Natera at Goldman Sachs Conference: Strategic Growth and Expansion

On Monday, 09 June 2025, Natera Inc. (NASDAQ:NTRA) participated in the Goldman Sachs 46th Annual Global Healthcare Conference 2025. The company highlighted its record-breaking first-quarter results and strategic initiatives, focusing on growth in its Signatera units and revenue, while addressing challenges in market competition and operational expenses.

Key Takeaways

• Natera achieved over $500 million in revenue for the first time, with significant growth in Signatera units.
• The company plans to expand into Japan by 2027, targeting the colorectal cancer market.
• Natera is committed to being cash flow breakeven this year, emphasizing operating leverage and profitability.
• The company is investing in R&D and commercial operations to maintain its leadership in the MRD market.
• Positive reception at ASCO for ctDNA and Signatera’s role in cancer care.

Financial Results

• Revenue: Surpassed $500 million, marking a milestone for Natera.
• Gross Margin: Increased by over 100 basis points sequentially from Q4.
• Cash Flow: Significant cash generation in Q1, with a commitment to remain cash flow breakeven for the year.
• Signatera Growth: Approximately 16,500 additional units sequentially, with a substantial market opportunity of 10 to 15 million MRD tests annually.
• Women’s Health: High single-digit sequential growth, with over 50% year-over-year growth in organ health.

Operational Updates

• Signatera: The main growth driver is efficacy data, with plans to introduce tumor-naive MRD tests.
• Women’s Health: Benefiting from market consolidation, with new tests for rhesus factor screening.
• ASCO Presentation: Highlighted increased adoption of ctDNA, featuring the DARE study in breast cancer.
• Commercial Operations: Expanded sales team and strategic focus on the Japanese market for a 2027 launch.

Future Outlook

• Innovation Commitment: Continued investment in MRD and screening tests, with an FDA-enabling trial in progress.
• Signatera: The INVIGOR study with Roche and Nentech may enhance business prospects.
• R&D: Partnerships with academic centers to generate valuable clinical trial data.
• Financial Strategy: Emphasis on operational leverage and strategic investments to capitalize on market opportunities.

Q&A Highlights

• MRD Competition: Natera welcomes competition, focusing on solving clinical problems and generating quality data.
• OpEx Investment: Directed towards R&D and commercial operations to maintain a competitive edge.
• Japan Launch: Targeting the prevalent colorectal cancer market, supported by strong MRD guidelines.

Natera’s strategic insights and financial performance details can be explored further in the full conference call transcript below.

Full transcript - Goldman Sachs 46th Annual Global Healthcare Conference 2025:

Matt Sykes, Life Science Tools and Diagnostics Analyst, Goldman Sachs: Welcome, everybody. Good afternoon. Matt Sykes, the Life Science Tools and Diagnostics Analyst at Goldman Sachs, and I have the pleasure of welcoming Mike Brophy, CFO of Natera. Mike, thanks for being here. Yes.

Thanks for having me. Maybe if we just start off with sort of a quick recap of first quarter results. Another really strong quarter of growth with record Signatera incremental units. What were the highlights from your perspective? I mean, we’ve all read it.

We were on the call. But just sort of looking back now, I think you had described to me this is one of the quarters you were probably most proud of in terms of execution, particularly on the MRD side. Maybe just give your highlights of the quarter.

Mike Brophy, CFO, Natera: Yes. No. I had a very strong Q1, and thanks again for having me. We had a record quarter kind of across the book of business from women’s health to Prospera to Signatera. As you mentioned, we had the best growth quarter we’ve ever had with Signatera.

We did about 16,500 growth units sequentially off of Q4. Obviously, massive growth year on year. Very proud of that, execution. Q1 was really supposed to be, the first quarter where we were really supposed to see some increased competition from the field from some very high quality players, think, that will have that are going to be doing good things for patients over time. But I think in the Q1 results, we showed that we could really you know, continue to just deliver kind of outstanding growth results for Signatera.

