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Invitae Q2 Revenues More Than Double

NEW YORK (GenomeWeb) – Invitae reported after the close of the market on Tuesday a 160 percent year-over-year increase in second quarter revenues driven by 139 percent growth in testing volume.

For the three months ended June 30, the company posted $37.3 million in revenue, up 160 percent from $14.3 million in Q2 of 2017, and beating the consensus Wall Street estimate of $31.7 million.

Company executives attributed the strong performance during the quarter to a number of factors, including payment from Medicare for deletion/duplications analysis, improved collections from other third-party payors, and new partnership with institutions and pharmaceutical partners.

"For some time we've been working with Medicare to pay us what they've been regularly paying others, for deletion and duplication analysis for breast and ovarian cancer patients using CPT code 81433," Invitae CFO Shelly Guyer said during an earnings call.. The company received $2.3 million dollars in Q2 from Medicare for this code for tests delivered in 2017.

The company accessioned more than 73,000 samples in Q2 2018, up 139 percent from the year-ago quarter when it accessioned 30,500 samples. Approximately 59,000 samples in Q1 were billable.

"It was encouraging to see numerous accounts beginning to order both oncology and reproductive health tests, and to see a pickup as we enter the Ob-Gyn space," Guyer added. The San Francisco-based firm, which previously focused on genetic testing for inherited adult and pediatric conditions, acquired Good Start and CombiMatrix last year in order to add reproductive health testing to its portfolio. 

Guyer also noted that the company o saw an increase in its international volumes , growth in cardio/neuro/pediatrics testing programs with children's hospitals, and a record number of orders from new accounts.

Average revenue per test was around $500, up from $460 in the first quarter.

The company's average cost per sample was around $280 in the second quarter, flat from the first quarter, and a 19 percent reduction from a $345 average cost per sample in Q2 2017.

"We held [cost of goods sold] flat as we increased production capacity in anticipation of additional volume growth in the second half of the year," Guyer said. Invitae also focused on launching an expanded carrier screening test that analyzes 287 genes associated with serious genetic disorders, instead of on reducing COGS. The company doesn't expect dramatic reductions in COGS going forward because it will introduce new tests and gauge more genes, which will increase medical interpretation costs. 

For the recently completed quarter, Invitae posted a net loss of $31.7 million, or $.47 per share, compared to a net loss of $28.6 million or $.66 per share, in the second quarter of 2017. Analysts, on average, had expected a net loss of $.54 per share.

R&D spending for the quarter increased 40 percent to $15.8 million from $11.3 million, while SG&A expenses climbed 51 percent to $31.1 million from $20.6 million. Invitae ended the quarter with $48.6 million in cash and cash equivalents and $36.6 million in marketable securities.

Based on the strength of its financial performance during Q2, Invitae said it is now expecting annual revenues of between $135 million and $140 million for 2018, from an earlier guidance of more than $130 million.

During the quarter, Invitae also said it would add tumor genomic profiling capabilities to its offerings by integrating Cambridge, Massachusetts-based Kew's CancerPlex sequencing assay, which gauges somatic mutations in 435 genes and includes assessment of tumor mutational burden and microsatellite instability. 

Invitae CEO Sean George didn't detail a regulatory strategy for this test but generally said it was positive that the Centers for Medicare & Medicaid Services had issued national coverage for next-generation sequencing cancer panels with US Food and Drug Administration-approved or -cleared companion diagnostic claims for advanced cancer patients. The national coverage determination was triggered by Foundation Medicine seeking parallel review from FDA and CMS for its FoundationOne CDx test. 

"Very importantly .... we will not be seeking to deploy a combination of the CMS and FDA [parallel review strategy] in an effort to maintain artificially high price floors for information … that could be useful for 15 million new cancer patients each year," George said. Under its current pricing scheme, Invitae charges $1,500 per clinical area to insurers out of network, $950 to institutions and insurers with which it has in-network contracts, and $250 for patients paying out of pocket.

In morning trading, Invitae's shares on the the New York Stock Exchange were up more than 9 percent at $8.80.