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Natera Reports 19 Percent Increase in Q3 Revenues

NEW YORK – Natera reported after the close of the market on Wednesday a 19 percent increase in third quarter revenues, driven by increased sales of its Panorama noninvasive prenatal and Horizon carrier screening tests.

"Q3 was in many ways a transformational quarter for Natera," said CEO Steve Chapman in a statement. "We continued to see strong momentum in volume growth and improved average selling price per test."

"We feel like we're hitting on all cylinders now," he said during a conference call to discuss the financial results. Chapman mentioned Natera's recent positive draft local coverage decision from Medicare for its Signatera liquid biopsy test in colorectal cancer and said that the firm is now "actively planning for a significant clinical launch next year."

 

He also talked about Natera's recent partnership with Foundation Medicine for developing and commercializing personalized circulating tumor DNA monitoring assays. "As discussed, we believe this opens up an entirely new oncology market that we haven't been able to access previously," he said.

 

The company also reached technical and commercial milestones with BGI Genomics during the quarter and completed a $230 million follow-on equity offering, which was larger than originally anticipated and "puts us in a strong position to execute on our upcoming commercial launches for Prospera and Signatera," Chapman said.

 

Revenues for the quarter ended Sept. 30 totaled $77.9 million, up from $65.3 million in Q3 of 2018 and beating the consensus Wall Street estimate of $74.0 million. Milestone payments from BGI contributed about $6.6 million to revenues, Chapman said.

The company processed 200,200 tests during the quarter, an increase of 20 percent compared to the 167,000 tests it processed in Q3 of last year. Of those, 187,200 tests were accessioned and 12,100 were processed through the Constellation software platform, compared to 156,600 tests accessioned and 9,500 processed through Constellation in Q3 of 2018.

A total of 136,000 tests were Panorama noninvasive prenatal tests, an increase of 28 percent over the 106,000 Panorama tests processed in Q3 of 2018. Natera also accessioned about 55,000 Horizon carrier screening tests in the third quarter, up 25 percent from the 44,000 Horizon tests it accessioned during the same quarter last year.

Natera recognized revenue in Q3 for about 189,600 tests for which it reported results to customers in the period, up 22 percent from 154,900 tests reported in Q3 of 2018.

In terms of volume growth, "we've seen continued momentum so far in Q4 and we believe that we're on track for a strong overall growth for 2019, very much in line with the goals we set at the beginning of the year," Chapman said.

The firm's R&D expenses for the quarter totaled $12.8 million, up 3 percent from $12.4 million a year ago, while SG&A costs soared 48 percent to $56.7 million from $38.4 million in Q3 of 2018. The increase was primarily driven by higher stock-based compensation expenses, litigation costs, and other outside services. The company also gained $14.4 million from the sale of its Evercord cord blood banking business.

For Q3, Natera reported a net loss of $23.1 million, or $.33 per share, compared to a net loss of $29.7 million, or $.49 per share, and beating analysts' consensus estimate of a net loss of $.54 per share.

The company narrowed its guidance for 2019 revenues in light of the Evercore sale and now expects revenues of $295 million to $302 million, from a previous expectation of $275 million to $305 million.

As of Sept. 30, Natera held $51.6 million in cash and cash equivalents and $186.7 million in short-term investments.

Natera's stock was up 1 percent at $36.19 in mid-morning trading on the Nasdaq.

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