Natera Inc (NTRA) Q3 2021 Earnings Call Transcript

Image source: The Motley Fool.

Natera Inc (NTRA 1.49%)
Q3 2021 Earnings Call
Nov 4, 2021, 4:30 p.m. ET

Contents:

• Prepared Remarks
• Questions and Answers
• Call Participants

Prepared Remarks:

Operator

Welcome to Natera's 2021 Third Quarter Financial Results Conference Call. At this time, all participants are in a listen-only mode. Following management's prepared remarks, we will hold a Q&A session. [Operator Instructions] As a reminder, this conference call is being recorded today, November 4, 2021. I would now like to turn the conference call over to Michael Brophy, Chief Financial Officer. Please go ahead.

Michael Brophy -- Chief Financial Officer

Thanks, operator. Good afternoon. Thank you for joining our conference call to discuss the results of our 3rd quarter of 2021. On the line is Steve Chapman, our CEO; Paul Billings, our Chief Medical Officer; and Solomon Moshkevich, General Manager of Oncology. Today's conference call is being broadcast live via webcast. We will be referring to a slide presentation that has been posted to investor.natera.com. A replay of the call will also be available at investor.natera.com.

During the course of this conference call, we will make forward-looking statements regarding future events and our anticipated future performance, such as our operational and financial outlook and projections, our assumptions for that outlook, market size, partnerships, clinical studies, opportunities and strategies, and expectations for various current and future products including product capabilities, expected release dates, reimbursement coverage, and related effects on our financial and operating results. We caution you such type statements reflect our best judgment based on factors currently known to us and that actual events or results could differ materially.

Please refer to documents we filed from time to time with the SEC including our most recent Form 10-K or 10-Q and the Form 8-K filed with today's press release. Those documents identify important risks and other factors that may cause our actual results to differ materially from those contained in or suggested by the forward-looking statements. Forward-looking statements made during the call are being made as of today.

If this call is replayed or reviewed after today, the information presented during the call may not contain current or accurate information. Natera disclaims any obligation to update or revise any forward-looking statements. We will provide guidance on today's call but will not provide any further guidance or updates on our performance during the quarter unless we do so in a public forum. We will quote a number of numeric or growth changes as we discuss our financial performance, and unless otherwise noted, each such reference represents a year-on-year comparison.

And now, I'd like to turn the call over to Steve.

Steve Chapman -- Chief Executive Officer

Thanks, Mike. Good afternoon everyone and thank you for joining us. We've got a packed session full of announcements, so let's get into the recent highlights. The very strong momentum in Q3 continued as you can see from the metrics in the first bullet. We processed 7,000 units in Q3, which was approximately 55% growth over the same period of last year. Total revenues and product revenues were both up 61% and 62%, respectively, over the same period last year. Net acceleration is being driven by continued strong growth in the women's health products and big contributions from oncology and transplant products. Those products are now large enough to shift our growth rates upward.

We heard a lot in the market during the quarter about the impact the Delta variant was having on the healthcare businesses. But as you can see from our Q3 volume, we were able to blow through any headwinds COVID 19 presented. As a result of the continued momentum, we are raising our revenue guide beyond the range we just gave a couple of months ago in August. We are now guiding revenues to be $615 million to $625 million for the full year. We started the year guiding revenues at $500 million to $525 million. So the top end of our range is now roughly $100 million above where it was at the start of the year. That gives you a sense of the traction we're having and we continue to see across the company. Mike will get into the full details of the guide later in the call.

In addition to the significant unit and revenue growth, we've got a set of transformative announcements in the transplant space. In kidney, we continue to make significant progress. First is the launch of Prospera with Quantification, which is a new technique only offered by Natera that has shown improved performance over earlier message that report donor-derived cell-free DNA fraction along.

Second is the announcement of the results of the Trifecta Study, which we believe is the largest prospective, multi-site, fully biopsy-matched study ever performed in the kidney transplant space. The initial results exceeded our expectations and we believe can eliminate the need for costly multi-modality approaches to bolster test performance. I'm also excited to discuss the major new Prospera commercial launches in heart and lung. In both organs, the commercial launch announcement was supported by significant new prospective datasets that we believe can redefine these fields.

In oncology, the major announcements continue to unfold. We had another strong colorectal study published in Clinical Cancer Research where we introduced Signatera velocity as a clinically useful metric. This study demonstrated the value of calculating circulating tumor DNA growth rate over time or velocity such that patients with fast-growing tumors fare much worse than patients with slow-growing tumors. Velocity can't be calculated if you're only reporting out a positive or negative result. So we believe this will become a competitive advantage for Natera in recurrence monitoring and we'll spend some time on this later in the call.

More broadly, I think the launch of quantitative approaches in both oncology and transplant has a lot of parallels with our launch of the fetal fraction metric for Panorama back in 2013. At that time. No other NIPT reporting on fetal fraction but physicians really gravitated to our tests because of that result and the metric has now become the gold standard and a requirement for the field. These new oncology and transplant metrics provide a window into a patient's underlying biology, which can offer a physician crucial context when deciding how to Incorporate a test result into clinical decision-making. Our technology lends itself to these types of metrics, further differentiating the clinical utility of our products across all areas of our business. I'm pleased that Natera continues to be a leader in the industry in this area of innovation.

