Natera, Inc 8-K, filed May 6, 2020
Natera, Inc. (NTRA)
About this 8-K
Natera, Inc filed this 8-K on May 6, 2020.
Items reported
- Item 2.02: Financial results
- Item 9.01: Financial statements and exhibits
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM
CURRENT REPORT
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| Item 2.02. | Results of Operations and Financial Condition. |
On May 6, 2020, Natera, Inc. issued a press release announcing its results for its first quarter ended March 31, 2020 and provided a related investor presentation. A copy of the press release and a copy of the investor presentation are furnished herewith as Exhibit 99.1 and Exhibit 99.2, respectively, to this Current Report on Form 8-K and are incorporated herein by reference.
The information in this Current Report on Form 8-K and the accompanying Exhibit 99.1 and Exhibit 99.2 shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”) or otherwise subject to the liabilities of that section, nor shall it be deemed incorporated by reference in any filing under the Securities Act of 1933, as amended, or the Exchange Act, regardless of any general incorporation language in such filing, unless expressly incorporated by reference in such filing.
| Item 9.01. | Financial Statements and Exhibits. |
(d) Exhibits.
| Exhibit No. | Description | |
| 99.1 | Press Release dated May 6, 2020. | |
| 99.2 | Investor Presentation. | |
| 104 | Cover Page Interactive Data File (formatted as in line XBRL) | |
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
| Natera, Inc. | ||
| By: |
/s/ Michael Brophy | |
| Michael Brophy | ||
| Chief Financial Officer (Principal Financial and Accounting Officer) | ||
Dated: May 6, 2020
Exhibit 99.1
Natera Reports First Quarter 2020 Financial Results
SAN CARLOS, Calif., May 6, 2020 /PRNewswire/ — Natera, Inc. (NASDAQ: NTRA), a pioneer and global leader in cell-free DNA testing, today reported financial results for the first quarter ended March 31, 2020 and provided an update on recent business progress.
Recent Accomplishments & Highlights
| · | Generated total revenues of $94.0 million in the first quarter of 2020 compared to $66.8 million in the first quarter of 2019, an increase of 41%. | |
| · | Processed approximately 235,500 tests in the first quarter of 2020, compared to approximately 200,200 tests processed in the first quarter of 2019 and 209,400 tests processed in the fourth quarter of 2019. | |
| · | Achieved cost of goods sold of $202 per test accessioned in Natera’s laboratory; approaching the company’s long-term target of $200 cost of goods sold per unit. | |
| · | Successfully enrolled the first 145 patients in the ProActive registry trial for ProsperaTM in kidney transplant rejection. | |
| · | Responded to COVID-19 by implementing safety protocols in the laboratory, scaling remote ordering capabilities for patients and physicians. | |
| · | Saw coverage for Panorama® expanded during COVID-19 by greater than 20 million lives. | |
| · | Successfully issued convertible senior notes due 2027 for net proceeds of $278.9 million in April 2020. | |
| · | Repaid the obligations under its 2017 term loan with OrbiMed Advisors in April 2020. |
“We were very pleased with our performance in the first quarter,” said Steve Chapman, Natera’s Chief Executive Officer. “We had a record quarter for both volumes and revenues, and drove cost of goods sold per unit to very near the long-term target we had set out previously. We responded aggressively to the COVID-19 outbreak to ensure no disruptions to our lab operations, demonstrated our ability to rapidly scale our mobile ordering platforms for patients and providers, and further strengthened our balance sheet with the financing.”
First Quarter Ended March 31, 2020 Financial Results
Total revenues were $94.0 million in the first quarter of 2020 compared to $66.8 million for the first quarter of 2019, an increase of 41%. The increase in total revenues was driven primarily by sales of Natera’s Panorama and Horizon tests. Natera processed 235,500 tests in the first quarter of 2020, including approximately 222,400 tests accessioned in its laboratory, compared to 200,200 tests processed in the first quarter of 2019, including approximately 186,500 tests accessioned in its laboratory.
