Ladies and gentlemen, thank you for standing by, welcome to the Myriad Genetics First Quarter 2009 Financial Earnings Results Call. During the presentation, all participants will be in a listen-only mode. Afterwards, we will conduct a question-and-answer session. [Operator Instructions]. As a reminder, this conference is being recorded, Tuesday, November 4, 2008. I would now like to turn the conference over to Mr. Peter Meldrum, President and CEO. Please go ahead, sir.

Thank you. Good morning and welcome to the Myriad Genetics earnings call for our first fiscal quarter ended September 30, 2008. My name is Peter Meldrum, and I am the President and Chief Executive Officer. I am joined today by Jim Evans, our Chief Financial Officer; Gregory Critchfield, President of Myriad Genetic Laboratories; and Adrian Hobden, President of Myriad Pharmaceuticals. I will begin the discussion this morning with a brief review of the past quarter, and will be followed by Mr. Evans, who will discuss our financial results. Dr. Critchfield will review the company's molecular diagnostic business; and Dr. Hobden will discuss our drug development activities. At the end of the presentation, I will turn the call over to the operator for the question-and-answer period. Please note that some of the information presented here today may contain projections, or other forward-looking statements regarding future events, or the future financial performance of the company. These statements are based on management's current expectations, and the actual results may differ materially and adversely from those expectations for a variety of reasons. We refer you to the documents the company files from time-to-time with the Securities and Exchange Commission, specifically the company's Annual Report on Form 10-K, it's quarterly reports on Form 10-Q, and it's current reports on Form 8-K. These documents identify important risk factors that could cause the actual results to differ materially from those contained in our projections or forward-looking statements. This is an historic quarter in Myriad's history. Our first profitable quarter from operations. Even with a significant investment this quarter in drug development and our Southern direct-to-consumer marketing campaign, the company recorded a net profit of $14.5 million, or $0.32 per share. With this first step into profitability, Myriad has embarked on an exciting new journey of sustained profitability.…

Thank you, Pete. It is my pleasure to present a more detailed look at Myriad's financial results for our first fiscal quarter ended September 30, 2008. Myriad's total revenues for the quarter were $73.6 million as compared to $48.3 million for the same period of the prior year. This significant growth was fueled by the 52% increase year-over-year of molecular diagnostic revenues. Molecular diagnostic revenues for the quarter were $70 million which is an increase of $24 million over the same quarter of our previous fiscal year. This growth is particularly satisfying given the current state of the economy. As Pete mentioned, we have yet to see an economic impact on our revenue growth. Dr. Critchfield will provide you with some interesting statistics later in his call that I believe indicate that Myriad is in an exceedingly strong position to withstand the current economic downturn. Annual product revenues of $70 million for the first fiscal quarter comfortably exceeded the average analyst projections of $67.1 million. Gross margins remain a very attractive 86% for the quarter ended September 30, 2008 as compared to 84% gross margins for quarter ended September 30, 2007. We continue to see opportunities on our horizon that will allow gross margin improvements over the next year or two. Net operating margins for the molecular diagnostic segment climbed to an impressive 46% for the quarter ended September 30, 2008. This result is all the more astounding when you consider that the quarter included $2.3 million of DTC expense. Previously, our best net operating margin for the quarter was 47%, and now has achieved in a quarter without any DTC spend. If one were to remove the DTC spend the net operating margin for our first fiscal quarter will be a record 49.7%. Research and development expenses for the…

Thank you, Jim. It is a great pleasure to speak with you today about our molecular diagnostics business. As Jim and Pete mentioned, our fiscal '09 first quarter molecular diagnostics revenues were $70 million, a new record representing a 52% increase over the same quarter's revenues last year. This revenues growth was also an increase over the 49% revenue growth we reported a year ago. Our operating margin for the quarter one fiscal '09 was a record 46%, compared to 40% for the same quarter one year ago. We are continuing our focus on the growth strategy to increase penetrations in the oncology market, to extend further into women's health market segment and to develop new molecular diagnostic products. We're making excellent progress in all these areas. Given the large market potential for our current molecular diagnostics products, approximately $1.4 billion per year, and the fact that our current products make a real difference in what physicians give for patients. We anticipate significant further growth in our business from these current products. One of the most important elements in our business has been to secure widespread insurance reimbursement for our tests and at the same time minimizing the out of pocket expense that patients pay for our testing. The number of insurance plans that have reimbursement from Myriad's testing is over 2,500. This includes fee-for-service plans, managed care plans, and government insurance programs. We have contracted with most of the major managed care plans and the total of managed care cover lies under contract with Myriad is now more than 130 million individuals. We have received this broad insurance coverage endorsement because our products help insurance companies focus to healthcare resources where they need to be in order to achieve the best outcomes and to help eliminate wasteful spending. Prevention…

