Invitae, the genetic testing company that reaped more than $100 million in its IPO last year, today announced an expansion of the diseases covered by its diagnostic assays beyond the cancer tests that have been delivering the bulk of its revenues.
The Invitae tests now cover more than a thousand genes—-a mid-year goal the company says it reached ahead of time by one financial quarter. The new genetic tests are designed to help doctors pinpoint ailments among patients that are caused, at least in part, by the genes they inherited. The illnesses range from immune system disorders to neuromuscular defects, and rare diseases that can be detected in newborns.
The San Francisco company’s announcement drew some encouragement from the market, with its shares (NYSE: [[ticker:NVTA]]) rising by more than 7 percent to $9.64 by the close of trading. The value of Invitae’s shares, however, is still down by nearly 40 percent from their $16 offering price in the IPO in February 2015.
Invitae is vying in a developing market with competitors including 23andMe and sequencing giant Illumina (NASDAQ: [[ticker:ILMN]]). And genetic tests can be a tough sell to insurance companies, who look for a clear clinical benefit such as a treatment for patients once they are diagnosed.
Invitae was founded in 2012 as a spinoff of Redwood City, CA-based Genomic Health (NASDAQ: [[ticker:GHDX]]), with that company’s then-board member Randy Scott (pictured above) as co-founder and first CEO. The young company took advantage of big drops in the price of gene sequencing, and gleaned information from a growing public database of genetic risks, to create test panels for inherited diseases. Its initial aim was to create a single assay that would detect any of 1,500 known genetic disorders, but it began in 2013 by offering a test that covered 150 of them.
With its new catalog of assays, Invitae is now testing for more than 30 neurological conditions including various forms of muscular dystrophy. Its pediatric tests are designed to help doctors diagnose children who test positive for metabolic disorders based on the initial public health screening of millions of U.S. newborns every year. Those screening tests are based on findings of abnormal levels of certain compounds in the blood. Invitae’s DNA-based tests may confirm the tentative diagnosis, removing uncertainties that can delay treatment, the company says.
The new genetic testing options for children also cover skin disorders, sex determination, immune system deficiencies, and rare illnesses including Batten disease, a neurodegenerative disorder.
Invitae allows doctors to customize their test panels to narrow down their hunt for the causes behind a patient’s illness. The company’s aim is to make its tests accessible through modest pricing. Tests generally cost $1,500, but the price can be lower for institutions under contract with Invitae, or for patients who lack medical insurance. Invitae is also trying to minimize the cost per test to make low pricing possible.
According to its financial reports, Invitae took in $8.4 million in revenues and recorded a net loss of $89.8 million, or $3.18 per share, in 2015. It increased its number of billable tests from 3,600 in 2014 to 19,000 in 2015. The scale-up plans for 2016 include a target of as many as 70,000 billable tests covering 3,000 genes.
In an interview with Xconomy’s national biotech editor Alex Lash late last year, CEO Scott said the proceeds from Invitae’s testing business could end up being a loss leader for business lines with higher profit potential, based on its growing database of genetic information from many thousands of individuals.
Those business lines could include storing genomic data for individuals and providing them with genetic counseling on health issues; offering doctors instruction on the genetic causes of disease—-or providing drug companies with access to genetic profiles to help them recruit clinical trial subjects. The latter strategy has already been pursued by 23andMe, which offers low-priced DNA sequencing to consumers. Invitae is looking at mechanisms to split profits with individuals who agree to allow their genetic information to be shared with third parties, Scott told Lash.