We we paired that with some very strong growth in the women’s health business. And the reason why yeah. That was remarkable to me is, you know, it’s such a big business now, particularly post the, you know, the shakeout that we’ve seen in that industry over the last few years. We’ve been able to, you know, to pick up, you know, a significant amount of volume from, competing labs that that have exited the space. And then, yeah, q one really showed kind of the the fruits of that, of all that hard work where we we grew, you know, high single digits just sequentially off of q four, which is really impressive to do in a relative to Secotero, you know, a more a more mature market where NIPT is kind of clearly the kind of the standard of care in that space.

And and Oregon Health continued to ramp, and we had a a very strong growth quarter in Oregon Health. And I think we referenced that we, you we grew, you know, more than more than 50% year on year in that within that franchise. We we highlighted some heart transplant data on the call, which look. I’m not sure how many of of the investors are are in the stock because of the of the heart data per se, but I I it was quite impressive and and very exciting for patients just showing the efficacy of using cell free DNA. And I think, you know, it augurs well for the evolution of, you know, cell free DNA, you know, compared even to, you know, standard of care biopsies, you know, over a period of time.

We saw that in the NIPT space over time, with the kind of the relative drop in amniocentesis volume, that was required in that population. So we’re hopeful to see kind of the same same kind of evolution in in organ health as well. So that’s kind of on the volume side and on the patient side. You know, the the financials, again, were were fantastic. I mean, I think we we broke 500,000,000 in revenue for the time ever in the company, which is always kind of a fun milestone.

We had pretty significant, I think, more than a 100 basis point sequential growth in gross margins over q four. So we just continued to to improve the the gross margin profile of the business, and we generated a substantial amount of cash in the quarter. So relative to our guide to be cash flow breakeven in the quarter, I think we felt very comfortable that we’re in great position to meet that goal for the rest

Matt Sykes, Life Science Tools and Diagnostics Analyst, Goldman Sachs: of the year. So really strong Q1. Great. Maybe before we move on to some other questions, just ASCO was last week. It seemed to be a record number of abstracts from the diagnostics industry at this particular ASCO.

Could you maybe cut through some of the noise and focus on maybe what the one or two takeaways investors should have about what you produced and the abstracts you had at ASCO?

Mike Brophy, CFO, Natera: Yeah. Well, I think just a general comment about ASCO is just it was really heartening to see, you know, I had a lot of people reach out to me and and mention that they felt like ASCO was a real coming out party for for ctDNA where Yeah. You know, there’s been excitement building, but, you know, things like, general ctDNA, you know, panels having standing remotely and, you know, much more evidence of kind of just general standard of adoption of ctDNA, as a use case, for you know, in cancer care, That’s incredibly rewarding to businesses like Natera, where we we feel like we we basically created this category on a whiteboard as a company ten years ago. And it’s been a long and sometimes difficult journey since then to to bring it to the level that it that’s been at now. So it’s very rewarding to see that type of reception for the for the concept for MRD, you know, at ASCO.

For us specifically, it it was probably our strongest academic conference we’ve ever had just in terms of the breadth and the quality of data we presented. Just to highlight a couple of things, I mean, we had, you know, the DARE study in breast cancer. We had really excellent data with our genome backbone Signatera test we’re really proud of. Maybe I’ll just spend a bit more time in breast cancer again on the I SPY data, which is really focused on the use case of Signatera in the neoadjuvant breast cancer space. Neoadjuvant breast is a really important indication for patients because an increasing percentage of people now, more than half of patients who have breast cancer, get some form of neoadjuvant care before they go on to surgery.

Okay? And then there’s just so many different choices to be made within the choice to get neoadjuvant care. I mean, like, which chemotherapy regimens do you use? Do you escalate all the way to a platinum, for example? And what we showed is that based on the CTD dynamics as characterized by Signatera, you can have huge implications for what are actually the outcomes of these patients.

They’re really kind of in very different categories based on what their Signatera results were, which has massive implications for how you care for these people most efficiently. So we’re very proud of that data. Obviously there’s going be more readouts from iSpine, DARE, and subsequent conferences as well.

Matt Sykes, Life Science Tools and Diagnostics Analyst, Goldman Sachs: Great. Going back to Signatera, growth continues to be the focus each quarter. I guess a couple of questions. What do you view as the main growth drivers to continue the momentum there? And you’ve laid out a pretty interesting strategy of what I would term as sort of covering your bases in terms of whole genome tumor naive.