In the three months ended March 31, 2020, Natera recognized revenue on approximately 221,500 tests for which results were reported to customers in the period (tests reported), including approximately 209,200 tests accessioned in its laboratory, compared to approximately 184,700 tests reported, including approximately 173,400 tests accessioned in its laboratory, in the first quarter of 2019, an overall increase of 20% for the quarter.
Gross profit for the three months ended March 31, 2020 and 2019 was $49.0 million and $23.5 million, respectively, representing a 52% and 35% gross margin, respectively. The company was able to achieve higher margins in Q1 2020 as a result of increases in both volume and average selling price as well as improved cost of goods sold per test.
Total operating expenses, representing research and development expenses and selling, general and administrative expenses, for the first quarter of 2020 were $83.9 million, compared to $55.3 million in the same period of the prior year. The increases were primarily driven by headcount growth to support new product offerings.
Loss from operations for the first quarter of 2020 was $34.9 million compared to $31.7 million for the same period of the prior year.
Net loss for the first quarter of 2020 was $35.4 million, or ($0.45) per diluted share, compared to net loss of $34.1 million, or ($0.54) per diluted share, for the same period in 2019. Weighted average shares outstanding were 78.3 million in the first quarter of 2020.
At March 31, 2020, Natera held $405.9 million in cash, cash equivalents, short-term investments and restricted cash, compared to $441.0 million as of December 31, 2019. As of March 31, 2020, Natera had a total outstanding debt balance of $123.0 million, comprised of $50.1 million with accrued interest under its $50.0 million line of credit with UBS at a variable interest rate of 30-day LIBOR plus 110 bps and a net carrying amount of $72.9 million under its debt agreement with OrbiMed Advisors.
Subsequent to March 31, 2020, Natera successfully issued seven-year convertible senior notes for net proceeds of $278.9 million, of which a portion was used to repay the obligations under the company’s 2017 term loan with OrbiMed Advisors. As of March 31, 2020, pro forma for the notes issuance and repayment of the term loan, the company’s cash, cash equivalents, short-term investments and restricted cash balance would have been $605.6 million.
2020 Financial Outlook
As previously disclosed, because of the highly dynamic situation and ongoing disruptions from COVID-19, the company has withdrawn its financial guidance for the 2020 fiscal year. At the present time, the company cannot predict the extent or duration of the impact of the COVID-19 outbreak on its financial and operating results.
Test Volume Summary
| Unit | Q1 2020 | Q1 2019 | Definition | |||||||
| Tests processed | 235,500 | 200,200 | Tests accessioned in our laboratory plus units processed outside of our laboratory | |||||||
| Tests accessioned | 222,400 | 186,500 | Test accessioned in our laboratory | |||||||
| Tests reported in our laboratory | 209,200 | 173,400 | Total tests reported in our laboratory less units reported outside of our laboratory including Evercord units in prior periods | |||||||
About Natera
Natera is a global leader in cell-free DNA testing. The mission of the company is to change the management of disease worldwide with a focus on reproductive health, oncology, and organ transplantation. Natera operates an ISO 13485-certified and CAP-accredited laboratory certified under the Clinical Laboratory Improvement Amendments (CLIA) in San Carlos, Calif. It offers proprietary genetic testing services to inform obstetricians, transplant physicians, oncologists, and cancer researchers, including biopharmaceutical companies, and genetic laboratories through its cloud-based software platform.
Conference Call Information
| Event: | Natera's First Quarter 2020 Financial Results Conference Call |
| Date: | Wednesday, May 6, 2020 |
| Time: | 1:30 p.m. PT (4:30 p.m. ET) |
| Live Dial-In: | (877) 823-0171, Domestic |
| (617) 500-6932, International | |
| Conference ID: | 2291875 |
| Webcast: | https://edge.media-server.com/mmc/p/gr22qiz2 |
A webcast replay will be available at investor.natera.com.
Forward-Looking Statements
This release contains forward-looking statements, including regarding the company's business operations in light of the COVID-19 pandemic. Any forward-looking statements contained in this release are based upon Natera's current plans, estimates, and expectations, as of the date of this release, and are not a representation that such plans, estimates, or expectations will be achieved. Subsequent events may cause these expectations to change, and Natera disclaims any obligation to update the forward-looking statements in the future.
