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Invitae Q4 2017 Revenues Grow 170 Percent

NEW YORK (GenomeWeb) – Invitae reported after the close of the market Monday that its fourth quarter 2017 revenues increased more than 170 percent from the prior year.

For the three months ended Dec. 31, 2017, Invitae reported $25.4 million in fourth quarter revenues compared to $9.2 million in Q4 2016, beating the consensus Wall Street estimate of $24.6 million. Invitae's base business contributed $19.4 million to the quarter's revenues, while recently acquired Good Start Genetics brought in $4.0 million and CombiMatrix added $2.0 million (factoring in revenue from November after the completion of its acquisition). 

Invitae accessioned more than 53,000 samples in Q4 2017, more than double the 20,500 samples it accessioned in Q4 2016. Nearly 44,000 of the accessioned samples in the quarter were from its base business, while Good Start contributed more than 7,600 samples and CombiMatrix brought in nearly 1,600 samples.

The company reduced its cost of goods sold per sample accessioned from $400 in Q4 2016 to around $321 in Q4 2017, marking a 19 percent decrease. Invitae's base business reduced its cost of goods sold per sample accessioned to $297, a 25 percent year-over-year decrease.

"As we continue to roll out new content, including the exome test launched last year, and as we finalize integration of Good Start and CombiMatrix, we expect that our [cost of goods sold] may vary quarter to quarter," Invitae CFO Shelly Guyer said during a call to discuss the financial results. "In the near term, we expect to improve COGS through the full integration of Good Start, including the transfer of lab operations to San Francisco currently underway. Looking longer term we have further opportunity to reduce [cost of goods sold] and realize significant synergies in the consolidated business."

Invitae's net loss for the quarter was $40.5 million, or $.78 per share, compared to a net loss of $24.8 million, or $.69 per share, in Q4 2016. The average analysts' estimate was for a loss per share of $.60.

Its R&D spending in Q4 was $13.6 million, up around 15 percent from $11.8 million in the year-ago period. Meanwhile, Invitae's SG&A costs more than doubled year over year to $29.6 million from $14.2 million. For full-year 2017, Invitae reported revenues of $68.2 million compared to $25.0 million in 2016, and beat analysts' consensus estimate of $67.3 million. Full-year revenues for the base business was $60.0 million.

The firm accessioned around 150,000 samples in 2017 compared to 59,000 samples in 2016. The firm's base business accessioned 134,000 samples during the year. Previously, Invitae had projected that it would accession between 120,000 and 130,000 test results in 2017.

Its net loss for 2017 came in at $123.4 million, or $2.65 per share, compared to a net loss of $100.3 million, or $3.02 per share, in 2016. Analysts, on average, had expected a net loss of $2.49 per share.

Its R&D costs were $46.5 million in 2017 compared to $44.6 million in 2016, while its SG&A spending rose to $92.9 million in 2017 from $52.7 million in 2016.

Invitae ended the year with $12.1 million in cash and cash equivalents and $52.6 million in marketable securities.

The company aims to accession at least 250,000 samples in 2018 and generate at least $120 million in revenue.

However, Guyer suggested that these revenue and sample estimates might be conservative. Factors that the company hasn't factored in — such as improvements in third-party payor contracts, the ability to bill Medicare for CPT codes for deletion and duplication analysis in hereditary cancer risk testing, and revenue from new partnerships and patient networks — could end up positively impacting the company's 2018 financials.

In the past year, Invitae inked third-party payor contracts "at an unprecedented rate" with negotiated test prices averaging around $1,000. "Improving the rates of reimbursement continues to be a significant priority for us," Guyer said. "However, much of this process is out of our hands, and therefore we are modeling revenue based on current trends rather than forecasting improvement in reimbursement rates."

Additionally, Invitae hasn't been able to bill the US Centers for Medicare & Medicaid Services for CPT codes for deletions and duplications analysis by its BRCA1/2 and Lynch Syndrome tests. "As this isn't uniformly applied across all [Medicare administrative contractors] or even apparently within our own MAC, we have stepped up efforts to allow billing and reimbursement for [deletion/duplication] analysis, conducted in conjunction with our CMS panel volume," Guyer said. The ability to consistently bill Medicare for deletion/duplication analysis would add $500 per test to Invitae's CMS volume, which accounts for 10 percent of the firm's revenues. 

In Tuesday morning trade on the New York Stock Exchange, shares of Invitae were down 13 percent at $5.45.