Natera (NasdaqGS:NTRA) FY Conference September 23, 2025 10:30 AM ET Speaker0All right. Hey, everyone. Thanks for being here, small but hearty crowd. Appreciate having you here. I am E.Bernstein, not related to Bernstein, different spelling. But I cover U. S. Life science tools and diagnostics. And it's my pleasure to have Mike Brophy here with us today.Mike joined Natera in 2015. You served as VP of Corporate Development and Investor Relations and SVP of Finance and Investor Relations before, starting as CF ...

Core Insights - Natera has achieved significant growth since its IPO, with stock prices increasing nearly 10 times from $18 to around $170 and revenues expanding from $190 million to $2 billion, reflecting a 44% revenue growth over the last twelve months [3][11]. Company Overview - Natera specializes in molecular diagnostics, particularly in cancer detection and monitoring, positioning itself as a leader in medical intelligence [4]. - The company's flagship product, Signatera, is a personalized tumor-informed test that utilizes a simple blood draw to detect circulating tumor DNA, revolutionizing cancer monitoring [5][6]. Product and Technology - Natera's technology allows for non-invasive liquid biopsies, providing doctors with critical insights into cancer progression and recurrence risk [6]. - In addition to Signatera, Natera offers Altera for genomic profiling and Empower for hereditary cancer screening, creating a comprehensive suite for cancer care [6]. Market Potential - In the latest quarter, Natera processed over 850,000 tests, generating $546.6 million in revenue, with oncology-related tests growing at 50% year-over-year [9]. - The cell-free DNA testing market is projected to nearly double from $11 billion to around $20 billion in five years, indicating substantial growth potential for Natera [12]. Financial Projections - Natera is expected to sustain 25% annual revenue growth over the next few years, potentially increasing revenue from $1.7 billion last year to approximately $7 billion by 2030 [11]. - If Natera achieves $7 billion in revenue while maintaining a price-to-sales multiple of 13x, the stock price could reach about $700, even with potential multiple compressions [13]. Growth Opportunities - Key areas for growth include expanding the oncology market, scaling internationally, entering adjacent markets, and increasing volume and penetration within existing markets [17]. - Broader insurance coverage and clinical evidence supporting test adoption are critical for expanding market size and pricing power [18]. Competitive Landscape - Natera competes with major players like Roche, Danaher, and Abbott, which have significantly higher revenues, indicating that Natera is still in the early stages of its growth story [12]. - The company must navigate challenges such as reimbursement issues, competitive pressure, regulatory hurdles, and the pace of international adoption [18].

Group 1 - The company has experienced record sequential volume growth for Signatera, indicating strong demand and interest in the product [1][2] - There has been a notable shift in physician mentality towards minimal residual disease (MRD) testing, with increased visibility and discussions at major conferences such as ASCO [1] - The company is positioned as the market leader in MRD testing, holding a significant majority of market share, which is contributing to its growth [2]

