Natera Inc at Morgan Stanley Global Healthcare Conference Transcript

The following is excerpted from the question-and-answer section of the transcript.

Question: Tejas Savant - Morgan Stanley - Analyst : Got it. So to just push along that thread a little bit, you stepped up your investment in R&D. Clearly, MRD is one of the areas that you're focused on. So as we think about the dimensions of that response, broadening out Signatera, improving the sensitivity and specificity, perhaps even a tumor-nanve assay. Can you just give us an update on those R&D efforts? How much of a focus is this for you? And when could we expect to see some launches or data?

Question: Tejas Savant - Morgan Stanley - Analyst : Got it. Fair enough. You've got the CIRCULATE GALAXY readout at ESMO next week -- or a couple of weeks, I guess, from now. You got 36-month follow-up data there, mature overall survival and DFS data, I think it's in about 2,000 patients. Are there any benchmarks you can provide around what would be viewed as clinically meaningful? And then if you hit those benchmarks, what does the commercial uplift on the other side look like?

Question: Tejas Savant - Morgan Stanley - Analyst : Got it. So that's a great segue to my next question, Mike, you've characterized NCCN guidelines in CRC and getting those as a body of evidence situation, right? And clearly, this is going to be a very rich data set that's reading out here at ESMO. You've also got Altera coming up in Jan. Do you think these two data sets to be -- assuming they are positive for you -- get you to NCCN guidelines? Or are there any other prospective clinical utility data sets reading out in '25 that we should be watching out for as part of that next review cycle?

Question: Tejas Savant - Morgan Stanley - Analyst : Got it. Fair enough. Signatera ASPs already passed that $1,000 threshold. You mentioned that the guide embeds additional growth, some additional growth, steady improvement coming from Medicare, Medicare Advantage plans. Can you help us think about the pace of the ASP uplift here, or the potential pushes and pulls to that line? Do you think $1,250, $1,300-ish is possible exiting next year? And where does the biomarker state reimbursement uplift get baked into that trajectory? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. SEPTEMBER 04, 2024 / 6:35PM, NTRA.OQ - Natera Inc at Morgan Stanley Global Healthcare Conference

Question: Tejas Savant - Morgan Stanley - Analyst : Got it. And the biomarker bill uplift, is that part of that?

Question: Tejas Savant - Morgan Stanley - Analyst : Fair enough. Steve, about 40% of US oncologists are on Signatera in the second quarter. Can you just walk us through the mix of new versus repeat customers? What do ordering patterns look like at new accounts? And once a physician has a bolus of patients in Signatera, does the likelihood of them trialing other vendors go down? One of the things that comes up from some of your competitors is that physicians aren't very loyal to a brand and some of them are taking like a whole portfolio approach. Just curious as to your take on that.

Question: Tejas Savant - Morgan Stanley - Analyst : Got it. Mike, one for you. Signatera gross margins are already north of 60% today. Where do you see them trending over the next couple of years as your Texas operation ramps, you transitioned to the NovaSeq X, you get Medicare Advantage and maybe some partial uplift from the commercial payers as well. And then you've got the mix shift towards surveillance. So there's a lot of good stuff happening for the gross margin line on Signatera. What's that theoretical maximum ASP and margin profile look like?

Question: Tejas Savant - Morgan Stanley - Analyst : Got it. Steve, preliminary data on the CRC screening program is expected in the near term here. Remind us what we should expect to see with the initial set of data? Could you provide a more specific estimate around when it reads out? And how big will that initial cohort of prospectively collected samples be?

Question: Tejas Savant - Morgan Stanley - Analyst : Got it. Fair enough. So Gartner's and Freenomer's have shown their cards. Exact got something coming up at ACG we hear on their blood-based version of Cologuard. What is the right threshold for success here in terms of sensitivity, specificity on CRC and then AA performance that then unlocks in your mind, basically justifies continuing to invest in commercializing this indication?

Question: Tejas Savant - Morgan Stanley - Analyst : Got it. You've assembled a vast database on IO treatment and clinical outcomes, Steve, on tens of thousands of patients. One of the things you could do with this is obviously use that data to build super neoantigen prediction algos, that's something that Matt Rabinowitz have alluded to when we sat down with them earlier in the summer as well as being a significant interest to you guys. Where are you in terms of that journey? When could we see some of that early data emerge? And what are your thoughts on how you go about monetizing that opportunity? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. SEPTEMBER 04, 2024 / 6:35PM, NTRA.OQ - Natera Inc at Morgan Stanley Global Healthcare Conference

Question: Tejas Savant - Morgan Stanley - Analyst : Got it. Fair enough. So women's health, you [bucked] typical seasonality in the second quarter, you're both really good organic growth. And then help from that fetal RHD test and, of course, you have the inorganic contribution from the Invitae accounts as well. How should we think about sustainability of that fetal RHD momentum once that RhoGAM shortage abates?

Question: Tejas Savant - Morgan Stanley - Analyst : Fair enough. Obligatory question on guidelines. So could you provide us -- what's the latest you're hearing from ACOG on expanded carrier screening? I felt like this was more near term than Microdels? And more a question of when they get published versus getting committee approval. And then on the 22q side, where do things stand on that process? And what are the chances that we don't get this until 2025?

Question: Tejas Savant - Morgan Stanley - Analyst : Got it. Mike, one for you on women's health gross margins. I think they're probably in the mid-50s at the moment. How do you think about room for improvement there? And over what time frame do you think we can get to the low to mid-60s? And is that contingent on some of those guidelines stuff coming through? Or can it happen independent of it?

Question: Tejas Savant - Morgan Stanley - Analyst : Got it. A couple of quick ones on organ health. Following the NKF endorsement for Renasight, what do you think about the commercial trajectory there? Or do you think -- but could you go in NKF in place now? It's largely a function of when the CKD drugs make it to market. I think Vertex has something that's reading out interim data early next year in the first quarter?

Question: Tejas Savant - Morgan Stanley - Analyst : Got it. On Prospera, how do you see the competitive advantage for that test relative to the Incumbent in the space or, I guess, the other player in the space now? And now that Medicare has decided not to drop coverage for their tests. Does that -- well, first of all, I mean, there was a confusion around what Medicare was doing which led to a bit of air pocket. But now looks like Medicare has reversed course on that. Walk us through those dynamics? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. SEPTEMBER 04, 2024 / 6:35PM, NTRA.OQ - Natera Inc at Morgan Stanley Global Healthcare Conference

Question: Tejas Savant - Morgan Stanley - Analyst : Got it. Fair enough. Mike, one for you on OOPs, I mean those have led to a few large beats and raises. First of all, what product are they related to? Is it largely Signatera with a little bit from Panorama and Horizon?

Question: Tejas Savant - Morgan Stanley - Analyst : Got it. So if you ex out year-to-date true-ups about that's $75 million and Invitae is about $25 million. You get to about 35% growth in 2024, embedded in the guide, right? Now when you look at that versus street models right now, how are you doing about 20% of that organic number, so to speak, next year. Is that just the law of large numbers catching up with you? Is that conservatism? Is that something else?

Question: Tejas Savant - Morgan Stanley - Analyst : Fair enough. All right. We covered a lot of ground, guys. So -- thank you so much for doing that.