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Invitae's Q4 Revenues Increase Nearly Threefold

This article has been updated with information and quotes from Invitae's Q4 earnings call.

NEW YORK (GenomeWeb) – Invitae reported after the close of the market Monday a nearly threefold year-over-year increase in fourth quarter revenues.

For the three months ended Dec. 31, 2016 Invitae reported $9.2 million in fourth quarter revenues, compared to $3.2 million in the year-ago period, beating the consensus Wall Street estimate of $8.8 million. Quarterly revenues benefitted from consistent payment from Medicare for cancer patients and included "catch up payments" to adjust for increased pricing, the firm said.

The Centers for Medicare & Medicaid Services priced Invitae's next-generation sequencing test for hereditary breast cancer-related disorders at $925, an amount the company was pleased with when CMS announced it in September, since it was pushing for a price of $950. Previously, CMS had proposed a price of $623.

"With the progress we made with payers in 2016, the last question marks on our business model have been removed, and we are on track to generate positive cash flow by end of 2018," said Invitae CEO Sean George in a statement.

Invitae grew its test volume in Q4 by 186 percent year over year, delivering approximately 20,000 billable reports and accessioning more than 20,500 samples, it said, adding that the value of billable reports in the quarter came to $22.6 million. "We view this figure as a way to keep an eye on the overall value of our business and as annualized growth," George said during an earnings conference call on Monday.

The company reduced its cost of goods sold per sample accessioned from $700 in Q4 2015 to around $400 in Q4 2016, marking a 43 percent decrease.

Invitae's net loss for the quarter was $24.8 million, or $.69 per share, compared to a net loss of $24.4 million, or $.76 per share, in Q4 2015. The average analysts' estimate was for a loss per share of $.73.

Its R&D spending in Q4 was $11.8 million, up around 4 percent from $11.4 million in the year-ago period. Meanwhile, Invitae's SG&A costs grew 34 percent year over year to $14.2 million from $10.6 million.

For full-year 2016, Invitae reported revenues of $25.0 million compared to $8.4 million in 2015, and beat analysts' consensus estimate of $24.7 million.

The firm grew its test volume by nearly 200 percent compared to 2015, delivering 57,000 billable reports and accessioning around 59,000 samples. Approximately, 80 percent of Invitae's test volume was in cancer, with hereditary breast and ovarian cancer comprising the majority of those indications. Previously, Invitae had projected that it would deliver between 50,000 and 70,000 test results in 2016.

During the year, the company also doubled the size of its genetic testing platform, compared to the previous year, and now gauges more than 1,100 genes. The company also launched a number of new test panels in 2016 for hereditary cancer, cardiovascular, neuromuscular, pediatric, and other rare disorders, and inked various reimbursement deals.

Its net loss in 2016 came in at $100.3 million, or $3.02 per share, compared to a net loss of $89.8 million, or $3.18 per share, in 2015. Analysts, on average, had expected a net loss of $3.08 per share.

Its R&D costs were $44.6 million in 2016 compared to $42.8 million in 2015, while its SG&A spending rose to $52.7 million in 2016 from $38.5 million in 2015.

Invitae ended the year with $66.8 million in cash and cash equivalents and $25.8 million in marketable securities.

Invitae's payment scheme — $1,500 per indication when institutions are out of network, $950 when institutions and payors are in network, and $475 for patients paying out of pocket — has helped the company to become in-network with an increasing number of payors, company executives said during the call.

George noted that payors often inform in-network partners "who's ordering what and from whom, and where volume would like to be directed." He noted that this is helping Invitae direct and target its sales force.

Invitae had 35 sales representatives active in the market in Q4, and this past January, the company nearly doubled the size of its active sales force. A small targeted sales team is focusing on securing contracts with children's hospitals, which will be a key customer base for Invitae's 20,000-gene medical exome test, which the company will launch by end of the first quarter this year.

Invitae CMO Robert Nussbaum said during the call that the company will introduce exome testing as a tool to help diagnose complex disorders. In these cases, exome testing has helped end diagnostic odysseys between 25 percent and 40 percent of the time. Moreover, "there are some payers who are reimbursing now for exomes because they realized both the clinical and economic value of bringing this odyssey to a close," he said.

The company aims to double its testing volume this year and accession between 110,000 and 120,000 samples. Invitae also projects revenues of between $55 million and $65 million in 2017.

Invitae's shares rose around 7 percent to $9.86 in Tuesday morning trading on the Nasdaq.