Like, are those going to be the future growth drivers for Signatera? Are there things just within the market in terms of penetration, etcetera, that have plenty of room to expand? Just as you look out the next couple of years, what maintains that level of momentum in Signatera?

Mike Brophy, CFO, Natera: Well, I think the main the answer to all these questions is you start with what is the clinical problem, what is the unmet need, and you work backward, from that. And there’s a huge unmet need for MRD, generally, to help guide people’s cancer journey. So I think that kind of the core growth driver over the next several years is just, the amazing, efficacy data that we’ve generated relative to the adoption, in the population. Okay? So we’re still very early innings of adoption, for MRD generally and Signatera specifically.

You know, we did something like a 165,000, units in q one. So what does that annualize? Like, 720,000 units, something like you know, something on that on that order? Estimates will vary. You know, there could be upwards of, you know, 10 to 15,000,000 tests, that are ordered annually kind of as an indicative kind of 100%, penetration.

So, obviously, a huge amount of of of room to to go there. So the primary driver is just going to be continuing to deliver very high quality prospective outcomes datasets across a range of tumor types. We’ve been able to do that because Signatera really is kind of one core technology that works very, very well, a very broad swath of solid tumors. So just to highlight a few things, I mean, we have, for example, hopefully later this year, we’ll have data in muscle invasive bladder cancer with Roche and Nentech in the INVIGOR study. That could be a huge, huge benefit for MIBC patients when we read that data out.

That will then what we’ve seen previously when we did the phase three study in INVIGOR, we had a huge halo effect in the overall business because of the benefit that was evident from Signatera in the phase three study. That’s really like more than any one particular product launch. It’s more about kind of the core franchise just kind of continuing to deliver longer dated, bigger prospective data sets and just having the time on task to kind of continue to drive adoption with having excellent kind of customer service. Within that, I mean, think an important component is there are kind of these these these use cases for MRD that I think can be addressed with the new products that we have. I mean, there is some percentage, and, again, estimates will vary.

Some fraction of patients will wanna get an MRD test, and they’re just not a good candidate for a tumor informed test. I mean, kind of like a classic example would be an older lung cancer patient that is just too frail to withstand the procedure to get a piece of tissue available for

Matt Sykes, Life Science Tools and Diagnostics Analyst, Goldman Sachs: a

Mike Brophy, CFO, Natera: tumor informed test, but you’d like to offer that patient something, and that’s a good that patient would be a good candidate for a tumor naive MRD test. Even if it’s a very small percentage of the kind of the overall unmet need for MRD, it it’s still it’s still an important clinical problem because those patients are kind of distributed across all of the, you know, oncologists in The United States. And so, you know, that that’s a clinical problem that many, many oncologists will face at some point over the course of their year. So you got to offer something there. So we’re excited to be launching that this year.

It’s a similar argument for the genome. I mean, there are a set of arguments to be made around certain cancer types perhaps where the technology may end up yielding performance that warrants using a genome backbone. That hasn’t been borne out yet in kind of the longer dated prospective outcome studies that you ultimately need, but we wanna be on top of that. We wanna be anticipating that, and we want we wanna try. You know?

Because if we can if we can generate high quality data, you know, with the genome backbone, then we certainly wanna make the effort. Got it.

Matt Sykes, Life Science Tools and Diagnostics Analyst, Goldman Sachs: Maybe just describe your current split in Signatera between adjuvant and recurring volumes. I think you’ve characterized in the past as fifty-fifty. I think the market is waiting for that to shift more towards recurring. But as we think about sort of what that means from a margin perspective, from a growth perspective, you know, when do you see that shift actually starting to happen?

Mike Brophy, CFO, Natera: I mean, I think it’s it’s you can start to see it happening. Right? I mean, I think what we’ve seen historically is that the the mix within the kind of the volumes that we deliver in a given quarter has been pretty balanced between the adjuvant treatment setting, and the recurrence monitoring setting. I think the momentum and just kind of the math of people, more and more cohorts of people staying with Signatera over the course of time in their cancer journey to the when they’re in remission and they’re getting monitored for recurrence means that you’ll have a bigger and bigger base of volumes coming from that recurrence monitoring indication. And then what mitigates against that is that you have more and more data sets coming, you got more and more patients kind of starting on Signatera.