Thank you, Greg and good morning. We continue to make good progress with our clinical programs with a with Azixa in melanoma and glioblastom. As you may recall, Azixa is a nanomolar inhibitor and rapidly induces apoptosis in dividing cells. The activity against the broad spectrum of tumor types. Primary brain tumors were especially sensitive with anti-tumor activity in the sub nanomolar range. In our Phase 1 studies, there were several observations, of anti-tumor activity against the number of cancers including melanoma, ovarian and testicular. We also noticed that it disrupts the blood vessels feeding oxygen to the tumors. An observation that we will subsequently able to confirm with detailed studies in mouse xenograft. Azixa has a remarkable ability to cross the blood brain barrier and accumulate in the brain. We have now examined this phenomenon in two animal species and find that Azixa has up to 30 times higher concentrations in the brain and the plasma. Furthermore, the drug is evenly distributed to all parts of the brain. Surprisingly; there have been no observations in animal studies or in our clinical trials CNS toxicity. As a result of these observations, we have concentrated our resources on metastatic melanoma, where there is a very high instance of brain metastases up to 90% of patients by some estimates. And on glioblastoma, where patients have relapsed following surgery, radiation and chemotherapy. We are very encouraged with early results from the clinical studies. For example, one patient who had relapsed after numerous treatments for his brain tumor had become disabled by the time he began treatment with Azixa. After three rounds of treatment with Azixa a total of 20 weeks the patient's tumor had shrunk significantly and he is not able... not only able to walk again but he has gone back to…

Thank you, Adrian. And I will turn it back to the operator for the question-and-answer period. Question And Answer

[Operator Instructions]. Our first question comes from the line of Geoffrey Meacham of JPMorgan. Please proceed with your question.

Hi, this is Matt Roden in for Geoff today, congratulations on the quarter and thanks for taking the questions. First, I was wondering if you could talk a little bit about the South campaign, the DTC and can you tell us, or give us a sense for what inning we are in, in terms of penetration of the market in the South? And then we have a follow-up.

Okay. The campaign in the South began several months ago in the spring with the first phase which was a physician education phase. Now that phase, lasted through the summer. And then we launched a consumer awareness portion of the campaign in the fall in September. So we were early in the campaign at this point of time. Remember a patient needs to go and have a conversation with the doctor. Once they are scheduled for an appointment, they sit down with the physician, go through the risks and then decide to have the test. So it takes a period of months from the time that consumer is aware of the BRACAnalysis as a test for hereditary cancer to going and seeing the doctor before the test is or it takes several months. The South is one of the excellent areas for us to be launching this campaign. One year prior to the campaign we filled in a number of Ob/Gyn sales reps in the South that were there on the ground meeting with physicians and preparing for the campaign that launched a year later.

Great. And then the follow-up is along with that in terms of the marketing spend that goes with driving the sales in the South, can you tell us where we are in terms of what we... the sustainability of the operating margin that we saw in the 46% this quarter?

Yes, the expense that we would expect to see in this next quarter should roughly be equal to what we saw in our first fiscal quarter. Maybe a tad bit higher up to the $3 million range but I do believe that we should be able to see our operating margins continue at the levels that we were able to reach in the first quarter.

Great. But I think... that the DTC started in size in September, does that imply that we didn't get a full quarters spend on the DTC reflective in the first quarter?

No, not really, we end up paying for quite a bit of the expense prior to the actual running of the ads. And so what we'll see is a little bit more like I mentioned in this current quarter than what we experienced last quarter. But if we look at how the spend went last year, we actually completed the spend pretty much by the end of the December quarter, and had minimal spend in the first calendar quarter, even though the campaign continued it through March and so I think we should see fairly consistent spend in this current quarter.

Okay, thanks a lot.

Our next question comes from the line of Michael Yee of RBC Capital Markets. Please proceed with your question.

Great, thanks and congratulation on the good quarter as well. My question, I guess regarding the Northeast campaign or at least the Northeast region, can you better characterize for us the pull through in terms of order flow that you saw on the quarter and kind of compare to the prior quarter and then I have a follow up.

Yes, let me make sure I understand your question Michael. We had pull through of all of our tests, as you may know in the physician aware and the physician education portion on the campaign. Doctors are taught how to evaluate patients for all hereditary cancer products that Myriad has. The campaign focuses on BRACAnalysis. What we saw is that Ob/Gyns were ordering a large number of other tests in addition to the BRACAnalysis test when the campaign ran. So we are seeing the same quality, the picture now in the South that we saw in the Northeast.

So it's definitely falling through on the additional products as well?

Yes it is.

Okay. And then follow-up in terms of margins, where do you think these operating margins can go to and over what timeframe and what do you think about the imprint leverage there?

