Natera, Inc 8-K, filed Aug 5, 2021
Natera, Inc. (NTRA)
About this 8-K
Natera, Inc filed this 8-K on August 5, 2021.
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 August 5, 2021, Natera, Inc. issued a press release announcing its results for its second quarter ended June 30, 2021 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 August 5, 2021. | |
| 99.2 | Investor Presentation. | |
| 104 | Cover Page Interactive Data File (formatted as inline 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: August 5, 2021
Exhibit 99.1
Natera Reports Second Quarter
2021 Financial Results
AUSTIN, Texas, August 5, 2021 /PRNewswire/ — Natera, Inc. (NASDAQ: NTRA), a pioneer and global leader in cell-free DNA testing, today reported financial results for the second quarter ended June 30, 2021 and provided an update on recent business progress and financial outlook.
Recent Accomplishments & Highlights
| ● | Generated total revenues of $142.0 million in the second quarter of 2021 compared to $86.5 million in the second quarter of 2020, an increase of 64.2%. Product revenues grew 70.7% over the same period. |
| ● | Processed approximately 375,700 tests in the second quarter of 2021, compared to approximately 234,100 tests processed in the second quarter of 2020, an increase of 60.5%. |
| ● | Increased 2021 revenue guidance from $550-575 million to $600-620 million, the second revenue guidance increase in 2021. |
| ● | Publication of a new study in Nature, validating the ability of its personalized and tumor-informed circulating tumor DNA (ctDNA) assay, Signatera®, to predict outcomes with immunotherapy in a randomized clinical trial. |
| ● | Announced a new publication in JCO Precision Oncology showing 96% overall survival from a single time point among metastatic colorectal cancer patients who test MRD-negative with Signatera after surgery. |
| ● | Awarded Advanced Diagnostic Laboratory Test (ADLT) status for its Signatera MRD test from Centers for Medicare & Medicaid Services (CMS). |
| ● | Launched the Natera/BGI Signatera Assay, now available to biopharmaceutical customers and clinicians across China. |
| ● | Announced the Foundation Medicine introduction of FoundationOne®️Tracker ctDNA Monitoring Assay for Research Use, in partnership with Natera. |
| ● | Announced a phase III trial with GSK using Signatera to identify early-stage breast cancer patients eligible for investigational treatment with niraparib, GSK's PARP inhibitor. |
| ● | Successfully completed $551.2 million, net follow-on equity offering in July 2021. |
“The second quarter of 2021 was the fastest year on year growth quarter in our history as a publicly traded company,” said Steve Chapman, Natera’s Chief Executive Officer. “Our volumes continued to accelerate, and we expanded our market opportunity with positive new data in both organ health and oncology. As a result of our Q2 performance and the current momentum in the business, we are increasing our revenue guidance for a second time this year, by roughly $50 million.”
Second Quarter Ended June 30, 2021 Financial Results
Total revenues were $142.0 million in the second quarter of 2021 compared to $86.5 million for the second quarter of 2020, an increase of 64.2%. The product revenues were $137.2 million in the second quarter of 2021 compared to $80.4 million in the second quarter of 2020, an increase of 70.7%. The increase in product revenues was driven by an increase in test volumes compared to the second quarter of 2020. Natera processed approximately 375,700 tests in the second quarter of 2021, including approximately 361,500 tests accessioned in its laboratory, compared to approximately 234,100 tests processed, including approximately 221,600 tests accessioned in its laboratory, in the second quarter of 2020.
In the three months ended June 30, 2021, Natera recognized revenue on approximately 355,700 tests for which results were reported to customers in the period (tests reported), including approximately 342,500 tests reported from its laboratory, compared to approximately 220,100 tests reported, including approximately 208,400 tests reported from its laboratory, in the second quarter of 2020, an overall increase of 61.6% for the quarter.
Gross profit* for the three months ended June 30, 2021 and 2020 was $65.9 million and $39.5 million, respectively, representing a gross margin of 46.4% and 45.7%, respectively. Natera was able to achieve higher margins in the second quarter of 2021 compared to the second quarter 2020 primarily as a result of increased revenues.
