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Investing in Invitae Corporation (NYSE: NVTA)

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Investing in Invitae Corporation (NYSE: NVTA)

Invitae Corporation (NASDAQ: NVTA) is a biotechnology company that creates genetic testing products for healthcare-related needs. The stated goal of Invitae is to work towards the mainstream adoption of genetic testing into everyday healthcare. Through their research and development, the company has created a product that allows healthcare providers to make better-informed decisions regarding patient care. Their low cost, highly curated, and accurate tests have become one of the most trusted and reliable genetic testing kits on the market today.

What is Invitae Corporation (NVTA)?

Invitae began as a subsidiary of Genomic Health, a genomics company founded in 2000 which focused on the development of cancer detection tests. Invitae was created in 2010 and then spun off into a separate organization in 2012. Since then, the company has grown to 800 employees and committed its resources toward developing affordable, accurate, and accessible genetic testing kits. These tests can be ordered either by doctors working with patients with medical issues or by healthy individuals who may be proactively screening for hereditary conditions. With 1 in 6 healthy adults being at risk for serious health conditions due to genetics, screening is becoming an increasingly important part of healthcare. The company promotes early detection and intervention through their products as a way to encourage lifestyle changes and increase monitoring to prevent more serious health conditions from manifesting later on in life.

To keep costs low, tests are usually curated towards a specific clinical area. For example, screening for a clinical area such as hereditary cancer or heart diseases will cost $250 per test. For those who may require a more holistic screening process, exome testing, which examines the entire genome, is available for $1,250. Invitae’s three main products are their cancer screening kit, their cardio screening kit, and their holistic genetic health screening kit.

Why does Invitae Corporation (NVTA) Matter?

Invitae differentiates itself from competitors in a few important ways. The company has made their tests a part of insurance coverage from many providers, and as a result, costs to consumers are much lower compared to many other testing services. For those who need tests to understand inherited diseases or unexplained symptoms, doctors can place orders for patients online. With an estimated 300 million individuals worldwide having insurance coverage that covers genetic testing from Invitae, the cost savings of using Invitae’s system over competitors are one of the main benefits to potential customers. Aside from pricing, another benefit is their educational portal and availability of genetic counsellors. Available at no extra cost, individuals who have undergone testing can take their results a step further and speak to a professional from within Invitae’s web portal about their results.

With over 1 million patients choosing Invitae for their healthcare needs, the company has aggregated data and developed a framework to identify the addressable market segments based on an individual’s age. The company has grouped patients into four addressable markets. The first addressable market identified is 0-17-year olds, which would see individuals use genetic testing for neonatal testing or to determine causes of developmental delay. The next segment of the addressable market is 18-40-years olds, who may benefit from genetic testing for treatments such as assisted reproduction and perinatal screening. The third segment, 41-65 years olds, may benefit from diagnostic testing that identifies genetic risks for diseases and other diagnostic tests. Finally, the 65+ market is the largest addressable market, estimated to be a $63 billion opportunity worldwide. These individuals may benefit from using genetic testing for things like oncology therapy selection and germline testing.

Invitae Corporation (NVTA) Prospects?

Over the years, the company’s innovations have allowed for costs to continually decrease. In 2015, one sample cost an average of $1,250 to produce. Five years later, the cost has been lowered to $274 a sample. The long term goal of Invitae is to make genetic screening the “standard of care” for health-related issues. To do this, the company made a total of 11 strategic acquisitions totalling over $600 million since inception. Together, these acquisitions have brought decades of experience related to DNA sequencing and analysis to the company. Including this knowledge into Invitae’s portfolio allows for a consistent pipeline of new and innovative ideas, reducing costs of research and speeding up timelines for new products to reach the public.

One major acquisition worth mentioning is the June 2020 deal to acquire ArcherDX, a company specializing in cancer testing. The company owns technology that not only can detect hereditary risks of cancer, but also allows for the ability for cancer patients to screen for any potential genetic issues that would interfere with medicine or other treatment options. This type of understanding is very helpful for pharmaceutical companies conducting clinical trials. ArcherDX will also be able to benefit Invitae by bringing over their existing relationships with big pharmaceutical names such as AstraZeneca and Bayer.  The company estimates that the total addressable market that has been unlocked as a result of this acquisition is around $45 billion.

Where to Buy Invitae Corporation (NVTA) Stocks

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Summary

Invitae is operating in a highly disruptive industry that could transform the way we think about healthcare in a matter of years. New developments are being researched and tested every day that could reduce the risks of serious diseases such as cancer and heart disease. Invitae products are relied upon heavily by both healthcare practitioners working with patients as well as healthy individuals looking to be better informed about their risk factors. As our population continues to age, the necessity of these technologies will only become more important.

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Baggio has been an investor in the technology space for over half a decade. He uses the perspectives gained from his work experience in the private, public, and non-profit sectors to guide his investment strategy, with a specific interest in the potential of emerging disruptive technologies.

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