As I look forward I think that we should be able to continue to see improvements both on the gross margin level as well the net operating margins and I could see them working up to at least 50% levels over time. It will depend on our ability to integrate new technologies into the lab. We continue to evaluate the DTC spend to see if we are getting the return that we are hoping to see through those efforts or if it makes sense to make our marketing investments in other areas. But through the determination of how we are going to progress with our marketing and sales efforts and what we are able to do in improving the process is in the lab should drive improvements to that operating margin.

Great, thanks guys. Operator:Our next question comes from the line of Annabel Samimy of UBS. Please proceed with your question. Analyst:Hi, this is Stacy [ph] in for Annabel, thanks for taking the question. Back to the Northeast campaign or the Southern campaign, what are the differences between this campaign versus the one you performed in the Northeast? I mean anything from for what you are doing versus what you are also seeing?

Great question. First of all the campaign itself is substantially similar to what we did in the Northeast. It focuses on women with a strong family or personal history of breast or ovarian cancer. And it looks that they need to have a conversation with the doctor. That part of the campaign is unchanged. What we are seeing though is there is greater uptake among physician practice groups and among network health systems, who are very involved now to see the value of this campaign and many of them are conducting their own activities to try and make consumers in their regions aware of the importance of following through and where they can get their hereditary risk assessment with our products. So we see that as a salient difference in the two areas. The other thing that's important to note is that as each year goes by, there's greater awareness among the public of the value of genetic testing, there's greater awareness among physicians of the value of these tests. And so we expect that to also have a positive impact as we move forward.

Thank you.

Our next question comes from the line of Charles Duncan of JMP Securities. Please proceed with your question.

hanks guys for taking the question, and congratulations on a very nice quarter. I had a question regarding the sustainability of the PM product demand, given the current economy. I think I saw the added cover on the out of pocket expense $54 or so on average seems pretty low to me, lower than I had anticipated. Can you give me some additional color with regard to perhaps the percentage of patients that are fully reimbursed for the task, and is that changing as perhaps a mix of patients changes slightly from one of currently diagnosed to perhaps those patients that come from the gynecologist?

Thank you, Charles. As Greg mentioned 96% of our revenues are paid by insurance. So the out of pocket cost to patients is very small, and as Greg mentioned, it's about $55 per patient. We also don't get a lot of pushback from insurers, in terms of the price of the task. In fact, if you look at last quarter, our average reimbursement was about 92% of list price. So we do offer a small discount to insurers for the... the volumes that they give us, but we really don't discount our tests heavily. And I think in large a part that's the cost benefit, the value of the test in terms of managing a patient's healthcare and assisting the physician and the patient to better prevent or delay the onset of their cancer. And as we mentioned in the earnings call, I think because of the utility of the test, and because of the very low out of pocket to the patient. We really have seen no impact whatsoever given the current economic environment on our revenues. In fact, as Greg mentioned we have really never seen stronger revenue growth here certainly in the quarter for this second fiscal quarter ending December 31st. So we are very excited about the test that Myriad offers and anticipate a very strong year.

Thanks Pete. And question do you feel that you have some pricing flexibility, it seems like you do and then regarding the gross strategy going forward, any additional color on the type of the next test and the timing of the next test that you anticipate being able to launch?

The Company has a very strong pipeline of seven or eight products under development, several of those are predictive medicine products, a number are personalized medicine products. Now the company's goal is to launch at least one new molecular diagnostic product each year for the foreseeable future. And we do anticipate launching an additional product before the end of this calendar year. That product will be in the oncology sector and we're very exited about the potential of not only that product but all of the products in our product pipeline.

Thanks Pete for the added color. Operator:Our next question comes from the line of Kevin DeGeeter of Oppenheimer. Please proceed with you questions. Analyst:Hi, good morning guys, this is actually Chris Walter [ph] in for Kevin. Just a question on the DTC campaign, you mentioned that you are still seeing some spill over from some of the other products, in terms of the increase you are seeing in growth, just wondering maybe if you can quantify the growth of some of those other products, and maybe talk about some of the drivers of growth?

As I mentioned on the call, all five of our products in the predictive medicine arena exceeded our historical annual compound growth rate of 45%. So everything that Myriad offers exceeded that growth rate. Our strongest product are fastest growing product was COLARIS. It had an exceptional quarter and our second fastest growing product was TheraGuide 5-FU, but even our flagship product BRACAnalysis exceeded that 45% historical growth rate. So we really are seeing across the board very strong uptake in demand for all of Myriad's products.

Great thanks a lot for taking that question.

Our next question comes from the line of Alastair Mackay of GARP Research Group. Please proceed with your question.

I am wondering with the three ongoing Azixa adaptive trials can you say what the enrolments looks like right now and if not a more general question is if you could describe when it is that you see the data and as the patients progress through the trial?