Total operating expenses, representing research and development expenses and selling, general and administrative expenses, for the second quarter of 2021 were $181.2 million, compared to $91.2 million in the same period of the prior year, an increase of 98.7%. The increases were primarily driven by headcount growth to support the Company’s expansion, volume growth, and product development.
Loss from operations for the second quarter of 2021 was $115.3 million compared to $51.7 million for the same period of the prior year. Net loss for the second quarter of 2021 was $116.0 million, or ($1.32) per diluted share, compared to net loss of $59.6 million, or ($0.75) per diluted share, for the same period in 2020. Weighted average shares outstanding were approximately 88.1 million in the second quarter of 2021 compared to 79.1 million in the second quarter of the prior year.
At June 30, 2021, Natera held $580.5 million in cash, cash equivalents, short-term investments and restricted cash, compared to $737.5 million as of December 31, 2020. As of June 30, 2021, Natera had a total outstanding debt balance of $329.8 million, comprised of $50.1 million including accrued interest under its line of credit with UBS at a variable interest rate of 30-day LIBOR plus 110 bps and a net carrying amount of $279.8 million under its seven-year convertible senior notes. The convertible senior notes were issued in April 2020 for net proceeds of $278.3 million. The gross principal balance outstanding for the convertible senior notes was $287.5 million as of June 30, 2021.
Financial Outlook
Natera anticipates 2021 total revenue of $600 million to $620 million; 2021 gross margin to be approximately 52% to 55% of revenues; selling, general and administrative costs to be approximately $500 million to $520 million; research and development costs to be $220 million to $230 million, and net cash burn to be $300 million to $340 million**.
* Gross profit is calculated as GAAP total revenues less GAAP cost of revenues. Gross margin is calculated as gross profit divided by GAAP total revenues.
** Cash burn is calculated as the sum of GAAP net cash used by operating activities (estimated for 2021 to be between $255 million and $295 million) and GAAP net purchases of property and equipment (estimated for 2021 to be approximately $45 million).
Test Volume Summary
| Unit | Q2 2021 | Q2 2020 | Definition | |||||||
| Tests processed | 375,700 | 234,100 | Tests accessioned in our laboratory plus units processed outside of our laboratory | |||||||
| Tests accessioned | 361,500 | 221,600 | Test accessioned in our laboratory | |||||||
| Tests reported in our laboratory | 342,500 | 208,400 | Total tests reported in our laboratory less units reported outside of our laboratory | |||||||
About Natera
Natera is a pioneer and global leader in cell-free DNA testing from a simple blood draw. The mission of the company is to change the management of disease worldwide with a focus on women’s health, oncology, and organ health. Natera operates ISO 13485-certified and CAP-accredited laboratories certified under the Clinical Laboratory Improvement Amendments (CLIA) in San Carlos, California and Austin, Texas. 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 Second Quarter 2021 Financial Results Conference Call |
| Date: | Thursday, August 5, 2021 |
| Time: | 1:30 p.m. PT (4:30 p.m. ET) |
| Live Dial-In: | (877) 823-0171, Domestic |
| (617) 500-6932, International | |
| Password: | 4434144 |
| Webcast: | https://edge.media-server.com/mmc/p/oe2yd2em |
Forward-Looking Statements
This press release contains forward-looking statements under the meaning of the Private Securities Litigation Reform Act of 1995. All statements other than statements of historical facts, including the company's financial guidance for fiscal 2021, its ability to continue to increase its revenues, its product development plans and its ability to maintain and grow its business operations in light of the COVID-19 pandemic, are forward-looking statements. Any forward-looking statements contained in this press 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.
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 and goals; we may be unable to maintain our business and operations as planned 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 engage in acquisitions, dispositions or other strategic transactions that may not achieve our anticipated benefits and could otherwise disrupt our business, cause dilution to our stockholders or reduce our financial resources; 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, including our SNP-based Microdeletion and Aneuploidy RegisTry, or SMART, Study, 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 either of our CLIA-certified laboratory facilities 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; any inability to effectively protect our proprietary technology could harm our competitive position or our brand; and we cannot guarantee that we will be able to service and comply with our outstanding debt obligations or achieve our expectations regarding the conversion of our outstanding convertible notes.
