Supreme Court Rules Against Myriad Genetics, Shares Soar

Michael Teague |

SCOTUSTo understand Thursday’s Supreme Court ruling in the Association for Molecular Pathology vs. Myriad Genetics case, it helps to have an idea of how the Court has traditionally approached the subject of patenting when it comes to naturally occurring phenomena.

The highest court in the land has long held that inventors, scientists, and the like who discover phenomena that already exist in nature, or who similarly discover a law of nature, are not thereby entitled to exclusive rights to that discovery. The reasoning for this is that natural substances and laws are the very material with which scientists work in order to make the discoveries that save and improve lives, and thus to give a monopoly to one entity would prohibit others from interpreting the same phenomena in different, potentially better or more effective ways.

The Myriad Genetics case fits in to this context because the Salt Lake City, Utah biotech firm has been studying DNA mutations indicating hereditary risks for breast and ovarian cancer since 1994. Myriad had isolated two genes, BRCA1 and BRCA2, which are known to play a role in mutations that indicate an increased chance of breast cancer, and had wanted to patent them. It claimed that the mere act of locating, isolating, and extracting these genes from the blood amounted to an invention, and thus it should be allowed to patent BRCA1 & 2.

Not known for his garrulousness, Justice Clarence Thomas wrote the court’s unanimous ruling against Myriad’s assertion, saying “We hold that a naturally occurring DNA segment is a product of nature and not patent eligible merely because it has been isolated,”. Justice Antonin Scalia reinforced Thomas’s argument: “the portion of the DNA isolated from its natural state sought to be patented is identical to that portion of the DNA in its natural state.”

While the wisdom of the court’s ruling may seem like a foregone conclusion, Myriad Genetics’ stock price shot up over 10 percent after the ruling was announced, to a 52-week high of $38.27 per share.

This is because the court also decided that synethetic DNA, or cDNA, can be patented due to the fact that such DNA requires a significant amount of human contrivance in order to create. Justice Thomas said “The lab technician unquestionably creates something new when cDNA is made.”

With money spent on genetic testing set to increase to $25 billion over the next decade, the court’s decision clears the way for other companies and labs to find and isolate genes on which Myriad had until now been preventing research and testing other than its own.

The decision is also consequential for nearly three decades of genetic patent awards that had previously been handed out by the government, but could unleash an explosion of competition that could be extremely beneficial for the biotech industry.

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Companies

Symbol Name Price Change % Volume
MYGN Myriad Genetics Inc. 17.40 0.41 2.41 954,547
SIEN Sientra Inc. 8.23 -0.04 -0.48 68,452

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