These forward-looking statements are subject to known and unknown risks and uncertainties that may cause actual results to differ materially, including: we face numerous uncertainties and challenges in operating our business in light of the COVID-19 pandemic; we may be unable to further increase the use and adoption of Panorama and Horizon, through our direct sales efforts or through our laboratory partners, or to develop and successfully commercialize new products, including Signatera and Prospera; we have incurred losses since our inception and we anticipate that we will continue to incur losses for the foreseeable future; our quarterly results may fluctuate from period to period; our estimates of market opportunity and forecasts of market growth may prove to be inaccurate; we may be unable to compete successfully with existing or future products or services offered by our competitors; we may not be successful in commercializing our cloud-based distribution model; our products may not perform as expected; the results of our clinical studies may not be compelling to professional societies or payors as supporting the use of our tests, particularly in the average-risk pregnancy population or for microdeletions screening, or may not be able to be replicated in later studies required for regulatory approvals or clearances; if our sole CLIA-certified laboratory facility becomes inoperable, we will be unable to perform our tests and our business will be harmed; we rely on a limited number of suppliers or, in some cases, single suppliers, for some of our laboratory instruments and materials and may not be able to find replacements or immediately transition to alternative suppliers; if we are unable to successfully scale our operations, our business could suffer; the marketing, sale, and use of Panorama and our other products could result in substantial damages arising from product liability or professional liability claims that exceed our resources; we may be unable to expand third-party payer coverage and reimbursement for Panorama, Horizon and our other tests, and we may be required to refund reimbursements already received; third-party payers may withdraw coverage or provide lower levels of reimbursement due to changing policies, billing complexities or other factors, such as the increased focus by third-party payers on requiring that prior authorization be obtained prior to conducting a test; if the FDA were to begin actively regulating our tests, we could incur substantial costs and delays associated with trying to obtain premarket clearance or approval and incur costs associated with complying with post-market controls; litigation or other proceedings, resulting from either third party claims of intellectual property infringement or third party infringement of our technology, is costly, time-consuming and could limit our ability to commercialize our products or services; and any inability to effectively protect our proprietary technology could harm our competitive position or our brand.
Additional risks and uncertainties that could affect our financial results are included under the captions, "Risk Factors" and "Management's Discussion and Analysis of Financial Condition and Results of Operations" in our most recent filings on Forms 10-K and 10-Q and in other filings that we make with the SEC from time to time. These documents are available on our website at www.natera.com under the Investor Relations section and on the SEC's website at www.sec.gov
Natera assumes no obligation to, and does not currently intend to, update any such forward-looking statements after the date of this release.
Contacts
Natera, Inc.
Investor Relations
Mike Brophy, CFO, Natera, Inc., 650-249-9090
Media
Paul Greenland, VP of Corporate Marketing, Natera, Inc., pr@natera.com
Natera, Inc.
Condensed Consolidated Balance Sheets
(Unaudited)
(in thousands)
| March 31, | December 31, | |||||||
| 2020 | 2019 | |||||||
| (1) | ||||||||
| Assets | ||||||||
| Current assets: | ||||||||
| Cash and cash equivalents | $ | 74,144 | $ | 61,926 | ||||
| Restricted cash | 55 | 55 | ||||||
| Short-term investments | 331,681 | 379,065 | ||||||
| Accounts receivable, net of allowance of $3,020 in 2020 and $2,919 in 2019 | 61,577 | 53,351 | ||||||
| Inventory | 14,161 | 12,394 | ||||||
| Prepaid expenses and other current assets | 15,590 | 16,376 | ||||||