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.
In light of the significant uncertainties in these forward-looking statements, you should not regard these statements as a representation or warranty by us or any other person that we will achieve our objectives and plans in any specified time frame, or at all. 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., 510-826-2350
Media
Kate Stabrawa, Communications, Natera, Inc., 720-318-4080 pr@natera.com
Natera, Inc.
Condensed Consolidated Balance Sheets
(in thousands)
| June 30, | December 31, | |||||||
| 2021 | 2020 | |||||||
| (Unaudited) | (1) | |||||||
| Assets | ||||||||
| Current assets: | ||||||||
| Cash and cash equivalents | $ | 62,811 | $ | 48,668 | ||||
| Restricted cash | 228 | 187 | ||||||
| Short-term investments | 517,432 | 688,606 | ||||||
| Accounts receivable, net of allowance of $2,649 in 2021 and $3,080 in 2020 | 100,130 | 78,565 | ||||||
| Inventory | 28,409 | 20,031 | ||||||
| Prepaid expenses and other current assets, net | 30,878 | 26,606 | ||||||
| Total current assets | 739,888 | 862,663 | ||||||
| Property and equipment, net | 48,884 | 33,348 | ||||||
| Operating lease right-of-use assets | 48,337 | 21,399 | ||||||
| Other assets | 12,847 | 14,743 | ||||||
| Total assets | $ | 849,956 | $ | 932,153 | ||||
| Liabilities and Stockholders’ Equity | ||||||||
| Current liabilities: | ||||||||
| Accounts payable | $ | 20,307 | $ | 8,096 | ||||
| Accrued compensation | 30,842 | 30,371 | ||||||
| Other accrued liabilities | 86,143 | 60,407 | ||||||
| Deferred revenue, current portion | 10,647 | 50,125 | ||||||
| Short-term debt financing | 50,049 | 50,054 | ||||||
| Total current liabilities | 197,988 | 199,053 | ||||||
| Long-term debt financing | 279,777 | 202,493 | ||||||
| Deferred revenue, long-term portion | 23,562 | 22,805 | ||||||
| Operating lease liabilities, long-term portion | 49,519 | 21,246 | ||||||
| Other long-term liabilities | — | 320 | ||||||
| Total liabilities | 550,846 | 445,917 | ||||||
| Commitments and contingencies | ||||||||
| Stockholders’ equity: | ||||||||
| Common stock (2) | 9 | 9 | ||||||
| Additional paid in capital | 1,399,659 | 1,411,286 | ||||||
| Accumulated deficit | (1,102,999 | ) | (929,318 | ) | ||||
| Accumulated other comprehensive gain | 2,441 | 4,259 | ||||||
| Total stockholders’ equity | 299,110 | 486,236 | ||||||
| Total liabilities and stockholders’ equity | $ | 849,956 | $ | 932,153 | ||||
| (1) | The condensed, consolidated balance sheet at December 31, 2020 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, 2020. |
| (2) | As of June 30, 2021, there were approximately 88,498,000 shares of common stock issued and outstanding. |
Natera, Inc.
