The delays allowed the company to continue selling RUOs and gradually launch LDTs in select markets, but IVD launches were pushed to 2023 or later.
This left ArcherDX and Invitae well below their competitors in the competitive liquid biopsy landscape, which spans nearly two dozen companies. Many have or will soon have FDA-approved IVD products, including Guardant Health
(Exact Sciences GH) (NeoGenomics EXAS) (Roche NEO) (Natera and many startups. RHHBY)
It also raises the question of whether the $1.4 billion acquisition is a good fit for Invitae. There is a strong case for offloading the assets.
Why Invitae should divest ArcherDX?
I’d say Invitae’s best way forward is to triple the screening for hereditary cancer. It is already the market leader in volume. By comparison, ArcherDX is unlikely to become a major player in liquid biopsies or PCM at this time. Recent delays could relegate it to one of the bottom feeders.
Meanwhile, Invitae does not have the right commercial infrastructure to achieve success in the liquid biopsy markets. That includes relationships with physicians and commercial payers, as well as the geographic footprint of the facilities. The company is furiously trying to cut funding in 2022 and 2023, so it seems unlikely that the expensive initiative to build out commercial infrastructure will be taken — or just a bad idea.
It’s also worth considering whether ArcherDX’s presence limits the list of potential suitors. Invitae’s strategic hub is likely to be an attempt to acquire itself over the next 36 months.
Many companies could be interested in acquiring the market-leading platform in hereditary cancer screening, assuming the economy improves and the price is right. However, most of them already have liquid biopsy portfolios. Antitrust barriers alone could exclude Exact Sciences, Guardant Health, Roche, Natera, Illumina
(and many others in the competitive landscape. ILMN)
That suggests the best way forward for Invitae is to divest ArcherDX in its entirety. The move could bring in hundreds of millions of dollars in cash, extending the runway to 2025 or later and delaying the need for further stock dilution. Such a transaction would also refocus the company on its core strengths, improving the economy of the overall platform. That would make the company more attractive and reduce the barriers to takeover — probably at a price that wouldn’t be possible otherwise.
Management certainly has their hands full. But as financial conditions tighten and the meme stock mania fades, investors may be looking for an acceptable exit. Offloading ArcherDX would probably offer the best chance of success.