So it wouldn’t surprise me if that mix is even like a little bit volatile. I mean, it’s been historically, it’s been relatively stable at about fiftyfifty, but I think it’ll bounce around over time. And then it kind of at at steady state, I I would expect the majority of the patients to be kind of in that recurrence monitoring indication just because of the just the math of kind of the people in kind of a prevalent status versus people that have just been been diagnosed in the last year or so.

Matt Sykes, Life Science Tools and Diagnostics Analyst, Goldman Sachs: Got it. You also continue to expand ASPs for Signatera, and you’ve mentioned that you see a path to $2,000 What is driving the near term momentum? And could you help us bridge to that 2,000? You know, you’re at, what, 1,100 ish right now. Like, how do we get there?

Mike Brophy, CFO, Natera: Yeah. ASPs were above 1,100 in the quarter, so continued good progress there. I mean, I think the the bridge and the point of the the $2,000 estimate is not to provide you with some specific piece of financial guidance over a specific time, but it’s more to to show you what’s what’s what’s achievable there. I think the components are as follows. I mean, I think there’s room for us to continue to drive higher compliance for reimbursement among Medicare Advantage patients where they’re objectively already covered today.

Medicare fee for service, the reimbursement is for those types of patients where they’re covered by Medicare. I mean, Medicare fee for service coverage rates are, like, you know, above 95%, 97%. With Medicare Advantage, it’s it’s nowhere near that. I mean, it’s, you know, 70%. Now that’s up from 20%, you know, a year ago, but there’s still work to do with, like, a longer tail of commercial plans that have Medicare Advantage books with whom we just need to work collaboratively to kind of clear up any kind of administrative barriers, confusion about what the test is, you know, that type of thing.

And we we just kind of we’re now kind of grinding through that in a pretty linear way. The success we’ve had makes us feel confident that we’ve got a good road map there to work with any particular payer. Similarly, there’s a set of patients now that should be covered for Signatera by dent of the fact that the patient is covered by a fully insured plan in a state that has a state biomarker law in effect. And the reason why we don’t get reimbursed all that frequently for those patients is kind of the same reason. There’s kind of confusion, there’s kind of administrative hurdles to be solved.

And honestly, with a lot of payers. It’s the exact same people, and it’s a very similar process that we just went through for their Medicare Advantage books of business. So and and we’re starting to see some good progress there. I mean, I think, like, last year, we’ve laid out a goal on one of the earnings calls where we said, like, look. Like, q three of twenty twenty five, we’d like to be able to kind of be able to point progress in the ASPs that’s attributable to the the, you know, state biomarker law compliance.

I think we’re we’re on on good track to be able to deliver, on that goal. The next bucket that I would I would point to as a potential source of, ASP improvements for the overall book would be a launch in Japan. So we’re kind of targeting a 2027 launch, in Japan. Time lines will vary on that. I I’ll caution you.

I mean, this will be our kind of our our launch in Japan, and so we’re learning as we go, but we’re kind of working through the Japanese FDA right now. I would expect on balance, the the Japanese ASPs to be accretive to the overall, you know, ASPs, in the business because that is kind of more of a single payer, health care system. They have a very strong guideline already in place in Japan, so we’re very excited for that launch. And then maybe the final component of that bridge would come from kind of initial inclusion in clinical practice guidelines in particular subtypes of cancer where we’re we’ve got more data and further along with the evidence development, like colorectal cancer, for example. So those are the buckets that I would point to that would bridge you to that indicative ASP goal.

Matt Sykes, Life Science Tools and Diagnostics Analyst, Goldman Sachs: Got it. If we shift over to women’s health, this is a segment that I’m probably not alone in this, that I thought would probably slow a lot sooner than it has. Yeah. And either you’ve been really conservative or you’ve been surprised too of the strength. There’s clearly been some consolidation as players have come out.

