What is Invitae's core value proposition to the medical market?

Invitae aims to bring genetic information into mainstream medical practice by solving the issues of high cost and fragmentation. According to Slide 5, they provide 'comprehensive content across all disease areas' with 'open and transparent pricing below $1,000.' This contrasts with the existing market where quality is variable and prices for complex tests can reach tens of thousands of dollars with months-long turnaround times.

How does Invitae justify the market size for genetic testing?

Slide 4 argues that 'rare' genetic conditions are common in the aggregate. It notes that 5-10% of all cancers likely have a hereditary basis, and ~100% of people are carriers for mutations that could cause severe illness in offspring if the other parent carries the same mutation. By totaling these segments—including cardiology, neurology, and pharmacogenetics—they argue the market affects 'everyone.'

What evidence of operational efficiency does the deck provide?

The deck provides specific unit economics on Slide 16. It tracks the 'COGS per sample' declining from $1,250 in Q1 2015 to $612 in Q1 2016. Simultaneously, it shows the volume of billable reports increasing from 2,200 to 9,700 in the same period, demonstrating that the company is successfully leveraging economies of scale to drive down the cost of sequencing.

What is the long-term vision beyond just selling lab tests?

Slide 22 outlines a three-phase business model. While Phase 1 is 'Genetic Testing' (high volume, low price), the long-term goal is Phase 3: the 'Genome Network.' This involves sharing genetic information on a global scale to advance clinical outcomes and 'monetizing networks for permission-based sharing of genetic information,' suggesting a transition into a data-platform company.

Invitae Pitch Deck Teardown: Scaling Genomic Data Through

Invitae’s May 2016 investor overview serves as a strategic roadmap for moving genetic information into mainstream medicine. The company identifies a massive market opportunity where 'rare' genetic conditions are common in the aggregate, affecting virtually everyone through carrier status or pharmacogenetics. By aggressively lowering costs—reducing COGS per sample from $1,250 in Q1 2015 to $612 in Q1 2016—and expanding their test menu to over 1,000 genes, Invitae demonstrated a classic flywheel effect. The deck emphasizes clinical validity, citing 100% analytical concordance for BRCA testing,…

Key takeaways

Invitae positions genetic testing as a multi-billion dollar industry that is currently fragmented and prohibitively expensive (Slide 5).
The company achieved a 51% reduction in COGS per sample in just one year, dropping from $1,250 in Q1 2015 to $612 in Q1 2016 (Slide 16).
Growth in billable reports is highly correlated with sales force expansion, moving from 0 reps and 229 reports in 2013 to 21 reps and over 19,000 reports in 2015 (Slide 13).
Clinical validity is a core pillar, with the company claiming 100% analytical concordance and 99.8% clinical concordance for BRCA testing in a 1,000-patient study (Slide 10).
The business model is built on three phases: Genetic Testing, Genome Management, and finally, a Genome Network for monetizing data sharing (Slide 22).
Invitae uses transparent pricing below $1,000 to disrupt a market where complex tests previously cost tens of thousands of dollars (Slide 5).
The 'flywheel for future growth' relies on attracting partners and lowering costs to drive volume, which in turn allows for further price reductions and content expansion (Slide 28).
Gross margin per sample showed a steady upward trend toward break-even, improving from approximately -$700 in Q1 2015 to roughly -$200 by Q1 2016 (Slide 19).

Executive Summary: The Industrialization of Genomics

The May 2016 Invitae Investor Overview is a masterclass in presenting a disruption strategy for a complex scientific market. At the time of this deck, genetic testing was largely the domain of specialized, high-cost laboratories with proprietary hold over specific genes (most notably Myriad Genetics and the BRCA genes). Invitae’s deck outlines a transition from this 'boutique' model to an 'industrial' model where genetic information is a commodity used to build a massive data network. The deck is heavy on execution metrics, showing a clear correlation between sales headcount, test volume, and declining cost of goods sold (COGS).

Slide 1: Title Slide

The deck opens with the title 'INVITAE: Bringing genetic information into mainstream medical practice.' The background is a collage of diverse human faces, reinforcing the message that genetics is not just for the 'rare disease' community but for the general population. It is dated May 2016, placing it in a period of rapid expansion for the company.

Slide 4: The Aggregate Market Opportunity

Invitae makes a compelling case for market size by reframing 'rare' diseases. Slide 4 breaks down genetic prevalence across several categories: Hereditary cancer (~5-10%), Pediatric genetics (~2%), and Preventive (~2-5%). Most significantly, it claims that ~100% of the population are carriers for mutations and ~100% are affected by pharmacogenetics (how genes affect drug response). The takeaway is that while individual conditions are rare, the need for genetic testing is universal.

Slide 5: Industry Fragmentation vs. Invitae’s Solution

This slide sets up the 'Enemy.' The current state of genetic testing is described as 'highly fragmented, inefficient, and prohibitively expensive,' citing 55,208 different assays across 673 laboratories. Invitae positions itself as the 'one-stop online ordering' solution with 'transparent pricing below $1,000.' This is a classic platform play: consolidate a fragmented market by offering a superior user experience and lower price point.

Slide 10: Clinical Validation and Quality

In the medical field, low cost often triggers concerns about low quality. Invitae counters this on Slide 10 by citing head-to-head studies against Myriad. They report 100% analytical concordance and 99.8% clinical concordance for BRCA testing. By referencing publications in Elsevier and JAMA Oncology, they leverage third-party institutional credibility to de-risk the investment for those worried about regulatory or clinical pushback.

