Iridian Asset Management's 13G filing: Some significant changes (Part 2 of 17)

(Continued from Part 1)

In its 13G filing in January, Iridian Asset Management increased its position in Myriad Genetics, Inc. (MYGN). According to the 13G filing, the fund now owns 3,978,504 shares in Myriad Genetics. This represents a minor increase compared to its earlier position of 3,577,703 shares. The fund also reported that it holds a 5.5% passive stake in the company.

Myriad Genetics (MYGN) is a formidable player involved in molecular diagnostics. The company aims to make a difference in the lives of patients by discovering and commercializing transformative tests. These tests assess a person’s risk for developing diseases.

After a disease is diagnosed, the company guides the patient’s decision to treat the disease and assesses the risk of the diseases’s recurrence and progression.

The strategic directives of Myriad Genetics involve introducing new products and expanding globally.

Myriad Genetics recently outlined its business strategy in a corporate presentation. Its strategy includes diversifying its product portfolio, expanding its hereditary cancer market, and increasing its global presence.

The company features a wide range of highly effective health care solutions, as statistics revealed in the company’s recent presentation. Myriad stated that although 80% of prostate cancer patients don’t require radiation therapy or surgery, close to 90% of them undergo treatment and risk unpleasant side effects.

Myriad’s Prolaris test helps close to 45% of patients make treatment decisions and saves $6 billion over a period of a decade. The test has a $2 billion potential global market.

On a similar note, Myriad’s myPath molecular diagnostic test tends to accurately identify melanoma, a type of skin cancer. The test helps avoid misdiagnosis by accurately differentiating between benign moles and melanoma. Reportedly, there’s a $1 billion global market for myPath.

The fiscal year for Myriad Genetics (MYGN) ends on June 30, 2015. The company reported a total fiscal first quarter revenue of $168.8 million. This was down 17% compared to the $202.5 million reported during the same period in the previous year.

This decline in revenue can be attributed primarily to the revenue benefit the company received during the fiscal first quarter of 2014. This revenue benefit came from celebrity publicity, share loss arising from competition, and an increase in work-in-progress in regard to constraints in the capacity for the myRisk process. Myriad’s myRisk tests certain genes for links to cancer.

Myriad Genetics has been demonstrating a healthy financial performance. The company has a compound annual growth rate of 25% for revenue and 30% for adjusted EPS (earnings per share) between fiscal years 2011 and 2014, thus delivering superior returns to shareholders.

Myriad Genetics (MYGN) sells its products in more than 80 countries. It experiences strong revenue growth from its diagnostic tests such as Prolaris, Tumor BRACAnalysis CDx, Endopredict, and myRisk. The company may have an important opportunity with Lynparza that’s pending approval in Europe where the market is estimated to be $8 billion.

As evidenced in the above graph, there’s a strong global market, potentially $18 billion, for the company’s products.

According to its 13G filing, Iridian Asset Management didn’t initiate any new positions.

The fund increased its holdings in the following companies:

• Myriad Genetics, Inc. (MYGN)
• Service Corporation International/US (SCI)
• Avis Budget Group, Inc. (CAR)
• Omnicare, Inc. (OCR)
• Halozyme Therapeutics Inc. (HALO)
• Theravance Inc. (THRX)
• AOL Inc. (AOL)
• Lexmark International, Inc. (LXK)
• The Valspar Corporation (VAL)
• W.R. Grace and Company (GRA)
• Sealed Air Corp. (SEE)
• Pitney Bowes Inc. (PBI)
• Graphic Packaging Holding Company (GPK)
• SemGroup Corporation (SEMG)

A significant aspect of the fund’s 13G filings is that Iridian Asset Management dropped the following two key positions:

• Dresser-Rand Group, Inc. (DRC)
• Wyndham Worldwide Corporation (WYN)

In the next part of this series, we’ll analyze Iridian Asset Management’s position in Service Corporation International/US (SCI).

Continue to Part 3

Browse this series on Market Realist:

• Part 1 - Highlights of Iridian Asset Management’s holdings: 13G filing
• Part 3 - Service Corporation International gets slight increase in Iridian
• Part 4 - Iridian boosts holding in Avis Budget Group by 43%