| Total current assets | 497,208 | 523,167 | ||||||
| Property and equipment, net | 26,718 | 23,283 | ||||||
| Operating lease right-of-use assets | 22,620 | 23,730 | ||||||
| Other assets | 12,093 | 12,476 | ||||||
| Total assets | $ | 558,639 | $ | 582,656 | ||||
| Liabilities and Stockholders’ Equity | ||||||||
| Current liabilities: | ||||||||
| Accounts payable | $ | 8,369 | $ | 8,604 | ||||
| Accrued compensation | 15,953 | 16,088 | ||||||
| Other accrued liabilities | 50,393 | 49,043 | ||||||
| Deferred revenue, current portion | 51,840 | 56,016 | ||||||
| Short-term debt financing | 50,087 | 50,123 | ||||||
| Total current liabilities | 176,642 | 179,874 | ||||||
| Long-term debt financing | 72,881 | 73,656 | ||||||
| Deferred revenue, long-term portion | 25,152 | 23,808 | ||||||
| Operating lease liabilities, long-term portion | 24,727 | 26,297 | ||||||
| Other long-term liabilities | 310 | 310 | ||||||
| Total liabilities | 299,712 | 303,945 | ||||||
| Commitments and contingencies | ||||||||
| Stockholders’ equity: | ||||||||
| Common stock (2) | 8 | 8 | ||||||
| Additional paid in capital | 988,199 | 976,955 | ||||||
| Accumulated deficit | (734,946 | ) | (699,171 | ) | ||||
| Accumulated other comprehensive income | 5,666 | 919 | ||||||
| Total stockholders’ equity | 258,927 | 278,711 | ||||||
| Total liabilities and stockholders’ equity | $ | 558,639 | $ | 582,656 | ||||
| (1) | The condensed, consolidated balance sheet at December 31, 2019 has been derived from the audited consolidated financial statements at that date included in the company’s Annual Report on Form 10-K for the year ended December 31, 2019. |
| (2) | As of March 31, 2020, there were approximately 78,652,000 shares of common stock issued and outstanding. |
Natera, Inc.
Condensed Consolidated Statements of Operations and Comprehensive Loss
(Unaudited)
(in thousands, except per share data)
| Three months ended | ||||||||
| March 31, | ||||||||
| 2020 | 2019 | |||||||
| Revenues | ||||||||
| Product revenues | $ | 87,046 | $ | 63,364 | ||||
| Licensing and other revenues | 6,966 | 3,460 | ||||||
| Total revenues | 94,012 | 66,824 | ||||||
| Cost and expenses | ||||||||
| Cost of product revenues | 41,520 | 41,605 | ||||||
| Cost of licensing and other revenues | 3,458 | 1,698 | ||||||
| Research and development | 18,225 | 11,435 | ||||||
| Selling, general and administrative | 65,681 | 43,832 | ||||||
| Total cost and expenses | 128,884 | 98,570 | ||||||
| Loss from operations | (34,872 | ) | (31,746 | ) | ||||
| Interest expense | (2,464 | ) | (2,724 | ) | ||||
| Interest and other income (expense), net | 1,987 | 453 | ||||||
| Loss before income taxes | (35,349 | ) | (34,017 | ) | ||||
| Income tax expense | (23 | ) | (74 | ) | ||||
| Net loss | $ | (35,372 | ) | $ | (34,091 | ) | ||
| Unrealized gain (loss) on available-for-sale securities, net of tax | 4,747 | 286 | ||||||
| Comprehensive loss | $ | (30,625 | ) | $ | (33,805 | ) | ||
| Net loss per share: | ||||||||
| Basic and diluted | $ | (0.45 | ) | $ | (0.54 | ) | ||
| Weighted-average number of shares used in computing basic and diluted net loss per share | ||||||||
| Basic and diluted | 78,287 | 62,831 | ||||||
Exhibit 99.2
1 Not for reproduction or further distribution. Natera, Inc. First quarter 2020 Earnings presentation May 6, 2020
2 Not for reproduction or further distribution. Safe harbor statement This presentation contains forward - looking statements under the meaning of the Private Securities Litigation Reform Act of 1995. All statements other than statements of historical facts contained in this presentation, including statements regarding the market opportunity, products and launch s che dules, reimbursement coverage and product costs, commercial partners, user experience, clinical trials, financial performance, strategies, anticipated future performance and gen eral business conditions of Natera, Inc. (“Natera”, the “Company”, “we” or “us”), are forward - looking statements. These forward - looking statements are subject to known and unknown risks and uncertainties that may cause actual results to differ materially, including: we face numerous uncertainties and challenges in achieving our financial projections ; o perating our business in light of the COVID - 19 pandemic; we may be unable to further increase the use and adoption of Panorama