Yes, we haven't discussed the enrolment numbers at the moment. In terms of your question, second question the trial is an open label trial. So we obviously see the data on the patients that they go as they go through the trial. But from a point of view of analysis, we are limited by certain period even though it's an adapted design. So we can adjust to you know get a positive result in the patient and to call it good and do an analysis both the statistical significance we have to have a certain number of patients enrolled in each of the study before we can do the analysis and decide whether we should we achieve success or we need put more patients and or we don't have response. And so we have defined once during the trial. We have yet to do one of those analysis.

Okay thanks. And then changing gears a bit, I wonder if on the genetic analysis side, you could give us any insight into the possible transitions from seeing your sequencing to any of the different variants of NextGen sequencing as it relates to the five nucleic acid tests?

Yes, as you know Myriad conducts capillary sequencing, as this is a highly optimized system in our hands. A very automated and of course is a major contributor to the gross profit margins and the profitability of the business. But we continue to look at new generation, next generation sequencing technologies. It's a very high bar for them to replace our current platform. We have a very focused and very dedicated internal technology development group it looks at those and at some point in time, it will make sense for us to transition over to newer generation sequencing platforms, right now the current platform performs extremely well, the... this is the highest sensitivity, highest specificity genetic test available of this kind anywhere in the world and we're very pleased with the performance of the current technologies. But we will continue to look and at the right time, when it makes an improvement, and is beneficial for the company, we would move forward to another platform.

Okay, thanks very much. Operator:Our next question comes from the line of William Ho of Banc of America. Please proceed with your question. A:William T. Ho: Banc of America Securities: Hi, guys, thanks for taking my question. Congratulations on the quarter again, just to get a little additional clarity with respect to, I guess the risks concerning I guess reimbursement and the current macro economic environment, should unemployment pick up a littler bit from where we're at, how much elasticity is there in the market and how much do you think it could potentially I guess impact sales as well is there any ability to have a price increase at this time?

Thank you, Will. We don't formally announce price increases but I will confirm that the company did have a price increase effective September 1st. The company will increase the prices of its products as you are aware of from time-to-time and we recently had a price increase. So we wouldn't anticipate another price increase for some time. Also as I mentioned there is such a strong cost benefit argument, we get very strong support from insurers both HMOs, private insurers and Medicare, Medicaid. So that insurance coverage is very much in place, and very supportive of our test. Myriad's test are somewhat unique, generally when you develop a new drug or a new healthcare product, you'd cost to healthcare system money. And various products actually save the healthcare system money. For a $3,000 test, you can identify patients who have a heightened risk for cancer, and then take preventive action to actually prevent the disease, and save hundreds of thousands of dollars treating that patient over the rest of their lifetime. So the arguments for testing using Myriad's products are very strong. You do raise a good point, and that is in this weak economic environment, there have been a substantial number of individuals who've lost their job. We wouldn't anticipate to see that impact however for some time. Traditionally, most of those individuals will remain on Cobra, and keep their insurance for about 18 months. So as we mentioned in this call, we haven't seen any negative impact whatsoever due to the current economic downturn on demand for our products or revenues. And that's not only last quarter which we just reported but end of this quarter, ending December 31st as well. And given the availability of Cobra, I wouldn't think we would see in this fiscal year a significant impact given the current recessionary environment. A:William T. Ho: Great, thanks Pete. Congratulations once again.

Thank you.

Our next question is a follow-up from the line of Charles Duncan of JMP Securities. Please proceed with your question.

Hi guys. Thanks for taking the follow-up. I had a question regarding the business model, kind of strategic moves that you recently announced. Really nice profitability this quarter, the achievement have been, has that changed your perspective, next steps and can you give us some update on the incremental progress and perhaps time lines?

Thank you, Charles. The company is 100% committed toward the separation of the molecular diagnostic core business from our pharmaceutical opportunity and feels it's the best way to grow our pharmaceutical business and our molecular diagnostic business is as too independent and completely separate organizations. So the company is moving forward with spinning off the pharmaceutical business from our core molecular diagnostic business. The fact of this was a very successful quarter, does not impact our decision at all. We do feel that it's in the best interest of both businesses and our shareholders that the company very aggressively move forward and implementing the spin-off transaction. I'm pleased to report that I think we are ahead of schedule in terms of the various items that we need to undertake to accomplish the separation of these two businesses. And I feel very confident that we'll be able to achieve a separation of the molecular diagnostic and pharmaceutical businesses in the first half of next year.

Okay, thanks Pete.

Ladies and gentlemen we have now reached the end of our allotted time for the question-and-answer session. I will now turn the call back over to Mr. Meldrum.

Thank you. And thank you for everyone for attending the Myriad Genetics earnings call for our first fiscal quarter of 2009. And we appreciate your continued support and the interest in Myriad. And this does end the conference call. Thank you.

Ladies and gentlemen, that does conclude our conference call for today. We thank you for your participation. And ask that you now please disconnect your lines. .