In a November 9 research note, Healthcare & Medical Technologies
Analyst Jeffrey S. Cohen of Ladenburg Thalmann & Co. Inc. stated
that advanced medical genetics company Invitae Corp. (NVTA:NYSE) announced Q3/21 financial results on November 8, 2021.
Invitae reported that in Q3/21 revenue totaled $114.4 million, which represents a 66% increase over Q3/20. The firm indicated that this included $111.7 million from test revenue and $2.7 million in other revenue.
The company also supplied a breakdown of revenue by product type and listed that in Q3/21, Data and Platform contributed $10.0 million, Rare Disease accounted for $15.0 million, Women's Health brought in $21.0 million and Oncology generated $69.0 million.
The firm listed in the news release that billable volume in Q3/21 increased by 89% year-over-year to 296,000.
According to Invitae, Q3 operations often experience seasonality issues, which were exacerbated this year due to COVID-19 disruptions. The reported that in Q3/21, average selling price (ASP) decreased to $377, versus $388 during Q2/21. The firm noted that the $11 decrease in ASP was primarily due to changes in the product mix, most notably greater testing in women's health and international sales. The company added that the average cost per test was $249.
The firm mentioned that R&D expenses in Q3/21 rose 46% y-o-y to $75 million due to costs associated with acquisitions, staffing and program collaborations. The company advised that its non-GAAP gross margin in the latest quarter was 36% and said that this will be a key area of focus going forward as the company expands.
During Q3/21, Invitae posted a net loss of $198.2 million, or a net loss per share of $0.91 and stated that at the end of Q3/21 it held $1.3 billion in cash on its balance sheet.
Ladenburg Thalmann advised that Invitae lowered the ranges for its FY/21 revenue estimates to $450-475 million, from previous guidance of $475-$500 million. The analyst noted that revised estimates represent annual y-o-y revenue growth of 60-70%. Ladenburg Thalmann stated that its forecasts call for Q4/21 revenue of $131.6 million and FY/21 revenue of $465.9 million.
The analyst discussed some of the specific business updates and clinical developments at the company and stated that the data the firm presented at a recent international conference "demonstrated that genetic findings informed clinical management changes, such as alterations to antiseizure medication, led to improved seizure control in epilepsy patients as reported by nearly 50% of the patients and 75% of patients had a change in clinical management within three months of receiving test results."
The report noted that Professor Charles Swanton of UCL and the Francis Crick Institute presented new data from the TRACERx lung cancer research collaboration to the International Society of Liquid Biopsy Congress. Prior data demonstrated that "monitoring of cancer circulating tumor DNA based minimal residual disease detected relapse of non-small cell lung cancer nearly three years earlier than traditional imaging surveillance." The analyst commented that "the new data presented further validates the importance and overall value of liquid biopsy as a minimally invasive mechanism of detecting disease."
The research firm stated that it believes Invitae Corp. should be valued based upon multiples of future revenue similar to the way other firms in the biotech and medical technology sectors are valued. As a result, Ladenburg Thalmann advised that it has adjusted the company's valuation metrics to be more in-line with its peers. The firm said that utilizing a multiple of 11.5x FY/24 revenue and applying a discount rate of 11%, it arrived at a value of $55.00/share for the company. While the price target is $3.00/share lower than its prior estimate of $58.00, it is still significantly higher than current stock price.
Ladenburg Thalmann & Co. has a "Buy" rating and $55.00 per share price target for Invitae Corp. The company's shares trade on the New York Stock Exchange under the ticker symbol "NVTA" and last closed for trading at $21.86/share on Wednesday, November 10, 2021.
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Disclosures for Ladenburg Thalmann & Co., Invitae Corp., Nov. 8, 2021.
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