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Natera Obtains Final Medicare Local Coverage Determination for Kidney Transplant Test From Palmetto

NEW YORK – Natera said on Thursday that it has received a final local coverage determination (LCD) from Medicare contractor Palmetto GBA for its Prospera organ transplant rejection test for kidney transplant patients.

Effective Feb. 3, 2020, the donor-derived cell-free DNA test will be covered for all kidney transplant recipients, including those with multiple kidney transplants, marking a coverage expansion from the initial draft LCD. The test identifies both T-cell mediated and antibody-mediated rejection.

Palmetto issued its draft LCD for Prospera in March, followed by draft LCDs from others, including Natera's local Medicare contractor Noridian.

The company is conducting a prospective study of kidney transplant recipients, called ProActive Study, that aims to enroll 3,000 patients at the time of surgery and will measure changes in biopsy usage and clinical outcomes based on physician-directed use of the Prospera test.

Natera noted that almost all new transplant patients are eligible for Medicare coverage. About 20,000 new kidney transplant surgeries are performed each year in the US. Of those, an estimated 20 to 30 percent fail within five years and 45 percent fail within 10 years.

Other kidney transplant tests have also garnered LCDs this year. CareDx's AlloSure test, for example, obtained a draft LCD from Palmetto in August for kidney transplant and heart transplant patients.

Also, in October, Transplant Genomics, a unit of Eurofins Scientific, received Medicare coverage for its TruGraf Blood Gene Expression kidney transplant test, following a draft LCD earlier this year.

In a note to investors, PaperJaffray analysts William Quirk and Rachel Vatnsdal wrote that "it will be difficult for Natera to gain market share from centers that are already using a competitive test," such as CareDx's AlloSure, which they said is used by transplant centers representing 65 percent of the US transplant volume. "We believe effectively 35 percent of market share is available for competition between CareDx, Natera, and Eurofins," they wrote.

Natera's stock was up 5 percent, at $36.02, in afternoon trading on the Nasdaq.