The top community questions for tomorrow’s #mARKetUpdate concern our investment thesis around Invitae ($NVTA).
I’m going to begin attaching my references (🔗) below, as well as some of my previous work, to help lay the groundwork for my thoughts tomorrow.
I’m going to begin attaching my references (🔗) below, as well as some of my previous work, to help lay the groundwork for my thoughts tomorrow.
Please keep in mind that I will not be directly comparing companies or stocks. This is not investment advice.
I’m going to be chipping away at this thread over the course of the evening, and I’ll probably be a little slower once college football starts.
(1/N)
Alright, folks, let's get into it. I'll start with a top-down view of genetic testing. Broadly, we think the space is winner-take-most wherein the most ambitious and innovative company should control majority market share over a long enough time frame (5-10 years).
Alright, folks, let's get into it. I'll start with a top-down view of genetic testing. Broadly, we think the space is winner-take-most wherein the most ambitious and innovative company should control majority market share over a long enough time frame (5-10 years).
(2/N)
Genomics is extremely complex. The hubris it takes to believe we're 'there' and have everything figured out is beyond me. To this end, we like when companies invest aggressively in their own innovation, or through strategic M&A, to capitalize on massive opportunities.
Genomics is extremely complex. The hubris it takes to believe we're 'there' and have everything figured out is beyond me. To this end, we like when companies invest aggressively in their own innovation, or through strategic M&A, to capitalize on massive opportunities.
(3/N)
Extending this, we believe genomic testing is NOT commoditized. There are innumerable aspects to be made more accurate, comprehensive, and medically actionable. There are many barriers to the widespread adoption of genomics, not the least of which is cost.
Extending this, we believe genomic testing is NOT commoditized. There are innumerable aspects to be made more accurate, comprehensive, and medically actionable. There are many barriers to the widespread adoption of genomics, not the least of which is cost.
(4/N)
These improvements, which I will outline, are not trivial. While some are highly esoteric (which I will attempt to explain), many of them are (and will be) noticeable to the average person. By improvements, I'm referring to things like turnaround time, VUS resolution, etc.
These improvements, which I will outline, are not trivial. While some are highly esoteric (which I will attempt to explain), many of them are (and will be) noticeable to the average person. By improvements, I'm referring to things like turnaround time, VUS resolution, etc.
(5/N)
A leader in the space, in our view, should invest in technology and return the benefits altruistically to patients, generally in the form of benevolent deflation (i.e. lower prices). This does NOT mean being a loss leader or sacrificing future profitability.
A leader in the space, in our view, should invest in technology and return the benefits altruistically to patients, generally in the form of benevolent deflation (i.e. lower prices). This does NOT mean being a loss leader or sacrificing future profitability.
I'm going to pause and switch to talking about Invitae as it exists today, before the finalization of its acquisition of ArcherDx.
I'll tag the beginning of each tweet with an emoji to denote which topic I'm in.
I'll tag the beginning of each tweet with an emoji to denote which topic I'm in.
(6/N) (Core Hereditary Testing 🧬)
Let's start w/ Invitae's core hereditary disease tests. These panels detect troublesome mutations in your genome to help you know if you're likely to get a disease, currently have a disease, and/or help you doctor know how to better treat you.
Let's start w/ Invitae's core hereditary disease tests. These panels detect troublesome mutations in your genome to help you know if you're likely to get a disease, currently have a disease, and/or help you doctor know how to better treat you.
(7/N/🧬)
Isn't this what the 'ancestry companies' do? NO! I've written about this topic before, so I won't spend time on it again here:
ark-invest.com/analyst-resear…
Isn't this what the 'ancestry companies' do? NO! I've written about this topic before, so I won't spend time on it again here:
ark-invest.com/analyst-resear…
(8/🧬)
In our view, Invitae has the highest quality standard for all of its tests. Companies often base their test results on standards set by the American College of Medical Genetics (ACMG). Invitae decided against this and built Sherloc!
invitae.com/en/variant-cla…
In our view, Invitae has the highest quality standard for all of its tests. Companies often base their test results on standards set by the American College of Medical Genetics (ACMG). Invitae decided against this and built Sherloc!
invitae.com/en/variant-cla…
(9/🧬)
Simply, Sherloc is an AI-powered tool that synthesizes and ranks evidence on how dangerous certain mutations are using criteria that are MORE stringent than the industry standard. This helps them be wrong less often.
nature.com/articles/gim20…
blog.invitae.com/rigorous-repro…
Simply, Sherloc is an AI-powered tool that synthesizes and ranks evidence on how dangerous certain mutations are using criteria that are MORE stringent than the industry standard. This helps them be wrong less often.
nature.com/articles/gim20…
blog.invitae.com/rigorous-repro…
(10/🧬)
Altogether, we think these investments demonstrate Invitae's differentiation on test quality above and beyond an industry standard. While Sherloc was expensive to develop, it gives the company scalable, efficient, and rigorous variant classification.