Condensed Consolidated Statements of Operations and Comprehensive Loss
(Unaudited)
| Three months ended | Six months ended | |||||||||||||||
| June 30, | June 30, | |||||||||||||||
| 2021 | 2020 | 2021 | 2020 | |||||||||||||
| Revenues | ||||||||||||||||
| Product revenues | $ | 137,232 | $ | 80,414 | $ | 255,614 | $ | 167,460 | ||||||||
| Licensing and other revenues | 4,794 | 6,058 | 38,728 | 13,024 | ||||||||||||
| Total revenues | 142,026 | 86,472 | 294,342 | 180,484 | ||||||||||||
| Cost and expenses | ||||||||||||||||
| Cost of product revenues | 73,227 | 42,731 | 134,549 | 84,251 | ||||||||||||
| Cost of licensing and other revenues | 2,885 | 4,208 | 8,376 | 7,666 | ||||||||||||
| Research and development | 53,752 | 23,005 | 93,940 | 41,230 | ||||||||||||
| Selling, general and administrative | 127,456 | 68,188 | 235,788 | 133,869 | ||||||||||||
| Total cost and expenses | 257,320 | 138,132 | 472,653 | 267,016 | ||||||||||||
| Loss from operations | (115,294 | ) | (51,660 | ) | (178,311 | ) | (86,532 | ) | ||||||||
| Interest expense | (2,075 | ) | (4,038 | ) | (4,148 | ) | (6,502 | ) | ||||||||
| Interest and other income, net | 1,585 | 1,924 | 2,956 | 3,911 | ||||||||||||
| Loss on debt extinguishment | — | (5,848 | ) | — | (5,848 | ) | ||||||||||
| Loss before income taxes | (115,784 | ) | (59,622 | ) | (179,503 | ) | (94,971 | ) | ||||||||
| Income tax expense | (242 | ) | (15 | ) | (376 | ) | (38 | ) | ||||||||
| Net loss | $ | (116,026 | ) | $ | (59,637 | ) | $ | (179,879 | ) | $ | (95,009 | ) | ||||
| Unrealized gain (loss) on available-for-sale securities, net of tax | (756 | ) | 104 | (1,818 | ) | 4,851 | ||||||||||
| Comprehensive loss | $ | (116,782 | ) | $ | (59,533 | ) | $ | (181,697 | ) | $ | (90,158 | ) | ||||
| Net loss per share: | ||||||||||||||||
| Basic and diluted | $ | (1.32 | ) | $ | (0.75 | ) | $ | (2.06 | ) | $ | (1.21 | ) | ||||
Weighted-average number of shares used in computing basic and diluted net loss per share: | ||||||||||||||||
| Basic and diluted | 88,077 | 79,069 | 87,387 | 78,681 | ||||||||||||
Exhibit 99.2
| Natera, Inc. Investor presentation Q2 2021 Earnings call |
| 2 Not for reproduction or further distribution. 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 our market opportunity, our proposed products and launch schedules, our reimbursement coverage and our product costs, our commercial partners and potential acquisitions, our user experience, our clinical trials and studies, our financial performance, our strategies, our anticipated revenue and financial outlook, our goals and general business and market conditions, 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 and goals; we may be unable to maintain our business and operations as planned due to disruptions and economic uncertainty caused by 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; we may be unable 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 engage in acquisitions, dispositions or other strategic transactions that may not achieve our anticipated benefits and could otherwise disrupt our business, cause dilution to our stockholders or reduce our financial resources; 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, including our SNP-based Microdeletion and Aneuploidy RegisTry, or SMART, Study, 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 either of our primary CLIA-certified laboratory facilities 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, obtain or maintain 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; any inability to effectively protect our proprietary technology could harm our competitive position or our brand; and we cannot guarantee that we will be able to service and comply with our outstanding debt obligations or achieve our expectations regarding the conversion of our outstanding convertible notes. We discuss these and other risks and uncertainties in greater detail in the sections entitled “Risk Factors” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in the preliminary prospectus related to the proposed offering and in our periodic reports on Forms 10-K and 10-Q and in