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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

 

 

FORM 8-K

 

 

 

CURRENT REPORT

Pursuant to Section 13 or 15(d) of

the Securities Exchange Act of 1934

 

Date of Report (Date of earliest event reported): February 25, 2021

 

 

Natera, Inc.

(Exact name of registrant as specified in its charter)

 

 

 

Delaware   001-37478   01-0894487

(State or other jurisdiction

of incorporation)

 

(Commission

File Number)

 

(IRS Employer

Identification No.) 

 

13011 McCallen Pass

Building A Suite 100

Austin, Texas 78753

(Address of principal executive offices, including zip code)

 

(650) 249-9090

(Registrant’s telephone number, including area code)

 

201 Industrial Road, Suite 410

San Carlos, CA 94070 

(Former name or former address, if changed since last report)

 

 

 

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2):

 

¨Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

 

¨Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

 

¨Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

 

¨Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

 

Securities registered pursuant to Section 12(b) of the Act:

 

Title of each class  

Trading Symbol(s)

 

Name of each exchange on which registered 

Common Stock, par value $0.0001 per share   NTRA  

Nasdaq Stock Market LLC

(Nasdaq Global Select Market)

 

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).

 

Emerging growth company ¨

 

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ¨

 

 

 

 

 

 

 


Item 2.02.
Results of Operations and Financial Condition.

 

On February 25, 2021, Natera, Inc. issued a press release announcing its results for its fourth quarter and year ended December 31, 2020 and provided a related investor presentation. A copy of the press release and a copy of the investor presentation are furnished herewith as Exhibit 99.1 and Exhibit 99.2, respectively, to this Current Report on Form 8-K and are incorporated herein by reference.

 

The information in this Current Report on Form 8-K and the accompanying Exhibit 99.1 and Exhibit 99.2 shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”) or otherwise subject to the liabilities of that section, nor shall it be deemed incorporated by reference in any filing under the Securities Act of 1933, as amended, or the Exchange Act, regardless of any general incorporation language in such filing, unless expressly incorporated by reference in such filing.

 


Item 9.01.
Financial Statements and Exhibits.

 

(d) Exhibits.

 

Exhibit No.

 

Description

   
99.1   Press Release dated February 25, 2021.
99.2   Investor Presentation.
104   Cover Page Interactive Data File (formatted as inline XBRL)

 

 

 

 

SIGNATURES

 

Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

 

  Natera, Inc.
   
  By:

/s/ Michael Brophy

  Michael Brophy
  Chief Financial Officer (Principal Financial and Accounting Officer)

 

Dated: February 25, 2021

 

 

 

 

 Exhibit 99.1

 

Natera Reports Fourth Quarter and Year 2020 Financial Results

 

 

 

SAN CARLOS, Calif., February 25, 2021 /PRNewswire/ — Natera, Inc. (NASDAQ:  NTRA), a pioneer and global leader in cell-free DNA testing, today reported financial results for the fourth quarter and year ended December 31, 2020 and provided an update on recent business progress.

 

Recent Accomplishments & Highlights

 

Generated total revenues of $112.4 million in the fourth quarter of 2020 compared to $83.2 million in the fourth quarter of 2019, an increase of 35.1%. Product revenues grew 43% over the same period.

Generated total revenues of $391 million in the year 2020 compared to $302.3 million in the year 2019, an increase of 29.3%, exceeding the 2020 revenue guidance range previously provided.

Processed approximately 295,000 tests in the fourth quarter of 2020 and 1,026,500 tests for the full year 2020, compared to approximately 209,400 tests processed in the fourth quarter of 2019 and 804,300 tests for the full year 2019.

Announced positive SMART trial results, exceeding expectations in largest ever prospective NIPT and microdeletions study.

Signatera pharma business accelerating: greater than $65 million in 2020 signed contracts.

Presented successful Phase 3 Imvigor data with Genentech, in first-ever phase 3 clinical trial validation in minimum residual disease.

Commercial launch of Altera tissue based comprehensive genomic profiling, expanding Natera’s oncology total addressable market opportunity.