You bought a book of business from Invitae, which also helped some incremental growth. But what would you attribute to sort of the persistence of a fairly attractive growth rate in what I would consider a high penetration relatively mature market? And what is your long term view as to what the women’s health market should grow at? Yeah. Well, NIPT solves an important clinical problem.

I mean, I sound like a broken record on these topics, but that really is the that really is the deal. I mean, if you go back to when everyone used to get a quad screen,

Mike Brophy, CFO, Natera: for every 20 positives on a quad screen, you’d have one true positive. So that’s a lot of amnios and TCs that are being run on those other 19 people that were, in retrospect, unnecessary if you had a better technology. NIPTs as a class are so good that, you know, it really knocks that down to where there’s the amniocentesis volume driven by the quad screen has has really dropped, like, quite precipitously. There’s just enormous kind of clinical utility associated with with NIPT. Then within that, you know, we ran a 20,000 patient prospective outcomes trial matched to, you know, heel pricks on the neonates that just will never be run again.

Hugely expensive and costly and time consuming to run that study. It showed outstanding results for both PANORAMA NIPT and PANORAMA for 22q microdeletion screening. And I think when when you solve an important clinical problem and you back up the performance with outstanding prospective outcomes data, I think, you know, physicians you’re meeting the need that the physicians have. Right? They wanna see that outstanding evidence.

And so I think that’s been an important driver, both for the patients and then also, you know, that redounds to the business as well. So I think that’s been the the number one, component. I think an important additional driver has been the intensity with which we have focused on customer service. Whether that comes from patients needing to call in, to us, where they’ve got a clinical question or they need to pay their copay at the deductible, we do our very best to deal with those people in a compliant but but sensitive way and a responsive way. And I think, I think that’s really resonated for both patients and physicians.

And we’ve continued to end it. K? So, we, just last year, in response to a shortage, for, rhesus factor, treatments, we launched a a a test that screens, the fetus for whether or they are kind of rhesus factor positive or not, and that effectively screens the population that really needs, for example, a rogue game shot. And so that’s that was time sensitive, incredibly important to the field, and we were able to kind of spin that up very quickly and get that out the door. And so that kind of commitment to continuing to kind of innovate has also, ultimately served us well.

So those are a couple of drivers and, of course, kind of the just the overall dynamics of the market that we talked about, have been have been critical for us. So going forward, look, I I I I do agree with you that, like, there’s, penetration continues to increase for in IPT, and it won’t go on forever, at the rate that it’s been going, and that’s okay. That’s a business where it’s a sustainable business from a financial perspective, and we’ve got plenty of room to continue to invest in innovation there.

Matt Sykes, Life Science Tools and Diagnostics Analyst, Goldman Sachs: Got it. And coming out of the first quarter, you raised OpEx guidance slightly more than your revenue raise. I think in speaking to investors, I think that was one area of kind of questions. But can you break down where those investments are going? And if you expect to continue increasing your investment in R and D in the commercial organization moving forward, just how are you thinking about calibrating that?

Because on one hand, you’ve got this MRD market to yourself today, and you know competition is coming. It’s a unique market because market share is stickier than it would be in sort of more of a screening type of diagnostics, so it’s important that you continue to gain that share. But how are you thinking about OpEx in the context of expectations from your shareholder base of profitability, but also wanting to maintain your advantage and increase your share?

Mike Brophy, CFO, Natera: Yes. It’s an consideration. I mean, I think just on the guide. I mean, the other part of the guide is that we reaffirmed our commitment to being cash flow breakeven this year. And so I think, like, the spirit of the guide is that we’re effectively kind of reaffirming kind of the bottom line commitment that we’ve made at the beginning of the year, we’re a little ahead of schedule based on the fact that we generated cash in q one.

So that’s the goal this year is to is to have it be an investment year, you know, be a cash flow breakeven or or thereabouts. And so no real change from, you know, the plans that we had articulated even, you know, midway through through last year for for 2025. I do think that, you know, it’s just inevitable that, you know, you’ve gotta generate profits to to be a company that continues to serve patients. I mean, that’s just kind of part of the job. And I think one of the questions, like, that I will have I mean, let’s hold off for the investors for a I internally will have would have a concern.