and Horizon, through our direct sales efforts or through our laboratory partners, or to develop and successfully commercialize new products, including Signatera and Prospera; we have incurred losses since our inception an d w e anticipate that we will continue to incur losses for the foreseeable future; our quarterly results may fluctuate from period to period; our estimates of market opportu nit y and forecasts of market growth may prove to be inaccurate; we may be unable to compete successfully with existing or future products or services offered by our competitors; we may not be successful in commercializing our cloud - based distribution model; our products may not perform as expected; the results of our clinical studies may not support th e use of our tests, particularly in the average - risk pregnancy population or for microdeletions screening, or may not be able to be replicated in later studies required for regul ato ry approvals or clearances; if our sole CLIA - certified laboratory facility becomes inoperable, we will be unable to perform our tests and our business will be harmed; we rely on a lim ited number of suppliers or, in some cases, single suppliers, for some of our laboratory instruments and materials and may not be able to find replacements or immediately trans iti on to alternative suppliers; if we are unable to successfully scale our operations, our business could suffer; the marketing, sale, and use of Panorama and our other products co uld result in substantial damages arising from product liability or professional liability claims that exceed our resources; we may be unable to expand third - party payer cover age and reimbursement for Panorama, Horizon and our other tests, and we may be required to refund reimbursements already received; third - party payers may withdraw coverage or p rovide lower levels of reimbursement due to changing policies, billing complexities or other factors, such as the increased focus by third - party payers on requiring that pr ior authorization be obtained prior to conducting a test; if the FDA were to begin actively regulating our tests, we could incur substantial costs and delays associated with try ing to obtain premarket clearance or approval and incur costs associated with complying with post - market controls; litigation or other proceedings, resulting from either third party cl aims of intellectual property infringement or third party infringement of our technology, is costly, time - consuming and could limit our ability to commercialize our products or services; and any inability to effectively protect our proprietary technology could harm our competitive position or our brand. We discuss these and other risks and uncertainties i n g reater detail in the sections entitled “Risk Factors” and "Management's Discussion and Analysis of Financial Condition and Results of Operations" in our periodic reports on Forms 10 - K and 10 - Q and in other filings we make with the SEC from time to time. Given these uncertainties, you should not place undue reliance on the forward - looking statements. Mor eover, we operate in a very competitive and rapidly changing environment. New risks emerge from time to time. It is not possible for our management to predict all risks, no r can we assess the impact of all factors on its business or the extent to which any factor, or combination of factors, may cause actual results to differ materially from tho se contained in any forward - looking statement. In light of these risks, uncertainties and assumptions, the forward - looking events and circumstances discussed in this presentation may not occur and actual results could differ materially and adversely from those anticipated or implied. Except as required by law, we undertake no obligation to update publicly any fo rward - looking statements for any reason after the date of this presentation to conform these statements to actual results or to changes in our expectations. We file reports, p rox y statements, and other information with the SEC. Such reports, proxy statements, and other information concerning us is available at http://www.sec.gov . Requests for copies of such documents should be directed to our Investor Relations department at Natera, Inc., 201 Industrial Road, Suite 410, San Carlos, California 94070. Our telephone number is ( 650 ) 249 - 9090.
