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Invitae Q2 Revenues Grow Six-Fold

NEW YORK (GenomeWeb) – Invitae reported Thursday after the close of the market that it generated $1.8 million in second quarter revenues, a six-fold increase from $301,000 in Q2 2014.

Invitae's revenues beat the consensus Wall Street estimate of $1.7 million.

The company billed 4,400 reports during the quarter, marking a 90 percent sequential growth from the first quarter of this year. The company said it had attained more than 4,600 samples in the second quarter.

Invitae's net loss for the second quarter was $24.3 million, or $.76 per share, compared to a net loss of $10.5 million, or $12.81 per share, in Q2 2014. The average analysts' estimate was for a loss per share of $.55.

Invitae used 31.8 million shares to calculate its net loss for Q2 2015 compared to 822,558 shares for Q2 2014. The firm went public in February.

Its R&D spending more than doubled to $11.8 million from $5.1 million in the year-ago period, and its SG&A costs also grew during the quarter to $10.2 million from $4.8 million.

The company said it accelerated its R&D programs to expand its testing content to more than 500 genes in the second half of the year. The company is hoping to test for an additional 500 genes by middle of 2016.

"We’re now moving into a new chapter for the company, focused on the path to profitability," Invitae CEO Randy Scott said in a statement. "We believe our investment in scaling up our production — and especially our medical interpretation capabilities — will enable us to deliver more than 1,000 genes for under $1,000 per indication in the first half of 2016."

During a call with investors, Scott highlighted data the company had published from a 1,000-patient study in the Journal of Molecular Diagnostics demonstrating that Invitae’s next-generation DNA sequencing platform had 100 percent analytical concordance and 99.8 percent clinical concordance compared to tests from competitor Myriad Genetics. "We believe this data will have a significant impact on both adoption and reimbursement of Invitae's tests," Scott said.

One of Scott's goals for the first half of the year was to make in-roads with payors, and he said he met with more than a dozen medical directors during that time. "They always start out skeptical and by the end of the conversations they really begin to understand that we're fundamentally focused on driving down prices and treating them like a true customer," he said.

Scott added that the company will embrace prior authorization schemes and work with payors around utilization management. "A couple of payors mentioned to me that at these prices we don’t worry as much about utilization management as we have in the past with multi-thousand-dollar priced tests and stacked [CPT] codes that sometimes get into the tens of thousands of dollars," he noted.

In May, Invitae announced new pricing schemes for its tests that took effect June 1. For third-party payors where Invitae is out of network, the tests costs $1,500 per indication. For institutions and payors with which Invitae has contracts and which bring Invitae in network, the price per test indication is $950. Patients whose doctors have ordered tests online and who have decided to pay out of pocket pay $475.

Invitae's strategy is to offer payors "replacement tests at a lower cost." The fact that Inviate is ramping up its test menu to 1,000 genes for under $1,000 will also help land in-network contracts, company executives said, noting that payors don't seem to want to ink deals with niche labs.

In the first quarter, Invitae expanded its test catalog to include four new cancer-related genes, including full sequencing of CHEK2, a gene associated with increased cancer risk. The company also introduced a new hereditary high-risk gynecologic panel. These new offerings helped grow test volume in the second quarter, said Lisa Alderson, Invitae's chief commercial officer.

By introducing the $475 price point for its tests, Invitae is hoping to penetrate the patient self-pay market. Concurrently, the company has also launched a patient-focused website and enhanced consent and recontact options. "We believe every patient should own and control [his or her] own genetic information," Alderson said. "We believe these efforts will enable us to drive volume from patient pay markets over time."

COO Sean George also noted on the call that the firm's PMS2 copy number detection testing capability is in the final validation stages and will become available in the coming weeks.

The company raised its guidance for billable tests delivered in 2015 to between 16,000 and18,000, up from its previous projection of between 14,000 and 17,000 billable tests delivered.

Invitae ended the quarter with $47.5 million in cash and cash equivalents, and $123.4 million in marketable securities.

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