You know, as you’re adding sales reps, for example, and the volumes are growing, well, are you able are you are you growing the volume just because you’re adding more and more sales reps? Or are the reps themselves kind of getting more productive, and are you actually Is there operating leverage? Yeah. Is there actually operating leverage in the business? And we’ve shown now, I think, time and again that we’ve been able to generate meaningful operating leverage in the business.

Case study number one, I’ll take you all the way back to 2019. I feel like I’m getting old when I do this. It’s like case studies is like six year old case studies, but, you know, we were actually at the time, we were actually under a fair amount of pressure to show that we could actually make this happen, in the just in the women’s health business. We made a commitment, you know, 2017, 2018 that by the middle of twenty nineteen, we’d be cash flow breakeven in the women’s health business. And we’re able to kind of hold the sales reps constant in that business and continue to grow, and we can we hit the target.

Fast forward to 2022. The market was in a very, very difficult place. After, you know, post COVID, there’s been a had been a very pro growth mindset among investors. 2022 was it was less that. It was much more around, you know, how efficient can you be?

And we laid out a path to, you know, how like, what would the financial profile of the business need to be for us to be cash flow breakeven. And we the way that that model worked out is that it implied by, you know, middle of twenty four that you’d be able to hit that. And we hit that almost exactly to the to the extent that we actually did a little victory lap on that. We actually republished that slide off, you know, on the quarter to show you that we can do it. One more case study was just second half of last year.

Even as we were investing in the business, rep counts were relatively constant, for example, for Signatera, and yet we continue to ramp volumes very rapidly, and we generated a substantial substantially more cash than what we had had forecasted. So there’s been a a good track record here of our ability to both deliver operating leverage and able to model it accurately. So as I look, you know, to this year, I feel very good now with those case studies in hand that we ought to be investing in the business. Like, I don’t think that there there’s some open question about whether or not we can generate operating leverage. So now now is the time to make the investments to focus on, like, what do those patients need in this huge unmet need because we’ve seen now time and time again that the the leverage will be there.

And so that’s kind of the plan for this year.

Matt Sykes, Life Science Tools and Diagnostics Analyst, Goldman Sachs: Got it. And just drilling down on that on on on the R and D side, we did a recent recently did an NDR with you, and we published in the back of that. You had talked about doing certain smaller kind of experiential trials with health systems that are your partners that are shorter, smaller, but have generate meaningful clinical evidence. Could you talk about that element of R and D spend as being a little bit more episodic? And then sort of your broad commitment to R and D and which ones do you see as being sort of meaningful catalyst moving forward that you’re already that you’re spending on today?

Mike Brophy, CFO, Natera: Yeah. I mean, look. The the r and d investment has been a constant for the business going back to the kind of the my comments I made at the at the top of this discussion. Absolutely paramount that that we continue to innovate. One of the really heartening developments that we’ve seen occur in the MRD space is as we’ve developed more and more customers and relationships with academic centers, we’re finding more and more opportunities where those partners are coming to us with a chance to participate in a 200 patient, thousand time point trial in you know, name your cancer type that where we we don’t have we we may not have that dataset yet.

You know? And it’s hard on our own to go and enroll the sites and and and, you know, circle all the the people required to generate the data. But here’s a here’s a center that that, you know, has those patients and wants to wants to partner with us to generate that data. Those are the types of investments that we wanna be making right now. I mean, to rewind to 2022, when those opportunities would come up, we’d have we’d have to be we’d we’d have to we’d have to make a tough decision there because, you know, the clinical trial budget gets planned a year ahead of time, and the answer would be, look.

Like, this we have a fixed amount of money for this, and it’s a very generous budget, but we have it’s all spoken for. You know? I think now we’re in a position where we need to be doubling down in evidence generation, particularly for minimal residual disease and recurrence monitoring, and we’re definitely doing that. And so that’s one where, in addition to that being high ROIC, I think that’s the best thing for patients. And our finding has been that if we solve the problems for patients, then the business end of it kind of takes care of itself.

Matt Sykes, Life Science Tools and Diagnostics Analyst, Goldman Sachs: Got it. And on the commercial side, you’ve been adding headcount over the last couple of quarters. Kind of what’s the strategy for implementing those reps? And could we start to see impact from that expansion in the back half of this year? And you talked a little bit about enhanced productivity.

