Diagnostics Stocks Are Relatively Calm After Patent News: But Patents Still Matter

The Supreme Court Ruling threw out two process patents on diagnostic tests because they were based on the laws of nature and that they were merely telling doctors of a new scientific discovery.In the WSJ article some expressed big concerns:

“Michael R. Samardzija, an intellectual-property lawyer at Bracewell & Giuliani, who has represented diagnostic test makers and MD Anderson Cancer Center in Houston, “It’s a major shift and will have profound effects on personalized medicine, and makes it a lot more difficult for diagnostic-test makers to claim their new products are patent-eligible”.

The Biotechnology Industry Organization expressed  “surprise and disappointment” in the ruling. “We are concerned that it introduces new and confusing concepts into the traditional body of patent law,” the group said in a statement. Oral arguments in the case appeared to go well for Prometheus, while the Obama administration had urged the court to adopt a position that was largely favorable to medical-testing companies.”

As of 2p trading Dx and Tools stocks showed little overall reaction with NASDAQ up 0.21%. Myriad Genetics (MYGN $23.39) , the focus stock of the patent issue is down 3.95% on higher than normal volume.The stock has fully recovered from past downdrafts from their patent concerns and the stock is near its 2 year high.

Although diagnostics tools and diagnostics stocks have not participated in the biotech bull market as dramatically as biopharmaceuticals,they are still doing well YTD. Today stocks we track in the sector are relatively flat with two losers: Cepheid (CPHD $41.30) down 1.64%, and Sequenom (SQNM $3.95) down 1.86% and one winner Orasure (OSUR $11) up 3.77%. Since the article expressed concern about personalized medicine as a trend you would expect more volatility but Genomic Health (GHDX $30.52)  a molecular diagnostic Company focused in personalized treatment for cancer is up 0.63%.

Back to biopharma a clinical  stage immunotherapy Company Galena(GALE $2.66) announced a patent allowance yesterday and the stock rocketed up 36% today.The Company was formerly known as RXi Pharmaceuticals and changed its name on Sep 26 when it merged and separated into two companies one with the RNAi focus and Galena that had the cancer immunotherapy clinical pipeline and Neuvax, a targeted cancer therapy.

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