Invitae (NVTA) recently hit a new all-time high; I believe that this company is on track to be the "Amazon of genetic testing" — the clear winner in a winner-take-most industry, suggests biotech expert Michael Murphy, editor of New World Investor.
The company's potential market is the 3.5 billion people on the planet who can afford genetic testing, which is likely to transition to a lifetime subscription model over the next decade (think Amazon Prime for your health).
Invitae, as you know, is the leader in germline genetic testing, which checks a person’s DNA for genetic mutations, including those that may increase their lifetime risk of developing cancers and other diseases. People are born with germline genetic mutations that are present in every cell in their body.
Invitae is acquiring ArcherDX, which is the leader in somatic genetic testing, which looks at a sample of a patient’s tumor to find specific genetic and protein changes that are unique to the cancer cells.
Somatic mutations happen after someone is born and can occur in any cell in someone’s body except eggs or sperm. This information can help determine their best treatment options.
The National Comprehensive Cancer Network now recommends all patients undergo both germline testing and somatic testing. If Invitae finds that someone has a germline variant that is potentially pathogenic, their inherited gene profile will determine their personal use of somatic testing and health monitoring.
If ArcherDX finds a pathogenic variant in a somatic test, that person will have their inherited genes mapped by Invitae so their doctor can give them advice on minimizing the risk of disease and life-long monitoring. If new treatments are developed, Invitae will be able to match them to all the patients in their database.
Invitae combined with ArcherDX is an unstoppable force. For now, our buy limit on NVTA is $40 — for a first target of $80. We caution that the primary risk would be if a competitor starts taking significant market share.
