Slide 1: Natera, Inc. Q1 2017 Earnings Call
Natera, Inc. Q1 2017 Earnings Call May 2017
Slide 2: Safe Harbor
Safe Harbor This presentation contains forward-looking statements. All statements other than statements of historical facts contained in this presentation, including statements regarding the market opportunity, products, commercial partners, user experience, clinical trials, financial performance, s
Slide 3: Recent Highlights
Recent Highlights • Processed 121,000 tests in Q1 2017, 12% growth vs Q1 2016 – 16% growth in our direct channel vs Q4 2016 – 3% volume growth vs Q4 2016 despite BRLI transition (~12% volumes in 2016) – Panorama®: 84,000 tests accessioned, 4% growth YoY – HorizonTM: 27,000 tests accessioned, 39% gro
Slide 4: Leader in Women's Health Genetic Testing
Leader in Women’s Health Genetic Testing Test Volumes – all Products Market Leading Product Suite 447K 317K 218K 88K 2013 2014 2015 2016 Not for further reproduction or use May 2017 4
Slide 5: Why We Win: Superior Coverage and Performance
Why We Win: Superior Coverage and Performance Disease incidence at birth False negative rate (T21, T18 and T13), % 1/600 1/85 Panorama 0.60% Counting 1/186 average* 1.87% Sex error in validation studies, % Panorama 0.00% Counting 1/213 average* 0.63% 22q deletion sensitivity, % Panorama 95.7% Counti
Slide 6: Vistara Screens for De Novo Mutations Covering 1/600 Pregnancies
Vistara Screens for de Novo Mutations Covering 1/600 Pregnancies • Screens for 30 genes tied to life-altering 1/250 Down syndrome1 genetic disorders • Complement to Panorama 1/500 Vistara • Conditions typically undetected with conditions2 1/1000 conventional screening • Enables better pregnancy mana
Slide 7: Leading Channel Drives More Revenue Per Account
Leading Channel Drives More Revenue Per Account 3 TESTS FROM PATIENT-FRIENDLY SERVICES INCREASE CUSTOMER LIFETIME A SINGLE BLOOD DRAW END-TO-END VALUE VIA ADDITIONAL OFFERINGS Patient portal Pre-test cost estimates Phlebotomy Services Online test results Genetic info sessions MICRODELETIONS Not for
Slide 8: Sales Rep Productivity Growth
Sales Rep Productivity Growth Direct Units (in 000s) Per Direct Sales Rep + 3.5 3.0 2.5 2.0 1.5 3.0 1.0 2.3 1.4 0.5 0.0 2015 2016 2017 Q1 Annualized Not for further reproduction or use May 2017 8
Slide 9: In US Women's Health, Natera's Addressable Market is >$15B
In US Women’s Health, Natera’s Addressable Market is >$15B gt;5B ~$1.5B ~$3.1B ~$0.3B ~$2.5B ~$3.8B Mdel Base Panorama Vistara Horizon Spectrum/Anora Cord Blood Upcominig WH Panorama Vistara Horizon Anora®/Spectrum® Evercord Planned Women’s NIPT + Microdeletions SNV NIPT Carrier POC/PGD Cord Blood* H
Slide 10: NIPT Market is Just Getting Started
NIPT Market is Just Getting Started 5 4 4.2M Pregnancies in US 4 ~3.4M • Average Risk market is ~4x 3 size of the High Risk market 3 2 2 1 ~0.8M • Natera estimated market share in Average Risk: 55% 1 0 High Risk Market Average Risk Market Current Market Penetration Source: Company Estimates 10 Not f
Slide 11: Significant Opportunity Exists for Continued Growth in Expanded Carrier Screening
Significant Opportunity Exists for Continued Growth in Expanded Carrier Screening Carrier Screening Market CF only • Market continues to shift from cystic fibrosis-only ~ 60% carrier screening to broader panels Broad • New ACOG guideline disruptive to large reference Panels labs focused on cystic fi
Slide 12: Leading Pan-Cancer Technology Platform
Leading Pan-Cancer Technology Platform Natera Advantages Proven Capability Personalized “bespoke” assay designed for each individual x Single molecule sensitivity in a tube of blood Cumulative relapse ctDNA Negative • Predicted relapse with 93% sensitivity, zero false positives Fast turnaround time
Slide 13: US Total Addressable Market in Recurrence Monitoring/MRD >$12B
US Total Addressable Market in Recurrence Monitoring/MRD >$12B Test Volume* TAM Breast 5.8M $2,900M Prostate 5.4M $2,700M Colorectal 1.8M $920M Thyroid 1.2M $610M • Incremental TAM Endometrial 1.2M $590M >$2B for monitoring Bladder Treatment Response 1.1M $560M Kidney 0.7M $330M • Additional value
Slide 14: Natera's Path to Cash Flow Breakeven
Natera’s Path to Cash Flow Breakeven • Reimbursement for existing test volumes • COGS Improvements • New product launches in women’s health channel • Stable operating expenses as revenues grow Substantially reducing quarterly cash burn in 2017 Not for further reproduction or use May 2017 14
Slide 15: Average Selling Prices Poised to Improve
Average Selling Prices Poised to Improve Three Distinct Pricing Headwinds Pricing Drivers Going Forward Total revenues / tests accessioned • Multi-year, fixed price Shift from procedure payer contracts code to NIPT Code In-Network shift $1,000 • Increasing average risk Shift from procedure code to N
Slide 16: Significant Earnings Potential Embedded in Current Volumes
Significant Earnings Potential Embedded in Current Volumes Estimated Quarterly Un-Reimbursed Expected Estimated Revenues & Cash Flow Test Volume Future ASP from Un-Reimbursed Volume 26,000 $450 $12MM Average Risk NIPT 40,000 $450 $18MM Microdeletions Total per quarter 66,000 $450 $30MM Not for furth
Slide 17: R&D Investments Driving Strong Returns
R&D Investments Driving Strong Returns Blended COGS Trajectory 500 $100 savings X 460,000 tests / year $388 400 = $296 $42MM annual savings 300 ~ $250 200 100 Greater than 51% ROIC on all R&D spend 0 Q1 2015 Q1 2017 Q1 2018E Not for further reproduction or use May 2017 17
Slide 18: R&D Investments Focused on Core Business
R&D Investments Focused on Core Business 2017 estimates Oncology 17% 61% COGS Product 22% Improvements Not for further reproduction or use May 2017 18
Slide 19: Q1 2017 Financial Overview
Q1 2017 Financial Overview Shift to in-network contracts primary driver of change vs Q1 2016 ($ in millions, except for per share data) P&L Q1 ‘17 Q1 ’16 Change Horizon Revenue $11.5 $18.8 ($7.3) Panorama Revenue $31.4 $38.6 ($7.2) Total Revenue $46.9 $61.9 ($15.0) Gross Margin%* 28%* 48% 2000 bps R
Slide 20: 2017 Guidance
2017 Guidance ($ in millions) Previous Current Revenue $210 - $230 $210 - $230 Gross Margin % revenue 35% - 40% 35% - 40% SG&A $135 - $145 $135 - $140 R&D $45 - $50 $45 - $50 Cash Burn $75 - $85 $65 - $75 Not for further reproduction or use May 2017 20
Slide 21: Natera
B natera’ Conceive. Deliver.