A Second Look: Myriad Genetics

Shares of Myriad Genetics bounced back Tuesday after a tumble the day before on the biotechnology company's announcement that it will stop development of the Alzheimer's disease treatment Flurizan.

Myriad shares rose $3.21, or 7.1 percent, Tuesday to $48.74. The stock fell 5 percent Monday after Salt Lake City-based company said it would end development of its late-stage drug candidate Flurizan. The drug failed to improve the condition of patients in a study.

In fiscal 2008, the company spent about $60 million on Flurizan development and an additional $8 million in expenses are expected to wrap up the program. Myriad said ending the Flurizan program will reduce research and development spending and help the company achieve profitability in its fiscal year ending June 30, 2009.

The company is still developing Azixa as a treatment for various cancers, Vivecon for HIV, MPC-2130 for blood cancers and MPC-0920 to treat thrombosis, a clot in a blood vessel.

Wall Street was mostly expecting the Flurizan program to fail and several analysts have been touting the rest of the company's molecular diagnostics business as the key to its growth. The molecular diagnostics unit includes products used for assessing breast, ovarian and other cancer risks, among other conditions.

On Tuesday, though, Canaccord Adams analyst Neil Maruoka reaffirmed a "Sell" rating for the company, citing long-term growth concerns.

"We continue to see excellent near-term revenue growth from the molecular diagnostics business; however, we believe long-term growth for this segment could be below Wall Street estimates," he said in a note to investors.

He also lowered his price target to $40 from $41.50.

A Myriad spokesperson could not be immediately reached for comment.