We were also very pleased to secure another major competitive win by being selected by NRG Oncology for the US arm of the CIRCULATE trial. You have seen the significance of the datasets coming down to CIRCULATE-Japan and we now think winning the critical US arm puts us even further ahead in terms of developing prospective validation data for colorectal cancer. These 2 trials, together with the work we are doing with BGI in China, make up the largest commercial CRC-MRD markets when you consider both the incidents and the reimbursement landscape. Although we aren't going to do a deep dive on our signature pharma trials today, we are now fully enrolling patients into both the phase III [Indecipherable] and ZEST trials we discussed on our last call and our pharma pipeline continues to build.

We are also now offering a broad plex [Phonetic] product to our pharma partners in the RUO setting. As you're aware Natera can multiplex thousands of probes in a single reaction, so offering a broad plex cast in the range of 50 or 100 or more targets is easy for us to do. We've only seen very targeted interest thus far in the broader plex offering, but for those who want it, we now have it available. We've been doing this kind of work upon request for a long time, but we've now made it available as part of our standard menu. In addition, Natera has developed a series of Signatera innovations that intends to introduce in 2022 and 2023. As you know from our NIPT business, we're constantly innovating and pushing the limits of the technology.

I'm also pleased to announce the progress of the clinical launch of Signatera in China with our partner, BGI. Recently, BGI kicked off a multi-site prospective trial in GI cancers including colorectal cancer. The study plans to roll roughly 500 patients and includes many of the top academic centers across China. BGI plans to expand on this initiative and is kicking off a series of investigator-initiated trials across other cancer types. Gaining support from top academic centers and KOLs is important for broader clinical launch, which requires the Chinese FDA approval and we expect will take several years to achieve.

Finally, we're excited to announce the details of our roadmap in early cancer detection. We signed a partnership with Aarhus University that gives us access to prospective 40,000 sample biobank of patients' screen for colorectal cancer. In addition, we've got an exclusive options to license our Aarhus' IP and we have access to their methylation signature, which is performing very well across all stages, which we plan to combine with our own methylation in ctDNA technology.

As you can see, we've had a very busy quarter. I'll now jump into each of these starting with the unit growth on the next set of slides. Our unit growth has really been accelerating recently and I think this longer-term historical view gives us a context of the growth trajectory we've been on for the last four quarters. You could see that while we made steady if lumpy progress in prior years, the business has rocketed upward on a much deeper ramp since Q3 of last year. That is not a coincidence.

In women's health, the new ACOG guidelines came out roughly 12 months ago and we launched both our transplant and oncology products in the second half of last year. We don't think this is a one-year trend. The NIPT market is still very underpenetrated compared to the 4 to 5 million pregnancies in the US so there's a long way to go. And of course, we are just getting started in both transplant and oncology, both of which we're starting to see play out in significant opportunities.

On the next slide, you can see the volume growth is clearly translating to revenue growth as well. You can see once again the scale up in growth we've experienced in the last year. This is driven by both the volume trends and also continued improvement in the realized revenues per test or ASP. We saw another nice increase in the blended ASPs in the business over Q2, which continues a multi-quarter trend going back to last year. We benefited from the volume mix shifting toward the newer, higher-priced products and we also had some healthy appeals wins on older claims that came in through the quarter in women's health. Mike will spend more time on ASPs later in the call, but we still have plenty of room to run on ASPs across their various products.

Okay. So we've got a fantastic set of milestones to now review in Oregon Health. I want to start off by highlighting some broader trends that are occurring with our organ health products. First, we've expanded from a single organ product to now multiple organs with the launch of Heart and Lung. Our technology is robust and we're seeing it translate well across organs in a very cost-efficient way, which we think offers a great expansion opportunity for Natera. Second, whereas at one point, we only had retrospective data; that is now no longer the case. We now have significant prospective multi-site data. In some cases, we believe, we now have the most significant prospective data in this space.

Third, we focused on innovation to improve test performance, for example, with the launch of quantification and now we're seeing AUCs that are exceptional from just ctDNA alone. These trends, expanding in other organs, producing high-quality multi-site prospective datasets, and delivering exceptional AUCs through innovation, all supported path for rapid growth in Prospera. In kidney, it's been a little more than a year since we were awarded our local coverage decision for Prospera and we started our commercial launch in earnest, and we are very pleased with the level of commercial traction we're generating so far. Of the top 100 transplant centers, 45 have now implemented Prospera routinely into their practice.

We've also been pleased with enrollment in our registry trial, ProActive, where we now have more than 2,500 patients enrolled. You may recall there was external skepticism about whether we would be able to successfully enroll patients into this trial, but clearly, we've done an exceptional job. This level of adoption among top centers just a little more than a year into the launch gives us confidence that our commercial plan is working. Now, with the addition of new organs, very strong multi-site prospective data, and our innovative quantitative approach, we're even better positioned to build on the momentum we've seen thus far.