3 Not for reproduction or further distribution. ● Total revenues of $94M in Q1 2020, up 41% vs. Q1 2019 on strong volume growth, growing ASPs, partnership revenue ● Achieved $202 in COGS per unit: close to our long - term target of $200 ● Successful early access program for Prospera: ~45% of top 50 centers have ordered and first 145 patients enrolled in the ProActive registry trial ● Responded to COVID - 19 by implementing safety protocols in our lab, scaling remote - ordering capabilities for patients and physicians ● Coverage for Panorama extended by >20 million lives during COVID - 19 ● Successfully completed ~$278.9M convertible debt offering Recent highlights
4 Not for reproduction or further distribution. 200 236 160K 170K 180K 190K 200K 210K 220K 230K 240K 250K Q1 2019 Q1 2020 $67 $94 $ $10 $20 $30 $40 $50 $60 $70 $80 $90 $100 Q1 2019 Q1 2020 Q1 total processed units (in thousands) Extending market leadership in Q1 Q1 Revenues ($ in millions) • Largest sequential quarterly unit growth in company history • Revenues driven by volume growth, continued ASP progress 41% 18 %
5 Not for reproduction or further distribution. Revenue growth timeline Volume and ASP growth has led to acceleration in revenue 49 52 56 52 62 63 65 67 67 74 78 83 94 2017 Q1 2017 Q2 2017 Q3 2017 Q4 2018 Q1 2018 Q2 2018 Q3 2018 Q4 2019 Q1 2019 Q2 2019 Q3 2019 Q4 2020 Q1 Revenues ($ in millions)
6 Not for reproduction or further distribution. • Implemented key lab and employee safety protocols • Nationwide mobile blood draw performed in - home (10K draws in 2019) • Virtual test ordering and fulfillment remotely without an in - office visit COVID - 19 update COVID - 19 initiatives • End of March total test volume off ~15% 1 from peak Q1 2020 levels, weekly volumes consistent with Q4 2019 average • New York area, IVF clinics most impacted Impact of COVID - 19 1. Last two weeks of Q1 2020 weekly average vs first 10 weeks of Q1 2020 weekly average
7 Not for reproduction or further distribution. Average risk NIPT coverage recently expanded >20M Lives
8 Not for reproduction or further distribution. $388 $264 $232 $202 $200 $0 $50 $100 $150 $200 $250 $300 $350 $400 $450 Q1 2015 Q1 2018 Q1 2019 Q1 2020 Target Average selling prices and COGS momentum ASP: Total revenues/tests reported 1 Blended COGS trajectory 2 1. ASP is calculated as total revenues / tests reported in Natera’s laboratory. Total revenues excludes revenue recognition f rom Qiagen, FMI, and BGI partnerships, and certain non - recurring items. 2. Blended COGS trajectory is computed by total COGS divided by tests accessioned. $384 $393 $396 $404 $416 $300 $320 $340 $360 $380 $400 $420 $440 Q1 2019 Q2 2019 Q3 2019 Q4 2019 Q1 2020
9 Not for reproduction or further distribution. Transplant: Strong momentum in early access phase Patients enrolled Accounts engaging Source: Natera, I nc . internal company estimates o f top 50 transplant centers by volume have ordered Prospera ~45 % patients enrolled in Natera’s ProActive study: a prospective registry study for kidney transplant recipients 1 45
10 Not for reproduction or further distribution. Prospera reimbursement pathway on track 2018 / 2019 2019 / 2020 x Completed analytical validation x Completed clinical validation x Successful pre - submission meeting x Obtained Z - code x Completed CLIA validation x Formal LCD submission x Draft LCD release x Launch registry study x Final MolDx LCD published x Establish pricing • Final Noridian coverage
11 Not for reproduction or further distribution. Oncology: progress across commercial channels intact Direct channel Clinical Direct channel Pharma Pharma BD reps Hiring oncology field force 100K+ clinical patients/yr 50+ active pharma partners 1 million+ genetic tests in 2018 in China Grow contracted value and revenue Launch in 2020 Biopharma launch in 2020 Final LCD for colorectal cancer Presence Near - term goal
12 Not for reproduction or further distribution. ● Est. opportunity ~1 million tests annually ● Over 85% of relapses caught too late for curative surgery 1,2 Medicare draft LCD in colorectal cancer Adjuvant MRD Program Use Signatera after surgery to evaluate the need for adjuvant chemotherapy and avoid unnecessary treatment Surveillance Program Use Signatera alongside CEA to detect recurrence earlier while it may still be resectable, and reduce false positives For Stage II - III colon cancer, Stage IIA rectal cancer For Stage II - III colorectal cancer patients 1. Purandare NC, et al. The Indian journal of radiology & imaging. 2010;20(4):284 - 288. 2. Lapointe L. Laboratory, Advance Healt hcare Network. 2016;25(9):14.