Summary of Natera Conference Call Company Overview - **Company**: Natera (NasdaqGS:NTRA) - **Industry**: Life Sciences and Diagnostics Key Points Signatera Performance - Natera reported record sequential volume growth for Signatera, with an upgraded volume growth outlook [3][4] - There is a significant increase in interest in minimal residual disease (MRD) testing, with Natera being the market leader [4][5] - The company noted strong data from the ASCO GI conference, particularly regarding colorectal cancer, which has driven growth [5][6] - New patient starts for Signatera doubled the previous record and tripled the normal figures, indicating robust demand despite competition [7][8] Market Penetration and Growth Potential - Current penetration in the MRD setting is described as low single digits, suggesting substantial growth potential [8][9] - Colorectal cancer is highlighted as a key area for growth due to its clinical utility in decision-making for adjuvant settings and recurrence monitoring [9][10] - Natera is capturing new patients from both newly diagnosed and prevalent populations, indicating a broad market opportunity [10][11] Physician Engagement and Education - Approximately 40% to 50% of oncologists in the U.S. are ordering Signatera, with ongoing efforts to educate more physicians about its benefits [18][19] - The company is expanding its commercial team to enhance physician engagement and increase adoption rates [18][19] Medicare Coverage and Revenue Potential - Natera has seven Medicare coverages and anticipates submitting for an additional ten indications over the next couple of years, potentially generating $250 million to $300 million in incremental revenue [21][24] - The company has a strong track record of quality studies, which is crucial for obtaining Medicare coverage [22][23] International Expansion - Natera is preparing for a commercial launch in Japan, expected in 2027, following FDA approval and pricing discussions with the national health system [28][31] - The colorectal cancer opportunity in Japan is comparable to that in the U.S., with significant unmet needs in the market [30][31] Women's Health and NIPT Market - Natera holds over 50% market share in the NIPT space, with a penetration rate of approximately 65% [32][33] - The company is launching new tests, including a fetal focus test that allows for direct detection of disorders in the fetus without needing the father's sample [36][37] Early Detection Initiatives - The PRESEDE CRC trial is set to provide data on early detection of colorectal cancer, with results expected soon [43][44] - Natera aims to be a major player in early cancer detection, with plans to launch its FIND study by 2027 [45] Financial Outlook - Natera reported a strong second quarter, raising revenue outlook while maintaining operational expense guidance [46][47] - The company is investing in product launches and clinical trials, anticipating significant growth in 2026 as the commercial team matures [48][50] Future Opportunities - The primary opportunities identified include continued growth of Signatera and advancements in AI and data initiatives, which have garnered interest from pharmaceutical partners [51][52] Additional Insights - Natera's focus on high-quality clinical trials and innovative technologies positions it well for future growth in both existing and new markets [40][41]

Investment Rating - The report provides an investment rating of "G" for the pharmaceutical and biotechnology industry [1]. Core Viewpoints - The report highlights that MRD (Minimal Residual Disease) is expected to become a new paradigm in immune companion diagnostics, with significant advancements in tumor treatment and the development of new tumor markers [2][3]. - The pharmaceutical and biotechnology sector saw a weekly increase of 1.05%, underperforming compared to the Wind All A index (3.87%) and the CSI 300 index (4.18%) [3][8]. - Key sectors within the industry that performed well include medical devices (4.49%), vaccines (4.41%), and traditional Chinese medicine (2.86%), while medical research outsourcing (-3%), raw materials (-1.44%), and medical consumables (-0.01%) lagged [3][9]. Summary by Sections Market Weekly Review - The pharmaceutical and biotechnology sector increased by 1.05% from August 18 to August 22, 2025, underperforming against the Wind All A index and CSI 300 index [3][8]. - Notable stock performances included Xiangxue Pharmaceutical (40.4%), Olin Bio (38.3%), and Tuo Jing Life (29.5%) with significant declines seen in Linuo Pharmaceutical (-22.1%), Nanmo Bio (-17.9%), and Fuyuan Pharmaceutical (-17.9%) [3][11]. Industry News and Key Company Announcements - On August 22, Daiichi Sankyo's targeted TROP2 ADC Datopotamab deruxtecan was approved for treating HR-positive, HER2-negative breast cancer [12]. - Natera announced positive results from its IMvigor011 trial for muscle-invasive bladder cancer, leading to a submission for FDA approval of Signatera as a companion diagnostic [13]. - The report emphasizes the importance of MRD in tumor treatment, with advancements in both US and China regarding MRD products [3][12].