Moving topics...
Altogether, we think these investments demonstrate Invitae's differentiation on test quality above and beyond an industry standard. While Sherloc was expensive to develop, it gives the company scalable, efficient, and rigorous variant classification.
Moving topics...
(11/N) (Vertical Integration ⏫)
We believe Invitae is the most vertically integrated molecular diagnostics company, giving it more control to lower prices and generate sustainable cashflows without relying on third party vendors.
We believe Invitae is the most vertically integrated molecular diagnostics company, giving it more control to lower prices and generate sustainable cashflows without relying on third party vendors.
(12/⏫)
When discussing Invitae's "cash-burn", many fail to note that Invitae spends more on R&D than any other molecular diagnostics company. We are encouraged by R&D spend because we study where it goes and view it in the context of how massive of an undertaking genomics is.
When discussing Invitae's "cash-burn", many fail to note that Invitae spends more on R&D than any other molecular diagnostics company. We are encouraged by R&D spend because we study where it goes and view it in the context of how massive of an undertaking genomics is.
(13/⏫)
I've already outline Sherloc, so I'll turn next to Jungla, which Invitae acquired and whose technology stock now is embedded into Sherloc. I did a thread on this long ago, but I'll link it here for anyone interested:
I've already outline Sherloc, so I'll turn next to Jungla, which Invitae acquired and whose technology stock now is embedded into Sherloc. I did a thread on this long ago, but I'll link it here for anyone interested:
https://twitter.com/sbarnettARK/status/1194345805953392640
(14/⏫)
Bear with me here while I explain how important Jungla (functional genomics) is.
When you're looking at more of the genome, the likelihood that you find something useful goes up, but the likelihood you find a variant of uncertain significance (VUS) goes up faster.
Bear with me here while I explain how important Jungla (functional genomics) is.
When you're looking at more of the genome, the likelihood that you find something useful goes up, but the likelihood you find a variant of uncertain significance (VUS) goes up faster.
(15/⏫)
VUSs are expensive to resolve and so doctors/genetic counselors have to deal w/ that. Ideally, you want to resolve (collapse to benign or pathogenic) any variant you find.
We think hoarding genomic data and saying that makes you better at resolving VUSs is silly.
VUSs are expensive to resolve and so doctors/genetic counselors have to deal w/ that. Ideally, you want to resolve (collapse to benign or pathogenic) any variant you find.
We think hoarding genomic data and saying that makes you better at resolving VUSs is silly.
(16/⏫)
To resolve a VUS manually (because you didn't build Sherloc), you'd need to recapitulate the variant in a cell line, run petri dishes, wait to analyze the results of various biochemical assays, etc. This is expensive and tedious.
This is what Jungla fixes.
To resolve a VUS manually (because you didn't build Sherloc), you'd need to recapitulate the variant in a cell line, run petri dishes, wait to analyze the results of various biochemical assays, etc. This is expensive and tedious.
This is what Jungla fixes.
(17/⏫)
Jungla uses proprietary machine learning + biophysics to rapidly iterate the physiological repercussions of VUSs. It's a physics engine/training loop that allows Invitae to cost-efficiently give VUSs truth labels.
Jungla uses proprietary machine learning + biophysics to rapidly iterate the physiological repercussions of VUSs. It's a physics engine/training loop that allows Invitae to cost-efficiently give VUSs truth labels.
(18/⏫)
In simpler English, Invitae's vertically-integrated AI-systems, we think, allow it to get the most accurate answers at the lowest price in a way that doesn't rely on data-banks and will get better over time.
blog.invitae.com/new-functional…
In simpler English, Invitae's vertically-integrated AI-systems, we think, allow it to get the most accurate answers at the lowest price in a way that doesn't rely on data-banks and will get better over time.
blog.invitae.com/new-functional…
(19/⏫)
Invitae also understands the importance of genetic counseling being included w/ every test result. They integrated Clear Genetics, which has an industry-leading genetic counseling AI (GIA) to help human GC's prioritize their time.
Invitae also understands the importance of genetic counseling being included w/ every test result. They integrated Clear Genetics, which has an industry-leading genetic counseling AI (GIA) to help human GC's prioritize their time.
