NEW YORK – Natera said Wednesday afternoon that its Signatera minimal residual disease testing business grew 85 percent year over year in the third quarter, delivering the company one of its best quarters on record for the Signatera technology and contributing to a significant overall revenue boost.
During a call with investors, Natera CEO Steve Chapman noted strong year-on-year revenue growth in both women's health and oncology versus Q3 2022, but he said Signatera volume in particular exceeded the firm's internal forecast.
The company's third quarter revenues were up 27 percent overall, driven by both test volume growth and improvements in average selling price. For the three months ended Sept. 30, the firm reported revenues of $268.3 million compared to $210.6 million for the same period in 2022. Analysts, on average, had expected revenues of $259.3 million. Product revenues were up 33 percent at $265.2 million compared to $199.8 million a year ago, while licensing and other revenues were down 71 percent at $3.1 million from $10.8 million.
Natera said it processed approximately 626,000 tests in the third quarter compared to approximately 517,500 tests processed in the third quarter of 2022.
The company performed approximately 89,000 oncology tests, up 68 percent from 53,000 tests in the third quarter of 2022. Approximately 81,000 of these were the firm's Signatera residual disease assay, a volume boost of 85 percent compared to the prior-year period.
According to Natera's president of clinical diagnostics, Solomon Moshkevich, this growth reflects a strong increase in new patients, continued testing by existing patients, and significant adoption by new physicians who had never ordered Signatera before. "We believe over 35 percent of all US oncologists ordered Signatera in the quarter," he said during the call.
According to Chapman, although the MRD test is gaining ground in current applications, Natera is also at a critical point in expanding Signatera into new indications.
The company is also continuing to generate data supporting clinical utility. For example, it also announced on Wednesday that it is participating in a new international breast cancer trial, which Chapman said reflects the company's growing focus on the use of Signatera to suggest treatment interventions.
"More and more, we are leading the way in a new area that we call 'treatment on molecular relapse,' which is where patients can actually receive a drug upon becoming ctDNA positive with Signatera in the surveillance setting rather than waiting for radiologic evidence of recurrence," he said, adding that, long term, "this might be the single biggest MRD opportunity and one where we believe Natera has a meaningful first-mover advantage with multiple Phase II and Phase III trials already underway, some of which have been ongoing for several years already."
Called TREAT ctDNA, the multicenter randomized Phase III study will be conducted by the European Organization for Research and Treatment of Cancer (EORTC) Breast Cancer Group in collaboration with Natera and Menarini.
Investigators plan to evaluate whether Menarini's endocrine monotherapy Orserdu (elacestrant) can delay or prevent occurrence of distant metastasis or death compared to standard endocrine therapy in ER-positive HER2-negative early-stage breast cancer patients who test positive for circulating tumor DNA despite showing no clinical or radiographic evidence of recurrence.
The trial, which will start before the end of this year, will screen approximately 1,900 patients across more than 120 sites in 12 countries throughout Europe, randomizing over 200 patients who are ctDNA positive by Signatera to continue standard endocrine treatment or to switch to Orserdu.
"Collaborations with leading clinical trial organizations like EORTC are needed as we seek to demonstrate the power of treatment on molecular recurrence across cancer indications. We believe this represents a paradigm shift in a patient's cancer journey, wherein ctDNA testing may serve as a critical tool to catch relapse earlier, enable treatment while disease burden is still low, and ultimately improve patient outcomes," Minetta Liu, Natera's chief medical officer of oncology, said in a statement.
As that trial progresses, several other previously initiated studies, which have been likewise examining breast cancer treatment upon molecular recurrence, should be reading out in 2024 and 2025, said Alexey Aleshin, Natera's chief medical officer, during the call.
The EORTC study joins other breast cancer-focused efforts, including a recently announced sub-study within the Phase II I-SPY 2 trial that will evaluate the ability of Signatera to monitor breast cancer patients' response to neoadjuvant therapy.
Chapman also highlighted recent data presentations featuring Signatera, which include an updated analysis of the GALAXY arm of CIRCULATE-Japan, which reinforced the test's prognostic and predictive value in colorectal cancer.