13 Not for reproduction or further distribution. • Signatera technology used to longitudinally quantify levels of ctDNA in a patient with recurrent oligometastatic esophageal cancer • Personalized ctDNA assay was designed with genomic alterations identified by FoundationOne • Signatera can help inform appropriate imaging escalation to FDG - PET when results from CT scans are indeterminate • Signatera in the surveillance setting can help resolve uncertainty when interpretation of CEA testing is confounded by comorbidities “Assessment of Molecular Remission in Oligometastatic Esophageal Cancer with a Personalized ctDNA Assay” Einstein DJ, Liang N, Malhotra M, et al. Assessment of molecular remission in oligometastatic esophageal cancer with a person ali zed circulating tumor DNA assay. JCO Precis Oncol. 2020;4:239 - 243. JCO Precision Oncology peer reviewed study published
14 Not for reproduction or further distribution. Extending our data leadership in MRD • 5 papers published • Submitted: pan - cancer response prediction with immunotherapy (INSPIRE) • Submitted: neoadjuvant - treated breast cancer (ISPY - 2) • Two others in submission Peer - reviewed publications • ASCO: 1 oral presentation on expanded CRC cohort ( Abstract #4009 ) , 3 posters • ESMO GI: 1 oral, 1 poster • ESMO: submitting multiple abstracts in May Scientific Congresses
15 Not for reproduction or further distribution. • Sponsored by Natera • Prospective, non - randomized • 1,000 Stage II - III CRC patients tested with Signatera • Real - world study of MRD - guided treatment following Medicare LCD • Testing protocol 6x in Year 1, and 4x in Year 2 • Sponsored by NCC Japan • Prospective, randomized • 1,500 Stage II - III colon cancer patients tested with Signatera • Treatment de - escalation for MRD - negative patients, and escalation for MRD - positive patients CRC data and clinical development plan intact BESPOKE CRC trial CIRCULATE - IDEA trial Japan Clinical validation study: JAMA Oncology (Reinert et al, 2019) 130 patients, 829 plasma samples. Relapse detected up to 16.5 months earlier (avg 8.7 months earlier) than standard imaging a nd CEA • Sponsored by AstraZeneca • Prospective, randomized platform clinical study • Stage II - III microsatellite stable CRC patients tested with Signatera after surgery • MRD - positive patients receive adjuvant chemo +/ - novel treatments • ctDNA clearance after 6 months of treatment, as measured by Signatera, used as primary endpoint COLUMBIA - 2 trial
16 Not for reproduction or further distribution. Signatera colorectal cancer – Medicare reimbursement pathway on track 2019 2020 x Successful pre - submission meeting x Obtained Z - code x Completed clinical validation x CLIA soft launch x Formal LCD submission x Draft LCD release x Launch registry trial • Final LCD published • Final pricing
17 Not for reproduction or further distribution. Balance Sheet Pro Forma 3 Q1’20 Q4’19 Change QoQ Cash & Investments 2 $605.6 $405.9 $441.0 ($35.1) UBS Line of Credit $50.1 $50.1 $50.1 $0.0 OrbiMed Debt Facility $ — $72.9 $73.7 ($0.8) Convertible Senior Notes $287.5 $ — $ — $0.0 F inancial overview ($ in millions, except for per share data) P&L Q1’20 Q1’19 Change Product Revenues $87.0 $63.3 $23.7 Licensing and Other Revenues $7.0 $3.5 $3.5 Total Revenues $94.0 $66.8 $27.2 Gross Margin% 1 52% 35% 1,700 bps R&D $18.2 $11.4 $6.8 SG&A $65.7 $43.8 $21.9 Net Loss Per Diluted Share ($0.45) ($0.54) $0.09 1. Gross margin is calculated as gross profit divided by GAAP total revenues. Gross profit is calculated as GAAP total revenues les s GAAP cost of revenues. 2. Cash and investments also include cash equivalents and restricted cash. 3. Pro forma balance sheet data includes net proceeds of $278.9 million Natera received in the convertible note financing and payoff of the Orbimed debt facility of $79.2 million (including early pre - payment penalty fees and accrued interest) subsequent to March 31, 2020 . This also includes the Convertible Senior Notes shown is the aggregate principal amount, not reflecting the adjustments required under ASC 470 - 20.