Summary of Natera (NTRA) FY Conference Call - August 12, 2025 Company Overview - Natera is a leader in cell-free DNA-based testing focused on women's health, oncology, and organ health [1] Key Points Performance Metrics - In Q2, Natera achieved a record of approximately 189,000 total units, with a sequential growth of about 20,000 units from Q1 [5][6] - Clinical units specifically for Signatera reached about 180,000, marking a significant increase compared to the average growth of 13,000 to 14,000 units per quarter in the previous year [6][7] - New patient starts contributed significantly to growth, with around 6,000 new starts in Q2, compared to an expected 2,500 [7][8] Market Dynamics - The company noted a competitive landscape with several new MRD tests entering the market, but expressed confidence in Signatera's unique value proposition [15][16] - Natera's strategy includes welcoming competition as it validates the market and enhances patient care [16][17] Clinical Data and Product Development - Recent clinical trial data, particularly in colorectal cancer, has driven interest and adoption of Signatera [10][12] - Natera is expanding its product offerings, including a genome backbone version of Signatera and a tumor-naive MRD assay [19][20] - The company anticipates significant revenue opportunities from new indications reimbursed by Medicare, estimating an incremental revenue potential of $250 million to $300 million [28][29] Financial Outlook - Natera raised its revenue guidance significantly while maintaining operating expense guidance, indicating a focus on sustainable cash flow generation [41][42] - The company aims for long-term gross margins of around 70%, having improved from 39% to 63% over the past two years [46][48] Future Opportunities - Natera is preparing for the launch of an FDA-approved screening test for colon cancer by 2028, which could align with USPSTF guidelines [34][35] - The company is optimistic about upcoming clinical trial data that could further enhance its market position and treatment paradigms in oncology [52][53] Strategic Focus - Natera emphasizes a patient-centric approach, focusing on addressing unmet needs and expanding its product portfolio based on customer feedback [50][51] - The company is committed to maintaining a balance between investment in growth and generating returns for investors [49][50] Additional Insights - The company is leveraging its existing NIPT database to inform its early cancer detection (ECD) assays, which could enhance its competitive edge [39] - Natera's operational strategy includes a focus on long-term clinical trial outcomes to support guideline adoption for its tests [31][32] This summary encapsulates the critical insights and data points from the Natera conference call, highlighting the company's performance, market dynamics, product development, financial outlook, and strategic focus.

Financial Data and Key Metrics Changes - The company generated $547 million in revenue, representing a 32% growth over Q2 of the previous year, and a 34% growth when excluding revenue true-ups [6][8] - Gross margin increased to 63.4% compared to approximately 59% in the same quarter last year, with consistent margins sequentially versus Q1 [7][14] - The revenue guidance for the year has been raised by $80 million, now expecting revenues in the range of $2.1 billion to $2.2 billion [8][56] Business Line Data and Key Metrics Changes - The company processed 189,000 oncology tests in the quarter, marking a growth of nearly 20,000 units compared to Q1, setting a new milestone [7][11] - Significant growth was noted in the Signatera product line, with new patient starts doubling the previous quarterly record [7][12] - Women's health products had their second-best volume quarter ever, despite seasonal trends [10] Market Data and Key Metrics Changes - The company is seeking Medicare reimbursement for additional tumor types, which could yield approximately $250 million to $300 million in annual revenue [13] - The company reported a record low in Days Sales Outstanding (DSOs) at 57 days, indicating improved cash collection efficiency [15] Company Strategy and Development Direction - The company is focused on expanding its product offerings, including the launch of Fetal Focus, a new NIPT for inherited conditions [9][26] - Investments are being made in artificial intelligence to enhance diagnostic capabilities and operational efficiency [25][46] - The company aims to maintain operating expenses while increasing revenue, indicating a strategy of scaling without proportional increases in costs [20][58] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about the growth trajectory, citing strong data and increased adoption of products [6][8] - The company is positioned to leverage its existing infrastructure to expand its market presence and improve patient outcomes [75] - Management highlighted the importance of upcoming clinical trial readouts, which could significantly impact practice guidelines [66][68] Other Important Information - The company exited its legacy paternity business, which had previously contributed to volume numbers [10] - The PEDAL study published in a high-impact journal demonstrates the potential of donor-derived cfDNA in predicting kidney transplant outcomes [30][31] Q&A Session Summary Question: What drove the record Signatera volumes? - Management noted strong data presentations at ASCO and significant growth in new patient starts, indicating a broad adoption of the product across various tumor types [61][63] Question: What are the key upcoming clinical trials? - Management highlighted the INVIGOR-11 trial and several colorectal trials that could influence guidelines and practice [66][68] Question: How is the company addressing the competitive landscape in early cancer detection? - Management emphasized their in-house R&D capabilities and the alignment of their PROCEED trial with FDA protocols, aiming for a strong performance readout [79][80]

