TRENTON, N.J. — Shares of diagnostic test maker Myriad Genetics Inc. surged and then dove Thursday after the Supreme Court handed the company a partial victory in a battle over the validity of patents underlying its lucrative test for genes linked to high risk of breast and ovarian cancer.
The ruling likely will eventually benefit rivals, as well as doctors and patients wanting to determine the best course of treatment.
Myriad, based in Salt Lake City, sells a popular test for the BRCA 1 and BRCA 2 genes linked to hereditary risk of breast and ovarian cancer — the only test currently available because of its patents. They were challenged by a scientists group, leading to the Supreme Court's review, even though the U.S. Patent and Trademark Office has been awarding patents on human genes for almost 30 years.
The high court ruled that genes naturally found in the body cannot be patented, but that synthetically created genetic material, called complementary or cDNA, can be patented. Patents enable inventors to prevent others from making, using or selling a novel device or process they've created.
While Myriad said the ruling will preserve its revenue from the test, other experts said it will open the door for competing tests and for scientists to do gene-related disease research without restraints.
The complexity of the ruling and its impact apparently confused investors, who initially drove the stock up more than 10 percent to a four-year high of $38.27 and then sold off shares furiously. By the end of regular trading, Myriad shares dropped $1.91, or 5.6 percent, to $32.01. Trading volume was about 15 times the daily average of 1.1 million shares.
Myriad's general counsel, Rick Marsh, told The Associated Press in an interview that the ruling invalidates only five Myriad patent claims, which involve isolated bits of naturally occurring DNA. That's out of more than 500 separate claims in 24 patents the company holds for its BRACAnalysis test, launched in 1996 and used by more than a million women so far.
"The balance of our patent estate is still valid and enforceable," Marsh said. "We are very pleased with the outcome," which ends four years of litigation.
He said the court's ruling upholds Myriad's "method" patent claims, those detailing specific processes for testing patients' genes for their cancer susceptibility, as well as ones covering cDNA. That is the synthetic DNA — created to look like the natural DNA at issue — that Myriad uses in its testing of patient samples.
Marsh said the ruling is not expected to decrease revenues for sales of the BRACAnalysis test, its top seller.
Jeffrey Rosenfeld, a researcher and assistant professor at the University of Medicine and Dentistry of New Jersey, said the ruling is good news for researchers, who now will be able to sequence genes to try to better understand diseases and to create new treatments — without fear of being sued by companies such as Myriad.
Rosenfeld said diagnostic testing companies now could sequence genes — determining the exact order of genetic material — linked to breast cancer or other diseases. Companies then could use the information to develop diagnostic tests that use different methods than Myriad's. Likewise, he said, "scientists can now research freely without fear of being sued."
Erik Gordon, an analyst and professor at University of Michigan's Ross School of Business, said Myriad still retains its "extremely valuable" patents on its testing method.
"It will take a while for anyone to duplicate the tests without infringing them," Gordon wrote in an email.
Les Funtleyder, health care strategist at private equity fund Poliwogg, said the ruling will benefit drugmakers in the long run.
"It will allow more tests to percolate up from research, especially in light of the progress being made in personalized medicine," he said.
For some cancers and other diseases, patient treatments are starting to be individualized based on their genes and how they affect which medicine works best.
"Most drugs are going to have a (diagnostic) test eventually," to determine if a medicine will help a particular patient or not, Funtleyder said.