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Natera entered a collaboration with Incyte to use its Signatera test in a mid-stage study for colorectal cancer. The trial will use the test to help determine how well a new immunotherapy treatment works for patients who have already finished surgery and chemotherapy.
This is a win for Natera because it further cements Signatera as the standard tool drugmakers use to measure success in clinical trials. Every time a large pharmaceutical company like Incyte builds a study around Natera's technology, it adds to the mountain of clinical data that makes it harder for rivals to compete.
Source: Business Wire
Solomon Moshkevich, who joined the company in 2011 and most recently led the oncology business, has been named CEO and joined the board. Steve Chapman is stepping down from the top role but will stay on as a consultant and advisor to the board for an extended period.
An immediate leadership change can be unsettling, but Moshkevich has been a key architect of the company's shift from prenatal testing into the high-growth cancer monitoring market. Because he is an internal veteran, the strategy is unlikely to shift, but the suddenness of the transition is worth watching as the company works toward sustained profitability.
Source: Business Wire
After Natera reported its November results, we updated our fair value. We moved our rating from Avoid to Watch because the company's oncology volume is growing faster than we expected. We have added the company's recent regulatory approval in Japan to our growth projections. We also started tracking how one-off accounting adjustments affect the profit margins the company reports for its core diagnostic testing business.
Natera brought in about $794 million in revenue last quarter, which was roughly 34 percent higher than the same time last year and well ahead of what analysts expected. The real engine was the oncology business, where test volume grew 61 percent. This is a key sign that Signatera, a blood test used to track if cancer has returned, is becoming a standard tool for doctors.
While the company reported a loss of 42 cents per share, which was wider than expected, its profit margins remained healthy at nearly 65 percent. The business is processing over one million tests per quarter now, showing it can handle massive scale without losing its grip on costs. The stock fell about 7 percent on the news, but this appeared to be driven by a sharp sell-off in the broader market rather than the results themselves, which showed the core business is performing well.
See the full quarter, and how our tracked metrics did
Source: 8-K filing
Natera is scheduled to release its quarterly numbers later today. Analysts are looking for revenue of about 710 million dollars and a loss of roughly 28 cents per share. For a long-term owner, the most important numbers will be the growth in oncology test volume and whether profit margins are staying on track. These two factors show whether the company's main cancer test is becoming the standard choice for doctors while remaining profitable to run.
Management consistently sets high bars and then outruns them, raising their full-year revenue outlook by $140 million this quarter alone as cancer test demand accelerates.
| Expectation | |
|---|---|
| EPS | $-0.14 |
| Revenue | $773M |