Commercial launch of Signatera in immunotherapy monitoring.

 

“Q4 was the fastest net unit growth quarter ever at Natera, and we delivered revenues significantly above our previous guidance. I am proud of the way the team has been able to accelerate the business even in the face of a pandemic,” said Steve Chapman, Natera’s Chief Executive Officer. “We’ve continued to drive growth in women’s health while achieving major coverage and clinical trial milestones. In oncology, we completed the build out of our commercial team on an accelerated timeline, launched a completely new product with Altera tissue based comprehensive genomic profiling, and launched the immunotherapy monitoring indication for Signatera. We are in a strong position to deliver on a successful 2021.”

 

Fourth Quarter and Year Ended December 31, 2020 Financial Results

 

Total revenues were $112.4 million in the fourth quarter of 2020 compared to $83.2 million for the fourth quarter of 2019, an increase of 35.1%. The increase in total revenues was driven primarily by an increase in product revenues compared to the fourth quarter of 2019. Product revenues grew 43% over the same period. Natera processed approximately 295,000 tests in the fourth quarter of 2020, including approximately 281,000 tests accessioned in its laboratory, compared to approximately 209,400 tests processed, including approximately 198,300 tests accessioned in its laboratory, in the fourth quarter of 2019.

 

 

 

 

In the three months ended December 31, 2020, Natera recognized revenue on approximately 281,400 tests for which results were reported to customers in the period (tests reported), including approximately 268,300 tests reported from its laboratory, compared to approximately 200,800 tests reported, including approximately 189,700 tests reported from its laboratory, in the fourth quarter of 2019, an overall increase of 40.1% for the quarter.

 

Total revenues for 2020 were approximately $391 million compared to $302.3 million in 2019, which represents an increase of 29.3%. In 2020, Natera processed approximately 1,026,500 tests including approximately 974,400 tests accessioned in its laboratory, compared to approximately 804,300 tests processed in 2019, including approximately 753,800 tests accessioned in its laboratory.

 

In 2020, Natera recognized revenue on approximately 961,500 tests reported, including approximately 912,500 tests reported from its laboratory, compared to approximately 763,900 tests reported, including approximately 718,500 tests reported from its laboratory, in 2019, an overall increase of 26% for the year.

 

Gross profit* for the three months ended December 31, 2020 and 2019 was $52.5 million and $38.8 million, respectively, representing a gross margin of 47% and 46.6%, respectively. Natera was able to achieve higher margins in the fourth quarter of 2020 compared to the fourth quarter of 2019 as a result of improved cost of goods sold per test and increased test volumes. Gross profit for the year ended December 31, 2020 and 2019 was $187.4 million and $126.9 million, respectively, representing a gross margin of 48% and 42%, respectively. Natera was able to achieve higher gross margins in the year 2020 as a result of increased test volumes and improved cost of goods sold per test.

 

Total operating expenses, representing research and development expenses and selling, general and administrative expenses, for the fourth quarter of 2020 were $126.5 million, compared to $73.6 million in the same period of the prior year, an increase of 71.9%. The increases were primarily driven by headcount growth to support new product offerings. Total operating expenses in the year ended December 31, 2020 were $403.7 million, an increase of approximately 56.8% compared to $257.5 million in the prior year, which excludes the gain from the sale of the Evercord business in 2019 of approximately $14.4 million. The increases were primarily driven by headcount growth to support new product offerings.

 

Loss from operations for the fourth quarter of 2020 was $74.0 million compared to $34.8 million for the same period of the prior year. Loss from operations for the year 2020 was $216.3 million compared to $130.7 million compared to the prior year, which excludes the gain from the sale of the Evercord business in 2019 of approximately $14.4 million.

 

Net loss for the fourth quarter of 2020 was $76.4 million, or ($0.89) per diluted share, compared to net loss of $35.2 million, or ($0.46) per diluted share, for the same period in 2019. Weighted average shares outstanding were approximately 85.7 million in the fourth quarter of 2020 compared to 76.5 million in the fourth quarter of the prior year. Net loss for the full year 2020 was $229.7 million, or ($2.84) per diluted share, compared to net loss of $124.8 million, or ($1.79) per diluted share, for the full year 2019. Weighted average shares outstanding were 81.0 million in 2020 compared to 69.6 million in 2019.

