Shares of Invitae are trading for less than a nickel apiece after a report surfaced earlier this week claiming the genetic testing company is on the verge of filing for bankruptcy.
The report came from The Wall Street Journal, which cited unnamed sources “familiar with the matter” who said a bankruptcy filing could arrive within the next few weeks.
Invitae has reportedly assembled an advisory group comprising investment bank Moelis, FTI Consulting and Kirkland & Ellis, a law firm, to help it explore the bankruptcy option, in addition to other possible routes of dealing with its $1.5 billion in debt.
Invitae declined Fierce Medtech’s request for comment on the WSJ report, citing a policy against commenting on market rumors or speculation. Instead, a company spokesperson pointed to Invitae’s third-quarter earnings release, which disclosed that the board had formed a special committee dedicated to improving Invitae’s financial standing.
“The Company is exploring a number of options, including, but not limited to, raising capital, asset sales, business and R&D refocusing efforts, capital expenditure and operating expense reductions and addressing its debt obligations,” it said in the November report.
Immediately after the WSJ report went live Monday morning, Invitae’s stock plummeted from its already-waning position, dropping more than 70% from $0.38 to about a dime per share. In the days since, the stock has further dwindled, trading for around two cents per share since midday Wednesday—a significant fall from grace for a company that saw its shares trade for nearly $60 apiece in late 2020.
Invitae’s shares have been in a precarious position for several months. Its stock hasn’t traded above the $1 threshold since August, leading the New York Stock Exchange to issue a warning the following month that Invitae was at risk of being kicked off the exchange.
The reportedly looming bankruptcy filing would come after Invitae has spent several years struggling to stay afloat.
As the WSJ noted in its report, the company has never turned a profit in its decade of existence. In its last full-year earnings report, covering 2022, it reported a net loss of more than $3.1 billion, a massive increase over 2021’s $379 million loss. As of the third quarter of 2023, Invitae had already tallied a net loss of more than $1.3 billion for the year, with cash burn of $311 million as of Sept. 30 and just under $265 million left in cash on hand.
Throughout that time, the company has made several attempts to cut costs. In the summer of 2022, Invitae laid out a restructuring plan that it said would ultimately save about $326 million per year, by laying off more than 1,000 employees, reducing its physical footprint and slimming down its genetic testing and genomic management operations.
The company has gone on to make further cuts: This past December, Invitae divested its Ciitizen health data platform into a VC-backed standalone company, while also implementing more layoffs and “other operating expense reductions,” all of which it said would save between $90 million and $100 million annually. A month later, Invitae agreed to a deal with Natera to sell off its reproductive health assets for $10 million up front, plus another $42.5 million in potential follow-up payouts; sloughing off that department, Invitae said at the time, could shave off around $44 million per year from its operating expenses.
During a conversation with Fierce Medtech about a year ago, CEO Ken Knight expressed confidence that Invitae was solidly on track to one day become profitable. In that January 2023 interview, he noted that while the then-recently announced restructuring was still in progress, it wasn’t designed to “cost-cut ourselves to prosperity.” Instead, he said, Invitae was planning to transition from the reorg into an “execution phase” that would see it expanding its offerings, after which, further down the line, it would shift into an “acceleration phase” that would ultimately result in the company’s becoming cash flow-positive.