Have you gotten better at ramping up your commercial organization? Therefore, the productivity and maybe even revenue per rep is actually higher than it’s what it had been in the past.

Mike Brophy, CFO, Natera: Oh, we’ve definitely improved. I mean, this is this is now this is, you know, a fifteen year journey for our commercial team where we’ve scaled very large sales teams, run every run into every type of problem that one can run into in in, you know, a molecular diagnostic sales team that has a lot of specific requirements. I mean, these tend to be very high touch, kind of high service, somewhat high complexity in terms of the technology involved, offerings. It’s a it’s a real pleasure to have colleagues with whom I’ve now worked for a long time. I mean, Steve Chapman, CEO, was the commercial employee that was ever hired here in 2010 after having a long career at Gensign Genetics, which was really the molecular diagnostics company to ever exist.

You know? So Steve is now, for real till the young guy, he’s a he’s pretty old in terms of his, like, amount of experience in terms of molecular diagnostics, commercial activities. Over the last fifteen years, we’ve built up a commercial team and operation and a set of how set of principles for how we do things that include, you know, how how best to motivate and how to manage commercial operations and how to scale commercial teams. And so, you know, every every day, you know, the the battle scars, the mistakes, the successes, all of those come to bear with every kind of micro every daily decision that that that Steve makes on that front. So, yeah, I mean, I think we’ve definitely gotten better over time.

And that’s just another reason why I I feel good about being able to, you know, invest in commercial operations right now.

Matt Sykes, Life Science Tools and Diagnostics Analyst, Goldman Sachs: Maybe just kind of staying on on MRD for a minute, but obviously hear a lot about competitors coming into the market. Some of them are doing whole genome. I’m sure Quest has got haystack, and LabCorp’s probably not going be sitting still. As you think about that competition coming in, you think about your position today, you’ve obviously had an advantage of being a mover, but there’s also an advantage for sort of fast follower in terms of drafting behind what you’ve done. How do you, one, protect the market share you’ve got, understanding most of the battle is gonna be for new patients?

But two, like, where do you see the competitive dynamic and the competitive landscape evolving into over the next couple of years? Will it be sort of the assumed oligopoly in years that everyone kind of takes for granted, or do you think it could be very different for MRD?

Mike Brophy, CFO, Natera: Well, I think, I mean, my reaction is is honestly, is is the same reaction I had, you know, getting the feedback on ASCO this year is there’s there’s some joy in that. I mean, like, these are the companies that you mentioned are excellent companies. They’re they’re they’re they’re in the position that they’re in because they know how to execute, and they also are very good at solving, problems for patients. It’s really not the worst thing in the world for a group of companies out there kind of aggressively kind of competing and generating data and just trying to solve the clinical problem. They’re gonna come up with some good ideas that we’re gonna have to copy.

You know what I mean? And and we’ve we’ve come up with a few ideas that they they’ve thought they’ve probably they’ve probably copying as well. And that’s good for the system. You know? That’s that’s good for for outcomes.

I think so long as, you know, the data continues to bear out, which I fully expect it will, you know, we’re gonna have our fair share of of the business. And the the growing of the business and the adoption of MRD for the for the population will improve the health of the population, will take costs out of the system, it it it’ll end up being fine for us as well. So when we think about, hey. How do we spend our time? It’s less about worrying about, like, defending some piece of share or, you know, dealing with some one competitor or another.

And it’s much more about, hey. Just work backwards from the clinical problem. I mean, the the the the the physicians and the patients tell you what they need to be what you need to be working on because they tell you what their problems are. So you just that’s the true north. If you point at that, you’ll run into other competitors that are trying to do that as well, and that and that’s fine.

Matt Sykes, Life Science Tools and Diagnostics Analyst, Goldman Sachs: K. Maybe switching over to screening, which is one of the kind of new tests that you talked about this year. One, remind us of the time line for data releases, how you’re thinking about that. Two, what are you kind of baking in for R and D spend? I think commercially, you’ve already kind of hinted that partnership or some lower cost way of doing that might be the way you go if the data is good.

