Slide 1: Natera, Inc. Q4 2017 Earnings Call
Natera, Inc. Q4 2017 Earnings Call March 13, 2018
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 137,800 tests in Q4 2017, 17% growth vs. Q4 2016 – Panorama®: approximately 97,000 tests processed, 10% growth YoY – HorizonTM: approximately 34,400 tests accessioned, 56% growth YoY • Signed $50.0M Next Generation Sequencing Agreement with Qiagen – $40.0M cash upfront,
Slide 4: Partnership to develop NGS-based clinical tests
Partnership to develop NGS-based clinical tests Benefits to Natera + + $40 million upfront* Ongoing royalties Accessing hospitals $10 million milestones** on sequencer and and labs globally reagent kit sales • Licensing fee plus royalties ** Delivered upon achievement of key milestones Not for furth
Slide 5: Driving growth in core products
Driving growth in core products Processed Units Accessioned Units 100,000 35,000 34,400 97,000 34,000 5% 6% 95,000 32,800 91,200 33,000 90,000 32,000 31,000 85,000 30,000 29,000 80,000 28,000 75,000 27,000 26,000 70,000 25,000 Q3 2017 Q4 2017 Q3 2017 Q4 2017 Not for further reproduction or use 5
Slide 6: Selected clinical trial partnerships in oncology
Selected clinical trial partnerships in oncology • 12 deals signed with leading pharma companies for Signatera RUO • 10+ academic collaborations with leading KOLs Institution Trial Cancer Size Investigator Overview TRACERx Monitoring ctDNA for treatment NSCLC 850 Charles Swanton Lung response and re
Slide 7: Signatera in the Adjuvant Setting (Colon)
Signatera™ in the Adjuvant Setting (Colon) Previously Diagnosed Cancer Example: Colorectal cancer. Patient Unmet Need: ~20% of Stage II CRC patients receive adjuvant chemo in US, but only 2-4% will benefit.1 NCCN guidelines ambiguous about Curative-intent Surgery who should receive therapy. Market s
Slide 8: Average Selling Prices Stable
Average Selling Prices Stable 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 • Increasing average risk $1,000 Shift from procedure code to NIPT Coverag
Slide 9: Revenue returning to growth
Revenue returning to growth ($ in millions) Revenue Growth Drivers $300 $275 • Core volume momentum driven by $250 2017 NIPT improvements $217 $250 $211 $200 $190 • New products contributing to revenue • Monetizing core technology with NGS $150 partners $100 • Stable pricing $50 – 2015 2016 2017 201
Slide 10: Natera's Path to Cash Flow Breakeven
Natera’s Path to Cash Flow Breakeven • Steady volume growth • Stable pricing • Continued momentum in COGS reductions • Stable operating expenses as revenues grow Not for further reproduction or use 10
Slide 11: R&D Investments Driving Strong Returns
R&D Investments Driving Strong Returns Blended COGS Trajectory $450 $105 savings X $400 $388 519,000 tests / year $350 = $300 $283 $54MM annual savings ~ $250 $250 ~ $200 $200 $150 ~50% ROIC $100 on all R&D spend $50 since Q1 2015 – Q1 2015 Q4 2017 Q2 2018E Funded projects Not for further reproducti
Slide 12: Significant Earnings Potential Embedded in Quarterly Volumes
Significant Earnings Potential Embedded in Quarterly Volumes Estimated Quarterly Un-Reimbursed Expected Estimated Revenues & Cash Flow Test Volume Future ASP from Un-Reimbursed Volume 28,000 ~$450 ~$12MM Average Risk NIPT 41,000 ~$450 ~$18MM Microdeletions Total per quarter 69,000 ~$30MM Not for fur
Slide 13: R&D Investments Focused on Core Business
R&D Investments Focused on Core Business 2018 estimated breakdown of R&D spend by category Oncology 25% Prenatal 40% COGS 35% Not for further reproduction or use 13
Slide 14: Q4 2017 Financial Overview
Q4 2017 Financial Overview Average selling price changes, growth in Horizon volumes primary drivers of change vs Q4 2016 ($ in millions, except for per share data) P&L Q4’17 Q4’16 Change Horizon Revenue $ 17.0 $ 11.4 $ 5.6 Panorama Revenue $ 32.0 $ 34.3 $(2.3) Total Revenue $ 53.8 $ 49.3 $ 4.5 Gross
Slide 15: 2018 Guidance
2018 Guidance ($ in millions) Revenue $250 - $275 Gross Margin % revenue 35% - 40% SG&A $140 - $150 R&D $50 - $55 Cash Burn $40 - $60 Not for further reproduction or use 15
Slide 16: Natera: Conceive. Deliver.
B natera’ Conceive. Deliver.