Slide 1: Natera, Inc. Q4 2018 Earnings Call
Natera, Inc. Q4 2018 Earnings Call March 12, 2019 1
Slide 2: Safe harbor statement
Safe harbor statement 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 perf
Slide 3: Three Goals
Three Goals 1. Expand leadership position in reproductive health ~$200 gross margin per test target for cash flow breakeven in reproductive health . 2 Establish Signatera™ as the new standard for cancer care Rapid revenue growth in oncology 3. Change patient care for transplant recipients Commercial
Slide 4: Recent highlights
Recent highlights ● Processed 174,245 tests in Q4 2018, full year volume growth of 30% ● Total revenues of $67M in Q4 2018, up 29% from Q4 2017 ● Signed $50M agreement with Beijing Genomics Co., Ltd. to commercialize Signatera in China ● Announced $9.1M in total cumulative contracted value for Signa
Slide 5: Extending market leadership with doubled growth in 2018
Extending market leadership with doubled growth in 2018 Total tests processed 669,000 30% 515,000 15% 448,000 2016 2017 2018 5 Not for further reproduction or use.
Slide 6: Average risk coverage drives ASP upside
Average risk coverage drives ASP upside Total revenues/tests reported1 Momentum and opportunity $411 $419 $411 $407 ● 4 additional BCBS and 5 states’ Medicaid programs now covering average risk ● Estimated ~$60M annual revenue and cash flow opportunity from existing volumes alone Q1 2018 Q2 2018 Q3
Slide 7: Blended COGS targets driving strong returns
Blended COGS targets driving strong returns Blended COGS trajectory Future gross profit benefit at $200 COGS $450 $400 $388 $350 $300 $62 savings per unit X $262 annualized Q4 volumes $250 $200 $200 = $150 $100 $40M annual additional $50 gross profit opportunity $0 Q1 2015 Q4 2018 Funded projects 7
Slide 8: $50M oncology-focused partnership with BGI
$50M oncology-focused partnership with BGI Benefits to Natera $35 million upfront1 Ongoing royalties Signatera™ distribution $15 million milestones2 on sales in China and reproductive health in select markets 8 1. $35 million upfront to Natera. $6 million prepayment to BGI for sequencing services 2.
Slide 9: Targeting $40M - $50M pharma total contracted value
Targeting $40M - $50M pharma total contracted value Pharma deals signed Larger trials $40M - $50M with >20 partners and >30 studies or trials $9.1M $4.3M Pilot studies $250K $630K 9 Q1 Q1 2018 2018 Q2 2018 2018 Q3 Q3 2018 2018 Q4 Q42018 2018 current 2019E 2019E Not for further reproduction or use.
Slide 10: One Lambda to co-promote transplant test in U.S.
One Lambda to co-promote transplant test in U.S. Leading commercial position in transplant centers ● Pioneer in transplant diagnostics ● Novel test augments One Lambda’s existing transplant offerings ● Access to transplant centers nationwide ● Accelerates entry into new market ● Complements Natera’s
Slide 11: Proven core technology drives clinical performance
Proven core technology drives clinical performance Analytical validation Clinical validation Core SNP-based technology Largest dd-cfDNA > 1.5 million cell-free DNA tests performed validation study2 3 9.2% CV Precision within run Highest overall 5x better1 1.85% accuracy (AUC) 3 Natera Competition CV
Slide 12: Transplant reimbursement pathway on track
Transplant reimbursement pathway on track ✓ Completed analytical validation ✓ Completed clinical validation ✓ Successful pre-submission meeting ✓ Obtained Z-code 2018 / 2019 ✓ Completed CLIA validation ✓ Formal LCD submission • Draft LCD release • Establish coding and pricing • Launch registry study
Slide 13: Pathway to significant transplant revenues
Pathway to significant transplant revenues Total tests Revenue sensitivity ($ in millions) $98 ● $2B market $84 ● < 5% $70 penetrated $56 Greenfield $42 3% 4% 5% 6% 7% Total < 5% Market penetration 13 Not for further reproduction or use.
Slide 14: Q4 2018 financial overview
Q4 2018 financial overview Growth in Panorama and Horizon volumes is primary driver of change vs Q4 2017 ($ in millions, except for per share data) P&L Q4’18 Q4’17 Change Horizon Revenue $ 23.9 $ 16.1 $ 7.8 Panorama Revenue $ 36.0 $ 30.9 $ 5.1 Total Revenue $ 67.0 $52.0 $ 15.0 Gross Margin%1 36% 29%
Slide 15: 2019 annual guidance
2019 annual guidance ($ in millions) Revenue $275 – $302 Gross margin % revenue 35% – 41% SG&A $180 – $190 R&D $60 – $65 Cash Burn $80 – $100 15 Not for further reproduction or use.
Slide 16: 2019 operating expenses supporting rapid growth
2019 operating expenses supporting rapid growth Reproductive health $182M ● Commercial leadership position SG&A R&D ● COGS reductions: – Carrier workflow – Algorithm improvements – Automation – Alternative sequencing platforms Oncology ● Launch CLIA assay ● Expanding pharma sales effort $47M ● Clini
Slide 17: ©2019 Natera, Inc. Not for reproduction or further distribution.
17 ©2019 Natera, Inc. Not for reproduction or further distribution.