 

At December 31, 2020, Natera held $737.5 million in cash, cash equivalents, short-term investments and restricted cash, compared to $441.0 million as of December 31, 2019. As of December 31, 2020, Natera had a total outstanding debt balance of $252.5 million, comprised of $50.1 million with accrued interest under its $50.0 million line of credit with UBS at a variable interest rate of 30-day LIBOR plus 110 bps and a net carrying amount of $202.5 million under its seven-year convertible senior notes. The convertible senior notes were issued in April 2020 for net proceeds of $278.3 million, of which a portion was used to repay the $79.2 million obligations under the company’s 2017 term loan with OrbiMed Advisors. The gross principal balance outstanding for the convertible senior notes was $287.5 million as of December 31, 2020.

 

 

 

 

Financial Outlook

 

Natera anticipates 2021 total revenue of $500 million to $525 million; 2021 cost of revenues to be approximately 47% to 52% of revenues; selling, general and administrative costs to be approximately $430 million to $450 million; research and development costs to be $160 million to $180 million, and net cash burn to be $230 million to $250 million**.

 

* Gross profit is calculated as GAAP total revenues less GAAP cost of revenues. Gross margin is calculated as gross profit divided by GAAP total revenues.

 

** Cash burn is calculated as the sum of GAAP net cash used by operating activities (estimated for 2021 to be between $210 million and $230 million) and GAAP net purchases of property and equipment (estimated for 2021 to be approximately $20 million).

 

Test Volume Summary

 

Unit  Q4 2020   Q4 2019   FY 2020   FY 2019   Definition
Tests processed   295,000    209,400    1,026,500    804,300   Tests accessioned in Natera’s laboratory plus units processed outside of Natera’s laboratory
Tests accessioned   281,000    198,300    974,400    753,800   Test accessioned in Natera’s laboratory
Tests reported in its laboratory   268,300    189,700    912,500    718,500   Total tests reported in Natera’s laboratory less units reported outside of Natera’s laboratory including Evercord units in prior periods

 

About Natera

 

Natera is a pioneer and global leader in cell-free DNA testing from a simple blood draw. The mission of the company is to change the management of disease worldwide with a focus on women’s health, oncology, and organ health. Natera operates ISO 13485-certified and CAP-accredited laboratories certified under the Clinical Laboratory Improvement Amendments (CLIA) in  Austin, Texas and San Carlos, California. It offers proprietary genetic testing services to inform obstetricians, transplant physicians, oncologists, and cancer researchers, including biopharmaceutical companies, and genetic laboratories through its cloud-based software platform.

 

Conference Call Information

 

Event:  Natera's Fourth Quarter and Fiscal 2020 Financial Results Conference Call 
Date:  Thursday, February 25, 2021 
Time:  1:30 p.m. PT (4:30 p.m. ET)
Live Dial-In:  (877) 823-0171, Domestic 
  (617) 500-6932, International
   
Password:   8877495
Webcast:  https://edge.media-server.com/mmc/p/ksr9bar5

 

Forward-Looking Statements

 

This release contains forward-looking statements, including regarding the company's business operations in light of the COVID-19 pandemic. Any forward-looking statements contained in this release are based upon Natera's current plans, estimates, and expectations, as of the date of this release, and are not a representation that such plans, estimates, or expectations will be achieved. Subsequent events may cause these expectations to change, and Natera disclaims any obligation to update the forward-looking statements in the future.