other filings we make with the SEC from time to time. Moreover, 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, nor can we assess the impact of all factors on our business or the extent to which any factor, or combination of factors, may cause actual results to differ materially from those 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 our actual results could differ materially and adversely from those anticipated or implied. As a result, you should not place undue reliance on our forward-looking statements. Except as required by law, we undertake no obligation to update publicly any forward- 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, proxy 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., 13011 McCallen Pass, Building A Suite 100, Austin, TX 78753. Our telephone number is (650) 249-9090. Safe harbor statement |
| 3 Not for reproduction or further distribution. Recent highlights ● Fastest year-on-year volume and revenue growth quarter since the IPO: – 376,000 tests processed in Q2, 61% growth vs Q2 2020 – Total revenues of $142M, 64% growth vs Q2 2020 – Product revenues of $137M, up 71% vs Q2 2020 ● Increasing 2021 revenue guide from $550M-$575M to $600M-$620M ● Cash flow breakeven in women’s health business achieved in Q2 2021 ● Signatera now published in 14 peer reviewed papers, including overall survival and predictive data ● Announced phase III trial with GSK using Signatera as a companion diagnostic in early-stage breast cancer ● Signatera direct channel sales accelerating, also launched Foundation Medicine and BGI Genomics ● ADLT awarded to Signatera: recurrence monitoring timepoints increase from $795 to $3,500 ● Raised ~$551M net in upsized follow-on equity offering |
| 4 Not for reproduction or further distribution. ● ~ 61% volume growth over Q2 2020 ● Strong market share gains in Women’s Health ● Continued momentum in Transplant and Oncology Record Q2 volume of 376,000 units Total processed units (in thousands) 163K 167K 174K 200K 195K 200K 209K 236K 234K 262K 295K 348K Q2 2018 Q3 2018 Q4 2018 Q1 2019 Q2 2019 Q3 2019 Q4 2019 Q1 2020 Q2 2020 Q3 2020 Q4 2020 Q1 2021 Q2 2021 376K |
| 5 Not for reproduction or further distribution. Accelerating revenues 1. Excludes licensing and other revenues $80 Q2 Q2 Product revenues1 ($ in millions) 2020 2021 71% $137 $54 $63 $74 $87 $142 Q2 2017 Q2 2018 Q2 2019 Q2 2020 Q2 2021 17% 17% 64% 18% Total revenues ($ in millions) ● Volume-out performance combined with improving ASPs ● New products gaining momentum |
| 6 Not for reproduction or further distribution. Head-to-head study in Transplantation Reports Other dd- cfDNA test Prospera test Sensitivity 4 out of 6 5 out of 6 Antibody-mediated rejection 1 out of 1 1 out of 1 T cell-mediated rejection 3 out of 5 4 out of 5 Single center study at UCLA1 ● Compared two different dd-cfDNA assays for detection of rejection ● A series of 15 paired-samples from individual kidney transplant recipients using Prospera and competitive test Key results using a 1% cutoff ● Prospera more accurately identified rejection ● Prospera identified 80% of T cell-mediated rejections (TCMR) vs 60% for competitor 1. Bunnapradist et al., Single center experience comparing two clinically available donor derived cell free DNA tests and review of literature, Transplantation Reports; 2021 |
| 7 Not for reproduction or further distribution. Multi-organ transplant rejection testing Simultaneous pancreas-kidney use case Data presented at ATC ● ~8% of kidney transplants are multi- organ transplants1 ● 15% of simultaneous pancreas-kidney recipients will experience a rejection of their kidney in the first year post- transplant2 ● Data presented at the American Transplant Congress showed excellent performance Biopsy-matched SPK & PAK3 Sensitivity 83.3% Specificity 87.5% Negative Predictive Value 93.3% Positive Predictive Value 71.4% 1. UNOS database 2020 2. Wakil K, et al. Causes of graft failure in simultaneous pancreas-kidney transplantation by various time periods. Clinical Transplant. 2013; 23-30. 3. Riad, S. et al. “Early experience with dd-cfDNA (Prospera) in Pancreas Transplantation.” American Transplant Congress, 5 Jun 2021, Virtual Symposium |
