Slide 1: 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 2: 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, $10.0M fu
Slide 3: Partnership to develop NGS-based clinical tests
Partnership to develop NGS-based clinical tests $40 million upfront* $10 million milestones** Ongoing royalties on sequencer and reagent kit sales Accessing hospitals and labs globally + + Benefits to Natera Licensing fee plus royalties ** Delivered upon achievement of key milestones 4
Slide 4: Driving growth in core products
Driving growth in core products 6% 5% 5 Processed Units Accessioned Units 32,800 34,400 25,000 26,000 27,000 28,000 29,000 30,000 31,000 32,000 33,000 34,000 35,000 Q3 2017 Q4 2017 91,200 97,000 70,000 75,000 80,000 85,000 90,000 95,000 100,000 Q3 2017 Q4 2017
Slide 5: Selected clinical trial partnerships in oncology
Selected clinical trial partnerships in oncology Institution Trial Cancer Size Investigator Overview TRACERx Lung NSCLC 850 Charles Swanton Monitoring ctDNA for treatment response and recurrence I-SPY 2 Trial Breast 234 Laura Esserman Monitoring ctDNA for treatment response and residual disease Ovar
Slide 6: Signatera in the Adjuvant Setting (Colon)
Signatera™ in the Adjuvant Setting (Colon) Previously Diagnosed Cancer Patient ctDNA negative ctDNA positive Surveillance/monitoring Adjuvant Chemotherapy Signatera™ Curative-intent Surgery Example: Colorectal cancer. Unmet Need: ~20% of Stage II CRC patients receive adjuvant chemo in US, but only 2
Slide 7: Average Selling Prices Stable
Average Selling Prices Stable Multi-year, fixed price payer contracts Increasing average risk NIPT Coverage Increasing coverage for microdeletions Broader Medicaid coverage Shift from procedure code to NIPT Code In-Network shift Shift from procedure code to Microdeletions code Total revenues / tests
Slide 8: Revenue returning to growth
Revenue returning to growth Revenue Growth Drivers Core volume momentum driven by 2017 NIPT improvements New products contributing to revenue Monetizing core technology with NGS partners Stable pricing ($ in millions) 9 $250 $190 $217 $211 $275 – $50 $100 $150 $200 $250 $300 2015 2016 2017 2018 guid
Slide 9: 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 10
Slide 10: R&D Investments Driving Strong Returns
R&D Investments Driving Strong Returns ~ Blended COGS Trajectory $105 savings X 519,000 tests / year = $54MM annual savings ~50% ROIC on all R&D spend since Q1 2015 11 ~ $388 $283 $250 $200 – $50 $100 $150 $200 $250 $300 $350 $400 $450 Q1 2015 Q4 2017 Q2 2018E Funded projects
Slide 11: Significant Earnings Potential Embedded in Quarterly Volumes
Significant Earnings Potential Embedded in Quarterly Volumes Estimated Quarterly Un-Reimbursed Test Volume Expected Future ASP Estimated Revenues & Cash Flow from Un-Reimbursed Volume Average Risk NIPT 28,000 ~$450 ~$12MM Microdeletions 41,000 ~$450 ~$18MM Total per quarter 69,000 12 ~$30MM
Slide 12: R&D Investments Focused on Core Business
R&D Investments Focused on Core Business 13 2018 estimated breakdown of R&D spend by category Oncology 25% COGS 35% Prenatal 40%
Slide 13: Q4 2017 Financial Overview
Q4 2017 Financial Overview Average selling price changes, growth in Horizon volumes primary drivers of change vs Q4 2016 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 Margin%* 32% 23% 870 bps R&D $ 13.0 $ 11.5
Slide 14: 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 15
Slide 15: 2018 Guidance
2018 Guidance [(sinmiionsy PT Revenue $250 - $275 Gross Margin % revenue 35% - 40% SG&A $140 - $150 R&D $50 - $55 Cash Burn $40 - $60 @natera Not fr further reproduction or use 15
Slide 16: + Natera’
+ Natera’ onceive. Deliv