Shares of Invitae rose more than 25% this week, a sharp rise after Cathie Wood of Ark Invest named the company one of its most undervalued shares in a CNBC interview on Monday.
Invitae was from Thursday the 11th largest stake in Wood’s flagship fund, the Ark Innovation ETF (ARKK), which carries a weight greater than well-known companies such as DocuSign and PayPal.
The fine-tuned investor and her firm are known for their strategy of investing in ‘disruptive innovation’, and a good performance last year led to billions of new dollars flowing into Ark’s family of funds.
In a CNBC interview on Friday, the CEO of Invitae set out the mission of the genetic testing industry and long-term goals, thus providing insight into why Wood is strong on his prospects.
“Genetic information is fundamental to improving people’s healthcare outcomes and lowering costs, and we are relentlessly striving for the idea of getting the information into general medical care, which is used daily,” said Sean George. He co-founded the San Francisco firm in 2010 and it was announced in 2015.
Invitae showed annual revenue of $ 279.6 million in 2020, compared to $ 216.8 million in the previous year. Its net loss increased last year to $ 608.9 million, compared to $ 242 million in 2019.
While genetic information can be a powerful tool in combating various diseases, George said that high costs have historically limited its availability, and also the impact it can have. However, he said recent innovations on gene sequencing have laid the groundwork for more accessibility. He compared it to semiconductor enhancements that helped kick-start the computer and networking industry in the 1970s and early 80s.
‘It has … enabled us to change application providers like us that in the past were fundamentally a rationed healthcare system – genetic information, kind of a niche, test-by-test, sample-by-sample laboratory industry – to something that looks a lot more like an information industry, ‘George said.
George, who holds a Ph.D. in molecular genetics, Invitae said its tests will get to the point that patients and doctors can use it proactively in large numbers. That way, even if the cost of each test is cheaper, Invitae will have the scale to generate enough operating cash to thrive as a company, he said.
“The great importance and paramount importance of genetic information in healthcare is about to – I am sure in the next five to ten years – about to emerge as an ability to get the right treatment sooner for individuals which can benefit, identify people at risk, and put in place monitoring and prevention methods to certainly delay, and even prevent, the onset of disease, and usually provide a core understanding of the risk to families, he added.
Ark Invest holds positions in a range of companies that work beyond Invitae on medical innovation. Wood’s firm has an ETF dedicated to it called the Genomic Revolution ETF (ARKG). As of Thursday, it includes Teladoc, Regeneron Pharmaceuticals and CRISPR Therapeutics. Invitae is also in the fund, currently the 16th largest stock.
Shares of Invitae closed Friday’s session up 0.5% at $ 42.70. Despite the stock’s big gains this week, it remains below the high of $ 61.59 on December 14, which rose on December 14. It has risen almost 260% in the last 12 months.