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What: Shares of Myriad Genetics (NASDAQ:MYGN), a company focused on developing molecular diagnostic tests, sank as much as 13% after a U.S. court denied a motion to block a rival from selling a competing BRCA gene diagnostic test.

So what: According to the ruling, a Utah court denied Myriad Genetics' attempt to put a temporary stop to rival Ambry Genetics' ability to market its BRCA 1 and BRCA 2 gene tests. These genes are commonly linked to a higher chance of developing breast and/or ovarian cancer in women. Myriad has laid claim to the patents surrounding the BRCA 1 & BRCA 2 genes for years, using those patent claims to protect its BRACAnalysis test from any competitors. However, a Supreme Court ruling in June last year determined that genes which naturally occur in the body aren't patentable, opening up Myriad's test to competitors. In its 8-K filing, Myriad asserts that it believes its patents are valid, and that it anticipates being victorious. Despite that optimism, no trial date has been scheduled as of yet.

Now what: Following Myriad Genetics is like watching a soap opera – just when things begin to calm down a new plot twist enters the picture. As if Myriad didn't have enough ongoing competitive issues, the Centers for Medicare and Medicaid Services recently proposed a nearly 50% reduction in reimbursement rates to its BRACAnalysis test. Although Medicare only makes up a smaller portion of Myriad's total revenue, its BRACAnalysis test made up 69% of total revenue as of the last reported quarter. In other words, Myriad has a lot on the line here.

Ultimately, I'm very excited for the potential of Myriad's prostate cancer diagnostic test, Prolaris, which helps with staging, and feel that as the U.S. population ages the need to offer personalized medical treatment will only further improve the diagnostic landscape. Over the near-term, though, an unclear Medicare reimbursement picture and a bevy of potential competitors makes Myriad a risky investment.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium advisory service. We’re motley! Questioning an investing thesis -- even one of our own -- helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.