 

 

 

 

These forward-looking statements are subject to known and unknown risks and uncertainties that may cause actual results to differ materially, including: we face numerous uncertainties and challenges in achieving our financial projections and goals; we may be unable to maintain our business and operations as planned in light of the COVID-19 pandemic; we may be unable to further increase the use and adoption of Panorama and Horizon, through our direct sales efforts or through our laboratory partners, or to develop and successfully commercialize new products, including Signatera and Prospera; we have incurred losses since our inception and we anticipate that we will continue to incur losses for the foreseeable future; our quarterly results may fluctuate from period to period; our estimates of market opportunity and forecasts of market growth may prove to be inaccurate; we may be unable to compete successfully with existing or future products or services offered by our competitors; we may not be successful in commercializing our cloud-based distribution model; our products may not perform as expected; the results of our clinical studies, including our SNP-based Microdeletion and Aneuploidy RegisTry, or SMART, Study, may not be compelling to professional societies or payors as supporting the use of our tests, particularly in the average-risk pregnancy population or for microdeletions screening, or may not be able to be replicated in later studies required for regulatory approvals or clearances; if either of our CLIA-certified laboratory facilities becomes inoperable, we will be unable to perform our tests and our business will be harmed; we rely on a limited number of suppliers or, in some cases, single suppliers, for some of our laboratory instruments and materials and may not be able to find replacements or immediately transition to alternative suppliers; if we are unable to successfully scale our operations, our business could suffer; the marketing, sale, and use of Panorama and our other products could result in substantial damages arising from product liability or professional liability claims that exceed our resources; we may be unable to expand third-party payer coverage and reimbursement for Panorama, Horizon and our other tests, and we may be required to refund reimbursements already received; third-party payers may withdraw coverage or provide lower levels of reimbursement due to changing policies, billing complexities or other factors, such as the increased focus by third-party payers on requiring that prior authorization be obtained prior to conducting a test; if the FDA were to begin actively regulating our tests, we could incur substantial costs and delays associated with trying to obtain premarket clearance or approval and incur costs associated with complying with post-market controls; litigation or other proceedings, resulting from either third party claims of intellectual property infringement or third party infringement of our technology, is costly, time-consuming and could limit our ability to commercialize our products or services; any inability to effectively protect our proprietary technology could harm our competitive position or our brand; and we cannot guarantee that we will be able to service and comply with our outstanding debt obligations or achieve our expectations regarding the conversion of our outstanding convertible notes.

 

Additional risks and uncertainties that could affect our financial results are included under the captions, "Risk Factors" and "Management's Discussion and Analysis of Financial Condition and Results of Operations" in our most recent filings on Forms 10-K and 10-Q and in other filings that we make with the SEC from time to time. These documents are available on our website at www.natera.com under the Investor Relations section and on the SEC's website at www.sec.gov.

 

Natera assumes no obligation to, and does not currently intend to, update any such forward-looking statements after the date of this release.

 

Contacts

 

Natera, Inc.

 

Investor Relations
Mike Brophy, CFO, Natera, Inc., 510-826-2350

 

Media
Paul Greenland, VP of Corporate Marketing, Natera, Inc., pr@natera.com

 

 

 

 

Natera, Inc.

Condensed Consolidated Balance Sheets

(Unaudited)

(in thousands, except par value per share amount)

 

   December 31,   December 31, 
   2020   2019 
       (1) 
Assets          
Current assets:          
Cash and cash equivalents  $48,668   $61,926 
Restricted cash   187    55 
Short-term investments   688,606    379,065 
Accounts receivable, net of allowance of $3,080 in 2020 and $2,919 in 2019   78,565    53,351 
Inventory   20,031    12,394 
Prepaid expenses and other current assets   26,606    16,376 
Total current assets   862,663    523,167 
Property and equipment, net   33,348    23,283 
Operating lease right-of-use assets   21,399    23,730 
Other assets   14,743    12,476 
Total assets  $932,153   $582,656 
           
Liabilities and Stockholders’ Equity          
Current liabilities:          
Accounts payable  $8,096   $8,604 
Accrued compensation   30,371    16,088 
Other accrued liabilities   60,407    49,043 
Deferred revenue, current portion   50,125    56,016 
Short-term debt financing   50,054    50,123 
Total current liabilities   199,053    179,874 
Long-term debt financing   202,493    73,656 
Deferred revenue, long-term portion   22,805    23,808 
Operating lease liabilities, long-term portion   21,246    26,297 
Other long-term liabilities   320    310 
Total liabilities   445,917    303,945 
Commitments and contingencies          
Stockholders’ equity:          
Common stock (2)   9    8 
Additional paid in capital   1,411,286    976,955 
Accumulated deficit   (929,318)   (699,171)
Accumulated other comprehensive gain   4,259    919 
Total stockholders’ equity   486,236    278,711 
Total liabilities and stockholders’ equity  $932,153   $582,656 

