NEW YORK (GenomeWeb) – Invitae reported Tuesday after the close of the market that it generated $4 million in first quarter revenues, a more than threefold increase from revenues of $1.2 million in Q1 2015.
Its revenues, however, fell short of the consensus Wall Street estimate of $4.4 million.
The company grew its test volume by 300 percent year over year, billing 9,700 reports and accessioning around 10,000 samples. The company estimates it will deliver between 50,000 and 70,000 test results in 2016.
Invitae said that it reduced its cost of goods sold from less than $700 per sample to approximately $600 per sample accessioned. The company is aiming to reduce COGS to $500 per sample by year end.
As the genomic testing market expands rapidly in the coming years, "a key driving force will be rapid cost reductions," Sean George, Invitae president and chief operating officer, said during an earnings call. "As scale across existing infrastructure plays a large role in reducing COGS, we continue to invest in our ability to reduce costs in sample preparation, sequencing, and most importantly, medical interpretation, which quickly becomes the driving factor at the volume and breadth of disease areas we now cover."
Invitae's net loss for the first quarter was $25.6 million, or $.80 per share, compared to $18.6 million, or $1.09 per share, in Q1 2015. Invitae used about 32 million shares to calculate its net loss in the first quarter compared to 17 million shares in Q1 2015. The average analysts' estimate was for a loss per share of $.76.
Its R&D spending rose 26 percent to $10.7 million from $8.5 million in the year-ago period, while its SG&A costs also grew during the quarter to $12.6 million from $8.2 million in Q1 2015.
The company said it achieved its mid-year goal of testing for more than 1,000 genes by adding new genes to panels for neurology, pediatrics, and rare diseases, as well as launching a service that complements newborn screening for metabolic and immunological conditions. Invitae said that it now assesses genes for more than 30 neurological disorders, more than 60 pediatric conditions and rare diseases, and more than 50 metabolic conditions that affect newborns.
The company reported that it has 30 sales representatives and more than 70 institutional customers. During the quarter, Invitae also signed agreements with several regional Blue Cross Blue Shield affiliates, which extends coverage for patients in five states and those with a Federal Employee Plan. "We're averaging above $1,000 [in reimbursement] in the contracts that we've just signed," Invitae CEO Randy Scott said during the earnings call.
Invitae has a pricing scheme under which its tests are $1,500 per indication when they are out of network. For the institutions and payors with which Invitae has contracts and which bring Invitae in network, the price per test indication is $950. The price is $475 for patients whose doctors have ordered tests online and who pay out of pocket.
"Our first message to payors is simply, 'Bring us into network where we think we can compete very favorably,'" Scott said. "Our second part of the message is that, 'If you're paying more than $2,000 for any genetic panel, not just in hereditary cancer, but across all of neurology, cardiology, then you're substantially overpaying.'"
In April, Invitae announced that its multi-gene tests for hereditary breast cancer-related disorders began receiving Medicare payments using CPT code 81432. The interim payment rate is $622.53, but Invitae has proposed a price of $950.
Invitae competes with Myriad Genetics and a number of other companies in the hereditary cancer testing space. Myriad has indicated that reimbursement for its 25-gene myRisk Hereditary Cancer test panel will not be impacted by the pricing of CPT code 81432 because it has arrangements with payors that allow it to bill with codes for its legacy tests.
Wells Fargo analyst Tim Evans estimated that Myriad is reimbursed more than $2,500 for myRisk.
"While conventional wisdom is that price is not a large factor, healthcare like any other industry, is a market for goods and services, and price matters," George said. "It is in no way the only driver, and in no way is healthcare an efficient market, but in addition to quality meeting and exceeding the standard of care, and a comprehensive offering, price is a very important factor."
Invitae ended the quarter with $27.3 million in cash and cash equivalents, $4.8 million in restricted cash, and $76.6 million in marketable securities.