NEW YORK – Natera is ramping up its R&D investments and expanding its commercial operations to take advantage of rising sales of its Signatera test for cancer recurrence and to solidify its presence in other fields such as genitourinary cancer.
In an after-market call with investors, Natera CEO Steve Chapman said that for the three months ended March 31, Signatera clinical volumes grew 52 percent year over year and that roughly 45 percent of all US oncologists ordered the cell-free DNA minimal residual disease (MRD) test in the quarter. Test volumes increased across all Natera's businesses in Q1, driving a 37 percent increase in product revenues to $500 million from $364.7 million a year ago.
Natera's overall Q1 revenues rose 36 percent to $501.8 million from $367.7 million a year ago as licensing and other revenues dipped slightly to $1.8 million from $3.1 million a year ago. On average, analysts had expected Q1 revenues of $446.7 million.
Despite this growth, Chapman called the market for Signatera "under-penetrated," and sees greater returns in the near- to mid-term for greater R&D investment.
"We expanded our commercial operations in Q4 and Q1, and those investments are on track to drive additional growth in [20]26 and beyond," CFO Mike Brophy said on the call.
Natera's Q1 R&D spending swelled 46 percent to $129.1 million from $88.6 million a year ago, while its SG&A expenses grew 33 percent to $266.9 million from $194.3 million. These operating expense increases were primarily driven by headcount growth to support new product offerings and by higher consulting and legal expenses, the company said.
The Austin, Texas-based molecular diagnostics company reported that it had processed 855,100 tests in Q1, a 16 percent increase from 735,800 tests a year ago. In particular, the company processed 167,700 oncology tests, up 46 percent from 114,800 such tests a year ago. Additionally, Chapman noted that the company saw "north of 50 percent" year-over-year growth in organ health products.
"In addition to the volume momentum," Chapman said, "the investments we've made in our reimbursement operations continue to improve average selling prices, and we're seeing ASP strength across the board in women's health, organ health, and oncology."
ASPs rose slightly above $1,100 over the quarter, driven in large part by securing Medicare Advantage reimbursement. Chapman said that if trends continue and Signatera gains greater guideline inclusion in the US and Japan, the company sees strong potential for ASPs to rise above $2,000 per test.
"We see 2025 as a crucial investment year for us, particularly around Signatera," Chapman said. "Given the potential size of the market, we think Signatera could eventually generate more than $5 billion in revenue."
Given this outlook, Chapman added that the company plans to continue funding high return-on-investment activities in commercial operations, clinical trials, and product improvements throughout the year.
The firm has numerous studies underway, and whose results Natera expects will drive further test adoption across multiple branches of its business.
For instance, Natera will soon present the results of its IMVIGOR 011 trial, investigating whether patients who test positive for MRD benefit from added immunotherapy after surgical removal of their bladder cancer.
"We expect [those results] mid-year," said Alexey Aleshin, the firm's chief medical officer and general manager of oncology, "and we think that we'll have the potential to really move the needle in [the genitourinary space] with muscle-invasive bladder cancer."
If successful, Aleshin said that this will result in the first companion diagnostic label that the company plans to bring to the US Food and Drug Administration.
Additionally, the firm is on track to launch a tumor-naïve MRD test for colorectal cancer in the near future.
The company is also investing beyond Signatera. Earlier this year, for instance, it presented data from the DEFINE-HT study, suggesting that its Prospera Heart with Donor Quantity Score predicted graft dysfunction more often than via endomyocardial biopsies, often even in the absence of biopsy-positive rejection.
Despite increased operating expenses, the firm trimmed its Q1 net loss to $66.9 million, or $.50 per share, from a net loss of $67.6 million, or $.56 per share, a year ago. On average, analysts had expected a loss per share of $.66.
Natera finished the quarter with $973.8 million in cash, cash equivalents, and restricted cash and $17.8 million in short-term investments.
The company raised its 2025 revenue guidance to a range of $1.94 billion to $2.02 billion, up from a previous range of $1.87 billion to $1.95 billion.
"This implies about a 26 percent revenue growth year on year," Chapman said.