 

(1)The condensed, consolidated balance sheet at December 31, 2019 has been derived from the audited consolidated financial statements at that date included in the company’s Annual Report on Form 10-K for the year ended December 31, 2019.
(2)As of December 31, 2020, there were approximately 86,223,000 shares of common stock issued and outstanding.

 

 

 

 

Natera, Inc.

Condensed Consolidated Statements of Operations and Comprehensive Loss

(Unaudited)

(in thousands, except per share data)

 

   Year ended December 31, 
   2020   2019   2018 
       (1)   (1) 
Revenues               
Product revenues  $367,211   $269,881   $240,366 
Licensing and other revenues   23,794    32,447    17,288 
Total revenues   391,005    302,328    257,654 
Cost and expenses               
Cost of product revenues   185,865    162,604    158,081 
Cost of licensing and other revenues   17,755    12,866    7,974 
Research and development   100,035    51,357    51,355 
Selling, general and administrative   303,627    206,176    154,872 
Gain from disposal of business       (14,388)    
Total cost and expenses   607,282    418,615    372,282 
Loss from operations   (216,277)   (116,287)   (114,628)
Interest expense   (15,082)   (10,693)   (10,476)
Interest and other (expense) income, net   7,562    4,152    (2,729)
Loss on debt extinguishment   (5,848)        
Loss before income taxes   (229,645)   (122,828)   (127,833)
Income tax expense   (98)   (1,999)   (321)
Net loss  $(229,743)  $(124,827)  $(128,154)
Unrealized gain on available-for-sale securities, net of tax   3,340    1,471    214 
Comprehensive loss  $(226,403)  $(123,356)  $(127,940)
                
Net loss per share:               
Basic and diluted  $(2.84)  $(1.79)  $(2.22)
                
Weighted-average number of shares used in computing basic and diluted net loss per share:               
Basic and diluted   81,011    69,555    57,848 

 

(1)The condensed, consolidated Statements of Operations and Comprehensive Loss for the year ended December 31, 2019 and 2018 have been derived from the audited consolidated financial statements for the periods included in the company’s Annual Report on Form 10-K for the years ended December 31, 2019.

 

 

 

Exhibit 99.2

 

Natera, Inc. Investor presentation February 2021 Q4 2020 earnings call

 

 