(20/⏫)
This allows Invitae to deliver medically-responsible pre/post-test education w/ AI and sort complex cases to actual GC's. GC's are a finite labor source, by not investing in systems like these, we think competitors are falling behind.
ir.invitae.com/news-and-event…
This allows Invitae to deliver medically-responsible pre/post-test education w/ AI and sort complex cases to actual GC's. GC's are a finite labor source, by not investing in systems like these, we think competitors are falling behind.
ir.invitae.com/news-and-event…
🚨 Taking a break now, will be back in a little while.
(21)
I want to continue my discussion of vertical integration because there's so much more to understand at the risk of this becoming a 100-tweet thread.
Let's talk now about the reproductive and women's health business, which currently is really taking off.
I want to continue my discussion of vertical integration because there's so much more to understand at the risk of this becoming a 100-tweet thread.
Let's talk now about the reproductive and women's health business, which currently is really taking off.
(22)
Invitae offers $99 non-invasive prenatal screening (NIPS) through its direct channel, meaning anyone can order regardless of insurance or location. I wrote a thread about why we love Invitae's acquisition of Singular Bio:
Invitae offers $99 non-invasive prenatal screening (NIPS) through its direct channel, meaning anyone can order regardless of insurance or location. I wrote a thread about why we love Invitae's acquisition of Singular Bio:
https://twitter.com/sbarnettARK/status/1295468198561800194
(23)
Simply, the NGS industry wasn't lowering costs fast enough, so Invitae acquired and implemented its own hardware for prenatal testing. To my knowledge, they are the only ones who have done this.
Soon, NIPS could be a 80%+ operating margin business bc of Singular Tech.
Simply, the NGS industry wasn't lowering costs fast enough, so Invitae acquired and implemented its own hardware for prenatal testing. To my knowledge, they are the only ones who have done this.
Soon, NIPS could be a 80%+ operating margin business bc of Singular Tech.
(24)
Single molecule detection isn't just limited to NIPS, it's also useful in liquid biopsy. I won't speculate too much, but we think Singular will play a big role in allowing Invitae to continue to drive costs down within liquid biopsy at breakneck speed.
Single molecule detection isn't just limited to NIPS, it's also useful in liquid biopsy. I won't speculate too much, but we think Singular will play a big role in allowing Invitae to continue to drive costs down within liquid biopsy at breakneck speed.
(25)
I really encourage folks to read through the technology Singular. Invitae's insourcing of 'sequencing' hardware is yet another unique example of its vertical integration strategy.
patents.justia.com/assignee/singu…
I really encourage folks to read through the technology Singular. Invitae's insourcing of 'sequencing' hardware is yet another unique example of its vertical integration strategy.
patents.justia.com/assignee/singu…
(26)
I'm really excited about Invitae's insourcing of its probe production via Archer.
For those who don't know, when you do targeted sequencing of the genome, you need probe molecules to lock on/pull down the target region. Making probes requires synthetic biology.
I'm really excited about Invitae's insourcing of its probe production via Archer.
For those who don't know, when you do targeted sequencing of the genome, you need probe molecules to lock on/pull down the target region. Making probes requires synthetic biology.
(27)
Virtually all companies in the space buy from a handful of probe vendors (e.g. Qiagen, Twist, IDT), but Archer does this in-house for their AMP chemistry. Once integrated, we think it's likely that Invitae will walk away from third party vendors on the synbio front too.
Virtually all companies in the space buy from a handful of probe vendors (e.g. Qiagen, Twist, IDT), but Archer does this in-house for their AMP chemistry. Once integrated, we think it's likely that Invitae will walk away from third party vendors on the synbio front too.
(28)
Let's also mention Diploid (Moon), which is another of Invitae's assets. Moon is an AI-platform that ingests massive amounts of NGS data to surface rare disease diagnoses. Moon was/is the cornerstone AI-engine for Rady Children's Hospital:
radygenomics.org/2019/04/24/rad…
Let's also mention Diploid (Moon), which is another of Invitae's assets. Moon is an AI-platform that ingests massive amounts of NGS data to surface rare disease diagnoses. Moon was/is the cornerstone AI-engine for Rady Children's Hospital:
radygenomics.org/2019/04/24/rad…
(29)
With Moon, Invitae has in-sourced an industry-leading rare disease interpretation engine, which we think it will be able to deploy to neonatal/pediatric intensive care units around the world, proving low-cost, rapid disease diagnostics for sick children.
With Moon, Invitae has in-sourced an industry-leading rare disease interpretation engine, which we think it will be able to deploy to neonatal/pediatric intensive care units around the world, proving low-cost, rapid disease diagnostics for sick children.