| 8 Not for reproduction or further distribution. Prospera pathway to multiple organs ● LCD covers broad range of solid organ transplants for dd-cfDNA testing ● Creates accelerated pathway to reimbursement for Prospera test beyond kidney transplants |
| 9 Not for reproduction or further distribution. Oncology evidence generation advancing Disease-free survival Overall survival Sensitivity Specificity PPV/NPV Predictive of treatment benefit Prospective Outcomes Data Validation Data |
| 10 Not for reproduction or further distribution. CIRCULATE-IDEA – large prospective MRD study1 Months after surgery DFS First prospective CRC study reporting disease free survival in a real-world setting 0 20 40 60 80 100 0 2 4 6 8 10 Negative Positive ctDNA HR =19.5 95% CI, 7.9 to 47.8; P < .001 Sensitivity for recurrence, 79.3% ctDNA Events/N 6M-DFS 95%CI Negative 6/657 99.0% 97.6-99.6 Positive 23/140 80.4% 70.4-87.3 Key results Pre-surgical detection2 >94% Longitudinal sensitivity to relapse2 >93% Disease free survival at 6 months median follow-up 99% % 1. Shirasu H, Taniguchi H, Watanabe J, et al. Monitoring molecular residual disease by circulating tumor DNA in resectable colorectal cancer: Molecular subgroup analyses of a prospective observational study GALAXY in CIRCULATE-Japan. ESMO GI, June 30-July 4, 2021. 2. For stage II / III CRC patients |
| 11 Not for reproduction or further distribution. Post-operative Management of Stage III CRC Patients Using Signatera ● Today, almost all stage III CRC patients get adjuvant chemotherapy, despite ~50% cured by surgery alone1 − Current Signatera utility helps guide 3 vs 6 months ACT strategies ● CIRCULATE is the first prospective study to provide definite de-escalation data to change the standard of care2 − MRD-negative patients randomized to receive adjuvant chemotherapy vs observation − DFS data expected to be presented at ASCO GI, Jan 2022 Stage III CRC patients after surgery Signatera MRD- Positive ⊕ Adjuvant Chemo MRD- Negative ⊝ No Chemo, Active Surveillance Adjuvant Chemo R Can physicians avoid chemotherapy for MRD- negative stage III CRC patients? 1. Corcoran R and Chabner: N Engl J Med 2018; 379:1754-1765 2. Shirasu H, Taniguchi H, Watanabe J, et al. Monitoring molecular residual disease by circulating tumor DNA in resectable colorectal cancer: Molecular subgroup analyses of a prospective observational study GALAXY in CIRCULATE-Japan. ESMO GI, June 30-July 4, 2021. |
| 12 Not for reproduction or further distribution. 1. Loupakis et al. Detection of molecular residual disease using personalized circulating tumor DNA assay in patients with colorectal cancer undergoing resection of metastases. JCO Precision Oncology. 2021 MRD-negative MRD-positive HR, 16.0; 95% CI, 3.9 to 68; P < .001 Overall Survival based on Post-surgery MRD-status Overall survival 0.75 1.00 0.50 0.25 0.00 0 10 20 30 40 50 Time (months) 51 51 48 32 13 3 61 55 41 25 9 0 Prospective PREDATOR clinical trial:1 ● 112 oligo mCRC patients who underwent surgical resection with curative intent ● MRD status assessed with Signatera after surgery and during follow-up, following a pre-specified analysis plan Key results: ● Post-surgical single timepoint sensitivity to progression of 72% and PPV of 97%, (one FP patient received ACT post Signatera draw) ● 96% of patients who were MRD-negative at single time point post surgery were alive at the end of clinical follow-up (up to 54 months), relative to 52% of MRD- positive patients ● 100% of longitudinal MRD-negative patients were alive at the end of clinical follow up Prospective overall survival data in oligometastatic CRC |
| 13 Not for reproduction or further distribution. Prospective overall survival data in adjuvant MIBC 1. Powles T, Assaf ZJ, Davarpanah N, et al. ctDNA guiding adjuvant immunotherapy in urothelial carcinoma. Nature. 2021. 2. https://clinicaltrials.gov/ct2/show/NCT04660344?term=imvigor+011&draw=2&rank=1 IMvigor010 ● Phase III trial of atezolizumab vs observation in high-risk, MIBC ● Pre-specified analysis using Signatera ● Outcomes tracked prospectively for up to 4 years, overall survival measured Key results ● MRD-positivity after surgery is predictive of treatment benefit with atezolizumab ● 41% improvement in overall survival (HR 0.59) ● MRD-negative patients derived no benefit despite treatment with atezolizumab Predictive |