2 Not for reproduction or further distribution. This presentation contains forward - looking statements under the meaning of the Private Securities Litigation Reform Act of 1995. All statements other than statements of historical facts contained in this presentation, including statements regarding the market opportunity, products and launch schedules, reimbursement covera ge and product costs, commercial partners, user experience, clinical trials, financial performance, strategies, anticipated revenue and financial outlook and goals and general business condition s o f Natera, Inc. (“Natera”, the “Company”, “we” or “us”), are forward - looking statements. These forward - looking statements are subject to known and unknown risks and uncertainties that may cause act ual results to differ materially, including: we face numerous uncertainties and challenges in achieving our financial projections and goals; we may be unable to maintain our business and ope rations as planned due to disruptions and economic uncertainty caused by the COVID - 19 pandemic; we may be unable to further increase the use and adoption of Panorama and Horizon, through our direct sales efforts or through our laboratory partners, or to develop and successfully commercialize new products, including Signatera and Prospera; we have incurred losses since our ince pti on and we anticipate that we will continue to incur losses for the foreseeable future; our quarterly results may fluctuate from period to period; our estimates of market opportunity and foreca sts of market growth may prove to be inaccurate; we may be unable to compete successfully with existing or future products or services offered by our competitors; we may not be successful in com mer cializing our cloud - based distribution model; our products may not perform as expected; the results of our clinical studies, including our SNP - based Microdeletion and Aneuploidy RegisTry , or SMART, Study, may not be compelling to professional societies or payors as supporting the use of our tests, particularly in the average - risk pregnancy population or for microdeletions screening , or may not be able to be replicated in later studies required for regulatory approvals or clearances; if either of our primary CLIA - certified laboratory facilities becomes inoperable, we will be unable to perform our tests and our business will be harmed; we rely on a limited number of suppliers or, in some cases, single suppliers, for some of our laboratory instruments and materials and m ay not be able to find replacements or immediately transition to alternative suppliers; if we are unable to successfully scale our operations, our business could suffer; the marketing, sale, an d use of Panorama and our other products could result in substantial damages arising from product liability or professional liability claims that exceed our resources; we may be unable to expand , o btain or maintain third - party payer coverage and reimbursement for Panorama, Horizon and our other tests, and we may be required to refund reimbursements already received; third - party payers may withdraw coverage or provide lower levels of reimbursement due to changing policies, billing complexities or other factors, such as the increased focus by third - party payers on requiring that prior authorization be obtained prior to conducting a test; if the FDA were to begin actively regulating our tests, we could incur substantial costs and delays associated with trying to obtain pre mar ket clearance or approval and incur costs associated with complying with post - market controls; litigation or other proceedings, resulting from either third party claims of intellectual property in fringement or third party infringement of our technology, is costly, time - consuming and could limit our ability to commercialize our products or services; any inability to effectively protect our pro pri etary technology could harm our competitive position or our brand; and with respect to our ability to service and comply with our outstanding debt obligations and our expectations regarding the co nve rsion of our outstanding convertible notes.” We discuss these and other risks and uncertainties in greater detail in the sections entitled “Risk Factors” and "Management's Discussion and Anal ysi s of Financial Condition and Results of Operations" in our periodic reports on Forms 10 - K and 10 - Q and in other filings we make with the SEC from time to time. Given these uncertainties, you shoul d not place undue reliance on the forward - looking statements. Moreover, we operate in a very competitive and rapidly changing environment. New risks emerge from time to time. It is not po ssi ble for our management to predict all risks, nor can we assess the impact of all factors on its business or the extent to which any factor, or combination of factors, may cause actual results to differ materially from those contained in any forward - looking statement. In light of these risks, uncertainties and assumptions, the forward - looking events and circumstances discussed in this presentation may not occur and actual results could differ materially and adversely from those anticipated or implied. Except as required by law, we undertake no obligation to update publicly any forwar d - looking statements for any reason after the date of this presentation to conform these statements to actual results or to changes in our expectations. We file reports, proxy statemen ts, and other information with the SEC. Such reports, proxy statements, and other information concerning us is available at http:// www.sec.gov . Requests for copies of such documents should be directed to our Investor Relations department at Natera, Inc., 13011 McCallen Pass, Building A Suite 100, Austin, TX 78753. Our telephone number is (650) 249 - 9090. Safe harbor statement

 

 

3 Not for reproduction or further distribution. • Processed 295,000 Q4 tests, 41% YoY unit growth versus Q4 2019 • Total revenues of ~$112M, product revenue up 43% vs Q4 2019 • Strong momentum in average risk NIPT coverage and exceeded expectations in SMART trial • Signatera pharma business accelerating, greater than $65 million in 2020 signed contracts • Presented successful Phase 3 Imvigor data with Genentech, first - ever phase 3 clinical trial validation in the minimum residual disease market • Completed build out of Oncology commercial footprint • Launching Altera tissue based comprehensive genomic profiling for therapy selection • Launching Signatera in immunotherapy monitoring • Guiding $500 – $525 million in revenues for 2021 Recent highlights

 

 

4 Not for reproduction or further distribution. Q4 volume: Fastest net unit growth in Natera history Total processed units (in thousands) 164K 163K 167K 174K 200K 194K 200K 209K 236K 234K 262K 295K Q1 2018 Q2 2018 Q3 2018 Q4 2018 Q1 2019 Q2 2019 Q3 2019 Q4 2019 Q1 2020 Q2 2020 Q3 2020 Q4 2020 • Strong market share gains in Women’s Health • Continued progress in Transplant and Oncology

