other payers follow UnitedHealthcare’s lead or if the coverage decision causes volume growth to exceed expectations. Shares in Myriad rose 54% following news of the UnitedHealthcare decision.
That investor response reflects the importance of GeneSight coverage to Myriad’s growth plans. Myriad acquired the test in its $225 million takeover of Assurex Health in 2016. At that time, Myriad said the test had a market potential in excess of $4 billion.
But GeneSight has failed to live up to that potential in part because of a lack of payer coverage. Over the first nine months of Myriad’s current financial year, it generated revenues of $82.9 million.
In 2017, the results of a key, 1,300-subject clinical trial raised doubts about whether GeneSight would ever become a major product. Patients assessed with the test statistically performed no better on a depression scale than their counterparts who received standard of care.
UnitedHealthcare referred to the study in its coverage decision, noting the primary outcome "was not different between the two groups." However, other evidence, including the fact "there was significant difference in response and remission," led the payer to decide to cover the test.