Another clinical study, of lung cancer patients' molecular response to Merck's Keytruda (pembrolizumab), recently determined that levels of circulating tumor DNA reliably correlated with patients' radiographic response eight weeks after treatment start.
Published in October, the data bolstered the evidence for clinical utility for Signatera as a tool to identify patients with metastatic non-small cell lung cancer who are less likely to benefit from the immunotherapy.
Natera also said last month that it had submitted the first premarket application module for Signatera as a companion diagnostic for patients with muscle-invasive bladder cancer to the US Food and Drug Administration. Additional modules will rely on analytical and clinical validation data that the firm is collecting in an ongoing registrational trial.
Melanoma is another area where the company believes it can prove utility for Signatera, with evidence from ongoing trials emerging for immunotherapy response monitoring, risk stratification to guide adjuvant therapy, and post-treatment surveillance.
As it has been advancing Signatera, Natera recently saw another MRD milestone with the clinical launch and Medicare coverage of FoundationOne Tracker, a separate residual disease product that Foundation Medicine in collaboration with Natera now offers to patients.
Chapman called FoundationOne Tracker a "complementary asset" to Signatera, with a focus on patients with advanced stage cancers. Foundation Medicine's recent publication on the assay showed that ctDNA testing during induction chemo-immunotherapy could distinguish patients with more favorable versus less favorable outcomes.
Outside of oncology, Natera highlighted recent progress in the nephrology market, with a publication in the Journal of the American Society of Nephrology and a presentation at the ASN Kidney Week conference from the RenaCARE study, a real-world prospective analysis of more than 1,600 patients examining the impact of the firm's Renasight test in chronic kidney disease (CKD).
Moshkevich said that renal genetics was a hot topic at the meeting, with many doctors expressing the belief that "nephrology is at the beginning of a new wave of personalized medicine similar to where oncology was 15 to 20 years ago."
For the study, more than 1,600 patients were enrolled across 31 sites. Investigators reported that one in five patients tested positive for a pathogenic or likely pathogenic variant associated with polycystic kidney disease. Of these positives, one in two patients received a new or reclassified diagnosis.
Moshkevich compared the study's 20 percent diagnostic yield for the Renasight assay to the established hereditary cancer testing market, where positive test results are seen somewhere between 5 percent and 17 percent of the time and tests have gained widespread adoption and insurance reimbursement.
"We all know that germline DNA testing in oncology has become standard practice. So given the high yield we've seen for Renasight, together with a significant clinical utility, we see a great opportunity … [and] strong potential for clinical guidelines and insurance coverage," he said.
To that end, Natera recently submitted an application to Palmetto GBA's MolDx program for coverage of the assay under Medicare.
"The market opportunity is potentially large and notably underpenetrated, with 37 million people affected by CKD in the United States. There's a significant need for reliable and actual genetic information to serve these patients, and we think Renasight could be that driver," Moshkevich added.
"Nephrologists are really welcoming this product with open arms. They're very engaged, and it's like they've been starving for a product like this. So, we're excited about that. With that said, any time you're introducing something new, it does take a while to get protocols in place and get that type of market penetration that could be impactful," Chapman added.
Regarding Natera's financial results, the firm's Q3 net loss was $109.0 million, or $.95 per share, compared to a net loss of $121.5 million, or $1.25 per share, in the same period in 2022. Analysts, on average, had expected a $.96 per share loss. Weighted average shares outstanding were approximately 115.2 million in Q3, compared to 97.1 million in the year-ago quarter.
Natera's third quarter R&D costs were up 18 percent to $77.2 million from $65.5 million a year ago, while SG&A expenses rose 5 percent to $154.7 million from $147.7 million.
Natera ended the quarter with $668.7 million in cash, cash equivalents, and restricted cash and $267.8 million in short-term investments.
The company raised its full-year revenue guidance to between $1.04 billion and $1.05 billion from a previous range of $1.02 billion to $1.04 billion.
In Thursday morning trading on the Nasdaq, Natera's shares were up 14 percent at $47.25.