 

 

5 Not for reproduction or further distribution. Accelerating revenue growth • Volume - out performance combined with improving ASPs • New products gaining momentum Total revenues ($ in millions) Product revenues 1 ($ in millions) $74 $106 Q4 2019 Q4 2020 $54 $67 $83 $112 Q4 2017 Q4 2018 Q4 2019 Q4 2020 24 % 24 % 35 % 43 % 1. Excludes licensing and other revenues

 

 

6 Not for reproduction or further distribution. SMART trial results exceed expectations NIPT: • Largest prospective trial ever conducted • 99% sensitivity / 99.97% specificity in Trisomy 21 • Panorama AI algorithm reduces no calls to 1.46% Microdeletions: • 22q11.2 microdeletion incidence higher than expected: 1/1,524 • Best in class 100% sensitivity for >2.5 Mb deletions • SNP method uniquely detects small 22q deletions vs MPSS – 41% of disease load • Overall sensitivity 83% with 53% PPV Drive market share: • Best in class performance • Most extensively validated • Highly differentiated • Low detection rate by ultrasound Revenue upside: • Supports screening for aneuploidies and microdeletions in all women • CMS rate for microdeletions: $759 • >400K microdeletions tests run in 2020 by Natera, 37% YoY growth Future impact Study results

 

 

7 Not for reproduction or further distribution. • 2M+ tests performed • 1.3M+ patients studied • 23 peer reviewed publications • 9 points of clinical differentiation Well positioned to serve >4.5 million pregnancies Source: Natera internal company data

 

 

8 Not for reproduction or further distribution. Source: internal company estimates Expanding Oncology TAM opportunity ctDNA / liquid biopsy Monitoring/MRD $15B Therapy selection $6B Early detection

 

 

9 Not for reproduction or further distribution. Launch of Altera CGP for therapy selection • Comprehensive genomic p rofile (CGP) identifying mutations across full exome, with boosted >500x NGS coverage in top 400+ clinically relevant genes • RNAseq for fusions and rearrangements • Matched normal DNA analysis to avoid false positives from germline • MSI status and exome - based TMB status Altera key features Seamless integration with Signatera Altera Tumor CGP report Custom assay design ctDNA analysis Tumor WES

 

 

10 Not for reproduction or further distribution. Signatera IO monitoring with Altera ● > 200,000 patients treated with immunotherapy (IO) annually, mostly with advanced disease ● IO eligibility often depends on CGP analysis, to identify therapeutically actionable mutations, TMB, MSI ● Clinically indicated for Signatera personalized monitoring, to identify tumor response earlier and more accurately than imaging alone 1. IQVIA Œ Institute for Human Data Science Releases Global Oncology Trends 2019 Study: Record Number of Cancer Drugs Launched in 2018 a cr oss 17 Indications. IQVIA 2. Bratman SV, Yang SYC, Iafolla MAJ, et al. Personalized circulating tumor DNA analysis as a predictive biomarker in solid tumor patients treated with pembro li zumab. Nat. Cancer. 2020. doi : 10.1038/s43018 - 020 - 0096 - 5 CT #1 CT #2 CT #3 Signatera TM Regimen B Regimen A DECISION POINT 2 Modify treatment strategy? TIME DECISION POINT 3 Discontinue IO in exceptional responders? True progression? DECISION POINT 1 BASELINE Signatera with Altera CGP

 

 

11 Not for reproduction or further distribution. Acceleration in Pharma business, ~$120M signed to date Average deal size getting larger, including multiple phase 3 trials with patient volume and development fees Two key benefits for pharma: 1. Study enrichment: treating only MRD - positive patients, for higher drug efficacy 2. Surrogate endpoint: observing rates of MRD clearance, for faster study results Value of new signed contracts 2018 2019 2020 $9M $46M >$65M

 

 