| 14 Not for reproduction or further distribution. ZEST Registrational Companion Diagnostic Trial1 1. https://clinicaltrials.gov/ct2/show/NCT04915755 About the ZEST trial ● Randomized phase III trial evaluating Niraparib (Zejula) in early-stage BC patients using Signatera as a companion diagnostic ● Stage I to III patients, either TNBC or HR+/HER2-, BRCA mutated breast cancer ● Serial Signatera used to identify patients who have molecular relapse by MRD, patients then randomized to Niraparib vs placebo ● ZEST is the second phase III registrational trial to incorporate Signatera as a companion diagnostic |
| 15 Not for reproduction or further distribution. Breakthrough Device Designations Signatera awarded ADLT designation Ÿ Breakthrough helps clear regulatory pathway to support biopharma studies Breakthrough device designation by the FDA – 3 total Ÿ Finalized a local coverage determination (LCD) to provide Medicare benefits for serial use of Signatera in patients with stage II or III CRC Final coverage for colorectal cancer (CRC) Ÿ Draft LCD proposes coverage of Signatera for immunotherapy response monitoring in all clinically validated solid tumors Draft immunotherapy coverage Ÿ Initial ADLT rate established by CMS is $3,500 for each Signatera assay used in the recurrence monitoring setting ADLT Designation May 2019, March 2021 September 2020 September 2020 June 2021 |
| 16 Not for reproduction or further distribution. Oncology MRD market opportunity – tests per year Stage II-III CRC IO response monitoring CRC oligomet Adjuvant MIBC Neo-adjuvant breast Ovarian Multiple myeloma Esophageal Total Indications in pipeline ~4M ~13M Total Source: internal estimates Tests per year (M) Total 0 3 6 9 12 Short term Mid term Published/presented indications Studies underway |
| 17 Not for reproduction or further distribution. Q2 Financial overview ($ in millions, except for per share data) Balance sheet Pro Forma4 Jun 30, 2021 Mar 31, 2021 Change Q/Q Cash & Investments2 $1,131.5 $580.5 $653.7 ($73.2) UBS Line of Credit $50.0 $50.0 $50.1 ($0.1) Convertible Senior Notes3 $279.8 $279.8 $279.5 $ — P&L Q2’21 Q2’20 Change Product Revenues $137.2 $80.4 $56.8 Licensing and Other Revenues $4.8 $6.1 ($1.3) Total Revenues $142.0 $86.5 $55.5 Gross Margin% 1 46% 46% 69.5 bps R&D $53.8 $23.0 $30.8 SG&A $127.5 $68.2 $59.3 Net Loss Per Diluted Share ($1.32) ($0.75) ($0.57) 1. Gross margin is calculated as gross profit divided by GAAP total revenues. Gross profit is calculated as GAAP total revenues less GAAP cost of revenues. 2. Cash and investments also include cash equivalents and restricted cash. 3. This balance reflects net carrying value for the Convertible Senior Notes under ASC 470-20 while the gross principal amounts outstanding is $287.5 million as of June 30, 2021. 4. Pro forma balance sheet data includes net proceeds of approximately $551 million received from follow-on equity offering subsequent to June 30, 2021. |
| 18 Not for reproduction or further distribution. Raising 2021 annual guidance Guide $ (millions) Original Q1 Guide Current Key drivers Revenue $500 – $525 $550 – $575 $600 – $620 Volume acceleration Gross margin % revenue 47% – 52% 52% – 55% 52% – 55% Strong women’s health margins balanced by growth-related costs in new businesses SG&A $430 – $450 $440 – $460 $500– $520 Ramping commercial investments R&D $160 – $180 $165 – $185 $220 - $230 Accelerating MRD clinical trials, oncology product launches Cash burn $230 - $250 $230 - $250 $300 - $340 Balance sheet remains strong Women’s Health business achieved cash flow breakeven |
| 19 Not for reproduction or further distribution. ©2020 Natera, Inc. All Rights Reserved. Not for reproduction or further distribution. ©2021 Natera, Inc. All Rights Reserved. Not for reproduction or further distribution. |