Financial Data and Key Metrics Changes - The company generated $547 million in revenue, representing a 32% growth year-over-year, and a 34% growth when excluding revenue true-ups [5][6] - Gross margin increased to 63.4% compared to approximately 59% in the same quarter last year [6][15] - The company raised its revenue guidance by $80 million, now expecting revenues in the range of $2.1 billion to $2.2 billion [7][58] Business Line Data and Key Metrics Changes - The company processed 189,000 oncology tests in the quarter, marking a sequential growth of 20,000 units, which is a new milestone [6][11] - Signatera saw record growth in both sequential growth and new patient starts, with new patient starts being double the previous quarterly record [6][12] - Women's health products had the second-best volume quarter ever, following a strong Q1 [10] Market Data and Key Metrics Changes - The company is seeking Medicare reimbursement for additional tumor types, which could represent an annual revenue opportunity of $250 million to $300 million [13] - The company reported a significant increase in cash collections, with days sales outstanding (DSOs) down to 57 days, a record low [16] Company Strategy and Development Direction - The company is focused on launching new products, including Fetal Focus, a new NIPT for inherited conditions, and expanding its oncology data pipeline [8][30] - Investments are being made in artificial intelligence to develop new diagnostic biomarkers and improve operational efficiencies [19][47] - The company aims to maintain operating expenses while increasing revenue, indicating a strategy of scaling without proportional increases in costs [20][21] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about the growth trajectory, citing strong data and new patient starts as key drivers [6][12] - The company is committed to maintaining cash flow positivity while investing in growth opportunities [60] - Management highlighted the importance of upcoming clinical trial readouts and their potential impact on market positioning [70][81] Other Important Information - The company exited its legacy paternity business, which had historically contributed to volume numbers [10] - The PEDAL study published in a high-impact journal demonstrated the utility of donor-derived cfDNA in predicting long-term outcomes after kidney transplant rejection [30][31] Q&A Session Summary Question: What drove the record Signatera volumes? - Management noted strong data presentations at ASCO and significant growth in colorectal and breast cancer monitoring as key drivers, along with a record increase in new patient starts [62][63] Question: What are the important upcoming clinical trials? - Management highlighted the INVIGOR-11 trial and several colorectal trials that could influence guidelines and practice [66][70] Question: How is the company addressing the competitive landscape in early cancer detection? - Management emphasized their in-house R&D capabilities and the alignment of their PROCEED trial with FDA protocols as a strategic advantage [80][81]

Financial Performance - Natera's Q2 2025 revenue reached approximately $547 million, a 32% increase compared to approximately $413 million in Q2 2024[10] - The company processed approximately 853,000 total tests in Q2 2025, reflecting a 12% year-over-year growth from approximately 760,000 tests in Q2 2024[10] - Gross margin was approximately 63% in Q2 2025, up from approximately 59% in Q2 2024, and the company generated approximately $24 million in cash inflow[10] - Natera is increasing its 2025 revenue outlook by $80 million, projecting revenue between $202 billion and $21 billion, with a gross margin between 61% and 64%, and positive cash flow generation[10] Oncology Business - Oncology tests processed in Q2 2025 totaled approximately 189,000, a 51% increase compared to approximately 125,000 in Q2 2024[10] - Clinical oncology experienced growth of approximately 20,000 units over Q1 2025[10] - Signatera demonstrated rapid growth, with clinical test volumes increasing by approximately 20,000 units[15] Product Development and Clinical Trials - Natera launched Fetal Focus, a new NIPT for 5 genes, and reported positive data from the PEDAL clinical trial in organ health[10, 35] - The DARE trial showed that over 99% of 400+ patients who remained Signatera-negative had recurrence-free survival (RFS) with a median follow-up of 274 months[48] - Natera is investing over $150 million in breast cancer clinical trials[55] AI Initiatives - Natera launched AI-based foundation models to support biomarker development, molecular therapeutics, and clinical decision-making[10] - The company is targeting approximately $200 million in value through AI-driven efficiencies[68]

Company Overview - Natera is a genetic testing company specializing in detecting tiny quantities of DNA across healthcare areas [3] - The company has a market cap of approximately $22 billion [2] - Natera has processed 12 million tests so far [11] Technology and Products - Natera's technology can detect cancer recurrence up to two years in advance of imaging [4][8] - The company utilizes a unique test called Signatera, specialized for each patient, to detect circulating tumor DNA [5][7] - The test sequences the entire tumor and compares it to the patient's germline DNA to identify unique signatures [7][9] Market and Financials - Natera operates in a total addressable market estimated at $50 billion [12] - The MRD (Minimal Residual Disease) segment, including Signatera, represents a $20 billion market [12] - The company follows standard billing and reimbursement guidelines and is in-network with most insurance plans [10][11]