But just kind of give us the overall view on screening and what you’re looking forward to

Mike Brophy, CFO, Natera: Well, we were very excited with the screening data that we were able to preview with folks at the at the JPMorgan conference, this year. This is another worthy goal. You know? Early cancer detection screening has a has an enormous role to play, I think, in the future of health care in The United States.

I’m 45, so I I just actually just got my colonoscopy, and that was quite that was quite an ordeal. I would love to have had that have been, just a blood test. And I think over time, you know, it probably will be. It won’t be unless all these companies are, you know, kind of pointing at this and trying to make this as good as it can be. To say nothing of the multi cancer early detection opportunity, many people die from cancer not because their cancer is inherently untreatable.

It’s just that they’re not they don’t develop symptoms until they have stage four disease and there’s not much to be done. So that’s a that’s a very worthy goal. Step one for us is is just to run the FDA enabling trial. I mean, think that there is enough there in the performance that we’ve shown to warrant that level of investment. And then beyond that, it like anything else, we’ll have to be heavily phase gated based on success.

So if the FDA enabling study is successful, we do have an excellent, you know, primary care, channel already in the OBGYN channel. Okay. I would humbly submit this is best OBGYN channel OBGYN channel that’s ever been assembled, that we can offer this, offer the test through that can be quite useful. And then from there, we’ll see we’ll see what the data generates and and what we can do.

Matt Sykes, Life Science Tools and Diagnostics Analyst, Goldman Sachs: Got it. Just pivoting towards Japan, which you mentioned, you you kinda talked about the ASP impact, but it’s obviously a major opportunity for Signatera volume growth as well. Can you maybe talk about any differences from The U. S. Opportunity set and how quickly you can ramp up testing following reimbursement and then launch in ’27?

Yeah. It’s very hard to know, like, exactly, like, what the curve of

Mike Brophy, CFO, Natera: the adoption, would be in Japan. There are some, dynamics there that I think would argue for reasonably rapid adoption. Number one, colorectal cancer is very common in Japan, much more common than it is in The United States. Number two, there’s been a huge emphasis probably related to that. There’s been a huge emphasis on data generation, and colorectal cancer treatment in Japan, as evidenced by the fact that there’s already a very strong guideline in place in Japan for MRD, usage even though there’s not really any any products on on the market just yet.

Number three, a lot of our the some of our best prospective outcomes data is actually Japanese data.

Matt Sykes, Life Science Tools and Diagnostics Analyst, Goldman Sachs: Okay? Yeah.

Mike Brophy, CFO, Natera: And so I think that’s that’s that’s incredibly useful for that population. So the the the ramp of that I mean, maybe one one final one is that when we were launching in The United States, this was this was an entirely new concept. And now I think MRD has a much more well understood. I think it’s easier to make the case to physicians. You know, they kind of already understand why they would want to use a tumor informed assay, to help guide their patient’s journey.

So I think all those factors kind of would argue toward a faster ramp than what we in terms of absolute units than what we saw in The United States. But you do have to see it. You got to see it in person.

Matt Sykes, Life Science Tools and Diagnostics Analyst, Goldman Sachs: Do you think people might be underestimating the opportunity in Japan because of the prevalence is so much higher? I mean, the population is smaller than The US, but the prevalence is higher. Is it is it a large operate larger opportunity than you think people would assume?

Mike Brophy, CFO, Natera: Well, I think one of the reasons I I I actually think this is kind of thoughtful. I mean, investors, you tell them that there’s something that’s coming in ’27 and it’s, like, you know, early twenty five, it’s just, unfortunately, that’s just a little bit beyond kind of the aperture that what where most investors can really afford to to spend a bunch of time and diligence. And I think as we get closer to the launch and as we get into the launch, I think I think investors, you know, will be able to understand that just fine.

Matt Sykes, Life Science Tools and Diagnostics Analyst, Goldman Sachs: Got it. Got a lot more questions, but we are over time. So, Mike, thank you very much. Appreciate it.

Mike Brophy, CFO, Natera: For having me.

Matt Sykes, Life Science Tools and Diagnostics Analyst, Goldman Sachs: Yeah. Cheers.

This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.