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Shares of Invitae rose more than 25% this week, a sharp rise that came after Cathie Wood of Ark Invest called the company one of its most underrated stocks in an interview with CNBC Monday.
Invitae was the 11th largest holding in Wood’s flagship fund, Ark Innovation ETF (ARKK), as of Thursday, giving it more weight than better-known companies like DocuSign and PayPal.
The closely watched investor and his firm are known for their investment strategy around ‘disruptive innovation’, and a strong performance last year has sparked billions of dollars in Ark’s family of funds. .
In an interview with CNBC on Friday, the CEO of Invitae explained the mission and long-term goals of the genetic testing company, offering insight into why Wood is optimistic about his prospects.
“Genetic information is of fundamental importance in improving people’s health care outcomes and reducing costs, and we are relentlessly pursuing the idea of integrating this information into mainstream medical care, for everyday use,” Sean George said on “Closing Bell”. He co-founded the San Francisco-based company in 2010, and it went public in 2015.
Invitae reported annual revenue of $ 279.6 million in 2020, up from $ 216.8 million the year before. His net loss widened to $ 608.9 million last year, from $ 242 million in 2019.
While genetic information can be a powerful tool in the fight against various diseases, George said high costs have historically limited its availability and, by extension, the impact it can have. However, he said, recent innovations in gene sequencing have laid the groundwork for greater accessibility. He compared it to the semiconductor improvements helping revive the computing and networking industry in the 1970s and early 1980s.
“It has allowed … application vendors like us … to change what has been fundamentally in the past a rationed good in health care – genetic information, sort of in a niche, test by test, sample by sample, lab industry set up – something much more like an information industry, ”said George.
George, who has a doctorate. in molecular genetics, said Invitae hopes to get its tests to the point where patients and doctors can proactively use them in large numbers. That way, even though the cost of each test is cheaper, Invitae will have the scale needed to generate enough operating cash flow to thrive as a business, he said.
“The massive importance and central importance of genetic information in healthcare is about to – I’m sure in the next five to ten years – is about to become a central feature as that ability to offer the right treatment earlier to those who may benefit from it, identify those at risk and put in place surveillance and prevention modalities to certainly delay, if not prevent, the onset of the disease and generally provide an understanding basic risks that run in families, ”he added.
Ark Invest has positions in many companies working on medical innovation beyond Invitae. Wood’s company has a dedicated ETF called Genomic Revolution ETF (ARKG). As of Thursday, it includes Teladoc, Regeneron Pharmaceuticals and CRISPR Therapeutics. Invitae is also part of this fund, which is currently its 16th largest holding.
Shares of Invitae closed Friday’s session down 0.5% at $ 42.70. Despite the stock’s big gains this week, it remains below its all-time high of $ 61.59 on December 14. It has increased by almost 260% in the past 12 months.
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