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Natera's Q1 Revenues Climb 7 Percent

NEW YORK (GenomeWeb) – Natera reported after the close of the market on Thursday that its first quarter 2019 revenues rose 7 percent over the first quarter of 2018.

For the three months ended March 31, 2019, the San Carlos, California-based molecular diagnostics firm reported revenues of $66.8 million compared to Q1 2018 revenues of $62.3 million. It beat the average analyst revenue estimate of $65.5 million.

The company said the increase in revenue was driven primarily by sales of its noninvasive prenatal screening test, Panorama, and its carrier screening test, Horizon. Revenues from Panorama were $37.2 million, up 12 percent from Q1 2018 revenues of $33.3 million, while revenues from the Horizon test grew 24 percent year over year to $22.7 million from $18.3 million, Natera CFO Mike Brophy said during a conference call discussing the company's Q1 2019 results.

The company processed 200,194 total tests in Q1 2019, up 22 percent from the 164,355 tests it processed in Q1 2018.

Natera CEO Steve Chapman said during the call that the year-over-year growth in test volume made this one of the company's best quarters and would help further its goal of becoming cash-flow break-even in its reproductive health business by the end of the year. He added that the test volume growth was despite recent changes in the competitive dynamics that saw new NIPT firms entering the market, adding that Natera "will be vigilant in protecting our market share."

In addition, Chapman cited the draft coverage decision for the company's kidney transplantation rejection test, along with the breakthrough designation from the US Food and Drug Administration for its cell-free DNA oncology assay, Signatera, and the publication of validation data for Signatera as key achievements in the quarter.

In particular, he noted that the Signatera data published Thursday in JAMA Oncology in regards to the test's performance in colorectal cancer led the company to pursue Medicare coverage for that indication. Chapman said that company has already had a "very encouraging pre-submission meeting with MolDx" and anticipates submitting an application for a local coverage determination this year.

In addition, he said that the company is "launching a prospective trial to gather additional utility evidence for prognostic and recurrence monitoring indications."

As previously noted, while Natera plans to launch the clinical version of Signatera in the second quarter of this year, it wants to focus on forging deals with pharmaceutical companies rather than selling Signatera as a clinical test until it has secured coverage determinations from third-party payors.

Chapman also said that obtaining the breakthrough device designation would help further its pharmaceutical business, as pharmaceutical companies looking to use Signatera in phase III clinical trials will have more confidence that there will be a "clear path" for Signatera to receive FDA approval alongside therapy.

Natera's planned plasma-based tumor exome sequencing test will also help grow the company's pharmaceutical services business, Chapman said. From a single blood draw, the company will be able to sequence the tumor exome and build a personalized Signatera panel. Currently, the Signatera panel requires having a tissue biopsy to sequence the tumor exome.

Natera plans to launch that test in the second half of the year for research-use only. The test will allow the company to "access patients and trials where tissue is not available," Chapman said. He added that the company's preliminary data has shown "strong concordance" between plasma and tumor biopsy for exome sequencing.

Natera's net loss in the quarter was $34.1 million, or $.54 per share, compared to $32.9 million, or $.61 per share, in the prior year period, beating the Wall Street consensus estimate for a net loss of $.60 per share.

The firm's R&D expenses fell 20 percent year over year to $11.4 million in Q1 2019, compared to $14.3 million in the year-ago quarter. SG&A expenses increased 16 percent to $43.8 million from $37.9 million.

For the full year 2019, Natera anticipates total revenues will be between $275 million and $302 million.

As of March 31, 2019, Natera held $34.3 million in cash and cash equivalents and $93.8 million in short-term investments.