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Natera Q2 Revenues Rise 15 Percent on Higher Test Volume

NEW YORK (GenomeWeb) – Natera reported after the close of the market Thursday that its second quarter revenues jumped 15 percent year over year as its test volume rose sharply.

The San Carlos, California-based molecular diagnostics firm reported total revenues of $52 million, up from $45.1 million for Q2 2015 and besting the consensus Wall Street estimate of $50.6 million.

Natera said that during the quarter it accessioned more than 103,000 tests, an approximately 49 percent increase from 69,000 tests in the second quarter of 2015. Of that total, it accessioned more than 80,000 Panorama non-invasive prenatal tests in Q2 2016, up from around 58,000 Panorama tests in the prior-year second quarter. It also accessioned more than 18,800 Horizon carrier screening tests in the second quarter, up from around 7,000 in Q2 2015.

The firm posted a net loss of $22.6 million, or $.46 per share, compared to a net loss of $19.7 million, or $3.58 per share, in Q2 2015. It beat the average Wall Street estimate for a loss of $.48 per share.

Natera's R&D spending increased to $10.3 million from $6.7 million year over year, while its SG&A expenses climbed to $33.2 million from $28.1 million.

Natera finished the quarter with $16.6 million in cash and cash equivalents, $1.3 million in restricted cash, and $198.6 million in short-term investments.

During the quarter, Natera and Illumina extended a supply agreement for 10 years, under which Illumina will supply Natera with products for use in oncology and transplant diagnostic testing.

And in the past month, the firm has licensed its NIPT technology to Unilabs, enabling the European clinical testing lab to offer Panorama through its own lab. It also inked a collaboration with the University of California, San Francisco to study DNA markers of kidney transplant rejection.

Natera CEO Matt Rabinowitz said on a conference call following the release of the Q2 results that transplant diagnostics has a $1.3 billion total addressable market for the firm.

"Natera and UCSF will investigate whether the non-invasive measurement of donor-derived cell-free DNA could improve patient management and organ survival," he said. "This kind of application is a natural fit for our technology, as measuring the fraction of donor DNA in a sample is very similar to measuring a fraction of fetal DNA in our Panorama test."

Rabinowitz said that in internal studies the firm has been "able to detect donor-derived cell-free DNA at levels below the detection limits of the leading commercially available approaches. As a result, we think we can deliver excellent sensitivity with a cost per test below our current Panorama costs, while current reimbursement levels for tests in this indication are substantially higher than NIPT reimbursement."

Company officials also noted that they are pursuing several oncology indications with Natera's technology including lung, ovarian, and breast cancer, with a focus on early-stage disease.

In Friday morning trade on the Nasdaq, shares of Natera dropped around 10 percent to $11.75.