Strong 3Q23 for Natera; Lots of Momentum with MRD, Potential for Medicare Renasight Coverage, and Improving Reimbursement
11-9-23 (by: Scott Gleason) Natera has reported its financial results for the third quarter with total revenues of $268.3 million, an increase of approximately 27% compared to $210.6 million in Q3 2022. The company processed 626,000 tests in Q3 representing 21% volume growth. This included total oncology tests of 89,000 which grew by 68% with the company’s MRD test Signatera up 85% in the clinical channel.
The company also recently published results from its RenaCARE study demonstrating strong clinical utility for the test in patients with chronic kidney disease and potentially creating a new, very large, genetic testing market with 37 million individuals with chronic kidney disease. Management noted that rates of clinically actionable variants exceeded the hereditary cancer market. The company noted that it recently submitted an application for coverage to MolDx for Renasight coverage. The vast majority of chronic kidney disease patients are covered by Medicare.
Natera also highlighted several recent positive MRD trials and noted a new clinical indication which is treatment upon becoming ctDNA positive, which could increase the importance of monitoring disease recurrence in patients if data shows improved outcomes with early intervention. The company noted several trials ongoing in this indication including their recently announced study in endocrine therapy for breast cancer patients. The company noted that 35% of U.S. oncologists ordered Signatera in the quarter and the average ASP is now above $900.
In Organ Health, the company noted that confusion related to draft LCDs issued by Medicare has now been largely resolved, and testing has largely rebounded.
The company reduced its cash burn to approximately $38 million in Q3 2023, marking a significant decrease of approximately 66% compared to Q3 2022. On the call management highlighted their confidence in reaching cash flow break even next year.
Steve Chapman, Chief Executive Officer of Natera, expressed satisfaction with the company’s performance, highlighting robust volume and revenue growth, operational discipline with a significant reduction in cash burn, and the delivery of strategic clinical milestones. He emphasized the company’s commitment to its strategic roadmap, including groundbreaking studies in chronic kidney disease and key evidence supporting Signatera across various cancer indications.
The company raised its full year guidance and now expects revenue in the range of $1.035 billion to $1.05 billion, up from the previous range of $1.015 billion to $1.035 billion. Net cash consumption is now expected to be approximately $260 million to $280 million, down from the previous range of $300 million to $325 million.