(30)
Invitae also brought in-house pharmacogenomic testing and clinical decision support tools. These help doctors better understand drug-drug and genome-drug interactions for patients.
ir.invitae.com/news-and-event…
Invitae also brought in-house pharmacogenomic testing and clinical decision support tools. These help doctors better understand drug-drug and genome-drug interactions for patients.
ir.invitae.com/news-and-event…
(31)
While pharmacogenomics (PGx) has been around for a while, it's not been widely adopted because of cost, visibility, reimbursement, education, etc. All of these things, in our view, Invitae has tackled for years in the core business, so PGx likely can follow suit.
While pharmacogenomics (PGx) has been around for a while, it's not been widely adopted because of cost, visibility, reimbursement, education, etc. All of these things, in our view, Invitae has tackled for years in the core business, so PGx likely can follow suit.
(32)
I'll end my discussion of vertical integration, for now, because I think my point has been made. We believe the company's breadth of services and level of control over key supplies, materials, and software is exemplary and shows no sight of slowing.
I'll end my discussion of vertical integration, for now, because I think my point has been made. We believe the company's breadth of services and level of control over key supplies, materials, and software is exemplary and shows no sight of slowing.
(33) (Breadth of Services ↔️)
We believe Invitae is differentiated not only by its vertically-integrated technology platforms, but also by the breadth and flexibility of its services. Invitae offers diagnostic and proactive testing across dozens of disease areas.
We believe Invitae is differentiated not only by its vertically-integrated technology platforms, but also by the breadth and flexibility of its services. Invitae offers diagnostic and proactive testing across dozens of disease areas.
(34/↔️)
Because of Sherloc and Jungla, Invitae can look at more genes than most competitors, increasing the value of each test while mitigating VUSs (confusing results) at scale. You're guided through the process using a bespoke AI-chat service (GIA).
Because of Sherloc and Jungla, Invitae can look at more genes than most competitors, increasing the value of each test while mitigating VUSs (confusing results) at scale. You're guided through the process using a bespoke AI-chat service (GIA).
(35/↔️)
If you need more help, you get access to human genetic counseling through Invitae's. Also, you can order Invitae's test through its direct channel (in US/Canada, other nations to come), without needing insurance pre-authorization or a doctor's co-pay.
If you need more help, you get access to human genetic counseling through Invitae's. Also, you can order Invitae's test through its direct channel (in US/Canada, other nations to come), without needing insurance pre-authorization or a doctor's co-pay.
(36/↔️)
Keep in mind, all of this costs you $250 out-of-pocket. If you have a VUS, Invitae will sequence blood relatives at no additional cost to resolve such variants. Many of these services, and more, exist in the clinical setting where a doctor orders the test.
Keep in mind, all of this costs you $250 out-of-pocket. If you have a VUS, Invitae will sequence blood relatives at no additional cost to resolve such variants. Many of these services, and more, exist in the clinical setting where a doctor orders the test.
(37/↔️)
To help phenotypic 'truth' data on rare diseases and cancers, Invitae offers free testing that is subsidized by its biopharmaceutical partners and patient advocacy groups. Read about those here:
invitae.com/en/biopharma/
invitae.com/en/clinical-tr…
invitae.com/en/advocacy/
To help phenotypic 'truth' data on rare diseases and cancers, Invitae offers free testing that is subsidized by its biopharmaceutical partners and patient advocacy groups. Read about those here:
invitae.com/en/biopharma/
invitae.com/en/clinical-tr…
invitae.com/en/advocacy/
There's still much, much more to discuss, but I'm going to go celebrate Labor Day and watch football. Stay tuned for a summary on tomorrow's #mARKetUpdate. I'll continue adding to this thread tomorrow. Please ask me questions. I'm happy to elaborate and be challenged. Cheers
Because folks have asked re: 'first-mover sales advantage' by competitors in the liquid biopsy space:
Consider that nearly all of Invitae's active oncology accounts would order Archer's assays, especially because they are aiming for early-stage through late-stage patients.
Consider that nearly all of Invitae's active oncology accounts would order Archer's assays, especially because they are aiming for early-stage through late-stage patients.
Essentially, Invitae's oncology customers may be ready to convert as soon as the offering is launched. Moreover, the offering is both centralized (LDT) AND decentralized (IVD), meaning it can sell into any clinic regardless of budget, size, or location.
This should de-risk commercialization in the near-term, especially if the company pursues CMS's new MCIT reimbursement pathway, which gives national coverage to devices w/ breakthrough designation, which ArcherDx has three of:
https://twitter.com/sbarnettARK/status/1303065449643507714
To those on our webinar, if I don't get a chance to speak, I will continue to update this thread. There's still a lot more to walk through with this company.
Yep, we ran over time today, but that's alright, feel free to ask any and all questions about Invitae and I'll continue adding to my thread soon. Thanks!
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