Slide 13: Scaling the Sales Engine

Slide 13 provides a transparent look at the relationship between sales efforts and output. In 2013, with 0 sales reps, the company produced 229 billable reports. By 2015, with 21 sales reps, they produced over 19,000 billable reports. This 'Foundational year' slide demonstrates that the product has market fit and that growth is a function of scaling the sales force—a metric investors find highly attractive because it suggests a predictable return on capital.

Slide 16: The Operational Flywheel

This is perhaps the most important slide for a growth-stage investor. It tracks four key metrics in a circular 'execution' loop: COGS per sample, Content on assays, Volume by billable reports, and Reimbursement contracts. The most striking figure is the COGS reduction: from $1,250 in Q1 2015 to $612 in Q1 2016. This 51% reduction in cost while simultaneously increasing the gene count (from >200 to >1000) shows a company that is successfully out-engineering its competition.

Slide 19: Path to Profitability

Slide 19 addresses the 'burn.' It shows the gross margin per sample. While the company was still losing money per sample in early 2016, the trend line is steeply upward. The gross margin improved from roughly -$700 in Q1 2015 to approximately -$200 in Q1 2016. The visual implies that break-even is imminent, providing a 'light at the end of the tunnel' for the business model's sustainability.

Slide 22: The Three-Phase Vision

Invitae moves from the 'what' to the 'so what.' Phase 1 is Genetic Testing (the current business). Phase 2 is Genome Management (building infrastructure). Phase 3 is the Genome Network. The goal is to 'monetize networks for permission-based sharing of genetic information.' This slide tells investors that they aren't just buying a lab; they are buying a future data company that will create value over the 'lifetime of a customer.'

Slide 25: 2016 Milestones

This slide details the immediate roadmap. It lists the launch of an 'adult prevention panel' and the creation of participatory research networks for oncology, cardiology, and adult prevention. It bridges the gap between the high-level vision of Phase 3 and the actual work being done in the current calendar year.

Slide 28: The Growth Flywheel

The deck concludes with a 'flywheel' diagram. It shows how 'Lower costs' lead to 'Lower prices,' which 'Drive Volume,' which 'Attracts Partners,' which allows the company to 'Expand content' and 'Improve customer experience.' It is a virtuous cycle intended to show that once Invitae reaches a certain scale, it will be nearly impossible for smaller, fragmented labs to compete on price or utility.

What Works Well in This Deck

Unit Economics: The inclusion of COGS per sample and gross margin trends (Slides 16 and 19) provides a level of financial transparency that is often missing in biotech decks. It shows the company is managed by people who understand operational efficiency. · Direct Competitive Comparison: By naming Myriad and showing concordance data (Slide 10), Invitae directly addresses the 'incumbent' threat and proves their technology is equivalent or superior. · Clear Strategic Phases: The three-phase model (Slide 22) gives investors a reason to value the company as a tech/data platform rather than just a low-margin diagnostic lab.

What Is Missing

The Team Slide: The provided slides do not include a team overview. In a highly regulated medical space, the pedigree of the scientific and executive leadership is critical. · The Ask: There is no slide detailing how much capital is being raised or how it will be allocated. While this might be in the omitted 19 slides, its absence in the core summary is notable. · Competitive Landscape (Broad): While they mention Myriad, they do not address the emerging threat of other low-cost sequencers or consumer-facing companies like 23andMe that might move into the clinical space.

Lessons for Founders

Quantify Your Disruption: If your value prop is 'lower cost,' you must show the trajectory of that cost reduction over time. Invitae’s Slide 16 is a perfect example of how to visualize operational progress. · Address Quality Early: In industries with high stakes (like healthcare), being the 'cheap' option is a liability unless you can prove your quality is identical to the 'expensive' option. Use head-to-head data. · Build a Flywheel: Investors love businesses where growth in one area (volume) naturally leads to advantages in another (lower COGS). If your business has a flywheel, make it the centerpiece of your conclusion.

Frequently asked questions

What is Invitae's core value proposition to the medical market?: Invitae aims to bring genetic information into mainstream medical practice by solving the issues of high cost and fragmentation. According to Slide 5, they provide 'comprehensive content across all disease areas' with 'open and transparent pricing below $1,000.' This contrasts with the existing market where quality is variable and prices for complex tests can reach tens of thousands of dollars with months-long turnaround times.
How does Invitae justify the market size for genetic testing?: Slide 4 argues that 'rare' genetic conditions are common in the aggregate. It notes that 5-10% of all cancers likely have a hereditary basis, and ~100% of people are carriers for mutations that could cause severe illness in offspring if the other parent carries the same mutation. By totaling these segments—including cardiology, neurology, and pharmacogenetics—they argue the market affects 'everyone.'
What evidence of operational efficiency does the deck provide?: The deck provides specific unit economics on Slide 16. It tracks the 'COGS per sample' declining from $1,250 in Q1 2015 to $612 in Q1 2016. Simultaneously, it shows the volume of billable reports increasing from 2,200 to 9,700 in the same period, demonstrating that the company is successfully leveraging economies of scale to drive down the cost of sequencing.
What is the long-term vision beyond just selling lab tests?: Slide 22 outlines a three-phase business model. While Phase 1 is 'Genetic Testing' (high volume, low price), the long-term goal is Phase 3: the 'Genome Network.' This involves sharing genetic information on a global scale to advance clinical outcomes and 'monetizing networks for permission-based sharing of genetic information,' suggesting a transition into a data-platform company.
How does Invitae address concerns about the accuracy of low-cost testing?: Invitae addresses quality head-on by comparing itself to the industry incumbent, Myriad. Slide 10 cites a 1,000-patient study demonstrating 100% analytical concordance and 99.8% clinical concordance for BRCA testing. They also point to peer-reviewed science published in journals like JAMA Oncology to demonstrate clinical utility beyond standard guidelines.