12 Not for reproduction or further distribution. Phase 3 IMvigor study proved that Signatera is predictive of treatment benefit in the adjuvant setting 1. Powles T, Assaf ZJ, Davarpanah N, et al. Clinical outcomes in post - operative ctDNA (+) muscle - invasive urothelial carcinoma patients after atezolizumab adjuva nt therapy. ESMO IO, Dec 9 - 12, 2020, Virtual Meeting, Oral Presentation #10 . Background: • GNE - sponsored, PhIII randomized controlled trial of atezo vs. obs in adjuvant bladder cancer. Pre - specified analysis with Signatera. Results: • 41% survival benefit in MRD - positive patients treated with atezo. Zero treatment benefit in MRD - negative population. Significance: 1. Pharma: MRD stratification becomes a must - have for adjuvant trials 2. Clinical: predictive evidence strengthens utility of Signatera in CRC Overall survival 0.75 1.00 0.50 0.25 0.00 MRD - negative (63%) HR, 1.31 P =0.32 Months 0 10 20 30 40 50 Atezolizumab Observation MRD - positive: (37%) HR, 0.59 P =0.0059 Overall survival in MIBC patients treated with adjuvant atezolizumab vs. observation 1

 

 

13 Not for reproduction or further distribution. Extending our industry leadership in MRD 1. CRC – Reinert et al (JAMA Oncology) 2. IO pan - cancer – Bratman et al (Nature Cancer) 3. Lung – Abbosh et al (Nature) 4. Bladder – Christensen et al (JCO) 5. Breast – Coombes et al (CCR) 6. Breast – Magbanua et al (Annals) 7. Esophageal – Einstein et al (JCOPO) 8. Breast – accepted manuscript NEW 2K patients studied with leading pan - tumor sensitivity and specificity >$65M • Breast • Melanoma • Renal • Pancreatic • Liver • Lymphoma • Multiple myeloma • Colorectal • Lung • Prostate • Glioblastoma • Ovarian • Head & neck • Gastro - esophageal 8 clinical studies published 50+ studies in pipeline

 

 

14 Not for reproduction or further distribution. Q4 Financial overview ($ in millions, except for per share data) Balance sheet Dec 31, 2020 Sep 30, 2020 Change Q/Q Cash & Investments 2 $737.5 $809.7 ($72.2) UBS Line of Credit $50.1 $50.1 $ — Convertible Senior Notes 3 $202.5 $200.0 $2.5 P&L Q4’20 Q4’19 Change Product Revenues $106.5 $74.5 $32.0 Licensing and Other Revenues $5.9 $8.7 ($2.8) Total Revenues $112.4 $83.2 $29.2 Gross Margin% 1 47% 47% 13 bps R&D $32.4 $15.0 $17.4 SG&A $94.1 $58.6 $35.5 Net Loss Per Diluted Share ($0.89) ($0.46) ($0.43) 1. Gross margin is calculated as gross profit divided by GAAP total revenues. Gross profit is calculated as GAAP total revenues les s GAAP cost of revenues. 2. Cash and investments also include cash equivalents and restricted cash. 3. This balance reflects net carrying value for the Convertible Senior Notes under ASC 470 - 20 while the gross principal amounts out standing is $287.5 million as of December 31, 2020.

 

 

15 Not for reproduction or further distribution. 2021 Annual guidance Guide $ (millions) Key drivers Revenue $500 – $525 Continued volume growth, conservative ASPs, growing contribution from new products Gross margin % revenue 47% – 52% Conservative ASP assumptions, COGS improvement, product revenues higher proportion of revenue mix vs. 2020 SG&A $430 – $450 Full commercial teams for Oncology, Transplant in place R&D $160 – $180 Expansion into new Oncology indications and products Cash burn $230 - $250 Focused on new business expansion Natera expects the Women’s H ealth business to reach cash flow breakeven in 2021

 

 

16 Not for reproduction or further distribution. ©2020 Natera, Inc. All Rights Reserved. Not for reproduction or further distribution. ©2021 Natera, Inc. All Rights Reserved. Not for reproduction or further distribution.