Delay to Stratafide could prompt more Invitae deals

Invitae has reportedly denied that it is in discussions to be bought by Exact Sciences after rumours of this deal surfaced last week. But it might want to reconsider, or at least contemplate other deal making, given that the flagship liquid biopsy for which it bought Archer DX last year will not get approved in the hoped-for timeframe. Stratafide, a tumour-agnostic test designed to guide therapy for cancer patients, must achieve US approval by March 31, 2022 to trigger a $262.5m milestone payment to Archer DX’s shareholders. Based on FDA feedback, Invitae no longer considers this possible, it disclosed in an SEC filing, and it has written off the liability connected to the milestone. It is not clear if new trials might be needed, or exactly when Stratafide’s approval or clearance might arrive. But, if it is approved, the test will enter a market already occupied by Guardant Health and Roche – and every month it is delayed allows these much larger groups to solidify their leads. Being merged into Exact would certainty give Invitae more firepower. Given that Invitae currently has around $1.1bn in cash, however, it is perhaps more likely to conduct M&A of its own. 

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