Let me talk now for a minute about Prospera with Quantification. Prospera is now the only commercially available cell-free DNA test for kidney rejection that provides three values; the quantity of the donor-derived cell-free DNA, the fraction of the donor-derived cell-free DNA, and the total amount of cell-free DNA on every report. Other available cell-free DNA tests only report on the fraction of donor-derived cell-free DNA alone, which has limitations especially when the total cell-free DNA is high, which may result in false negatives. As you can see here on the left side of the slide, the percentage of the donor-derived cell-free DNA is a fraction that incorporates the absolute quantity of donor-derived cell-free DNA as the numerator and the total amount of cell-free DNA as the denominator.

The donor-derived cell-free DNA comes from the donated organ and the total cell-free DNA mostly comes from the recipient. The fraction of donor-derived cell-free DNA can change significantly if the denominator or the recipient cell-free DNA is artificially increased. When reporting donor-derived cell-free DNA fraction alone, like our competitors do, doctors need to be very careful about any factors that might impact the denominator. There are 10 items on the right hand of the slide that we've identified in the literature that could impact the total cell-free DNA. Our hypothesis was that incorporating a measurement of the absolute quantity of the cell-free DNA rather than just a fraction alone into the result would improve the sensitivity of the assay and that's exactly what we're now seeing in our studies.

To test our hypothesis, we performed validation study of the Prospera with quantification method with UCLA that resulted in a peer-reviewed paper published in the Journal of American Nephrology, one of the premier journals. The paper showcase improved performance from Prospera with Quantification in 41 kidney transplant recipients, nine of whom were experiencing rejection. Incorporating the quantity of donor-derived cell-free DNA with the fraction of donor-derived cell-free DNA, improve the sensitivity of the Prospera test; from initially identifying seven out of nine cases of rejection, to then nine out of nine cases of reactive rejection which were then confirmed with biopsy. This improvement has now been seen across several different independent data sets, a number of which are in submission for publication. The most significant dataset comes from the Trifecta study, which I'll go into on the next slide.

Yesterday, we announced the results of the Trifecta study. The Trifecta study is a multi-site prospective trial being led by Dr. Phil Halloran from the University of Alberta, a leading KOL in the field. The study, which included more than 300 biopsy match samples and greater than 100 biopsy match rejections is the largest multi-site prospective fully biopsy match study ever performed in this space. In the study, we tested the AUC in Prospera with Quantification to distinguish rejection from non-rejection using BANFF 2019 criteria, and we showed an AUC of 0.81. We then used molecular pathology as the standard and showed an AUC of 0.89. There are recent studies that suggest that molecular pathology maybe a better standard than BANFF suggesting that Prospera may be performing better than previously suspected.

Finally, we also compared rejection versus quiescence or essentially rejection versus exceptionally stable patients resulting in AUC of 0.91. This last analysis, in comparison with rejection to quiescence, is similar in concept to that used by some of our competitors in the recent multi-modality publications. Unfortunately, it isn't a very useful analysis clinically, which I'll touch on in a minute. Overall, the AUCs from the Trifecta study are exceptional. The definitive data is now in. Prospera with Quantification performed very well and Natera now has the largest fully biopsy match study that's ever been performed in the kidney transplant space.

I want to take a second to quickly touch on rejection versus quiescence because it's easily confused on the different types of analyzes that are out there. Rejection versus non-rejection is different from rejection versus quiescence. Quiescence includes essentially only the most stable of stable patients. As you can see below, this type of analysis excludes intermediate patients, which really isn't practical in a real-world setting. In most cases, it's not possible to determine if patient is quiescent without doing a biopsy first to determine if there are any non-rejection pathological findings. That is why the vast majority of the papers in the field have assessed rejection versus non-rejection which remains the main benchmark for performance.

As you assess the landscape of testing available, keep in mind that the analysis being performed may be different than the intended use population and just -- and thus the results may be less clinically useful. So far, from what we've seen, multi-modality approaches have not been validated in rejection versus non-rejection cohorts and their performance in that intended use population remains to be seen.

Okay, on the next slide, I'm really pleased to provide details on the recent launch of Prospera in heart transplant setting. As I said before, it's been relatively easy for us to expand beyond kidney to other organs because of our robust core technology. In addition, it's also proving to be commercially efficient because we're able to leverage a lot of the same infrastructure in terms of nurse coordinators and customer supports, so it's also been cost-efficient for us to enter this space. We think Prospera Heart offers compelling advantages versus our competing tests. Our validation study is a multi-site study that included greater than 250 prospective samples collected during 2020 and 2021 for the purpose of validating Prospera Heart and another 100 samples from a biopsy matched biobank.

You could see the results of the study on the right-hand side of the page. The initial results were impressive but then further improve with quantification where we were able to achieve an area under the curve of 0.88. These are really exceptional AUCs in the heart transplant monitoring space further underscoring the power of our technology. What's critical about these results is that the Prospera Heart test is delivering this exceptional AUC by performing cell-free DNA alone and therefore, we believe there is no need for cumbersome and costly multi-modality approaches to bolster test performance. Competitive test in heart must be collected at a site that is set up for specialized handling because the sample must be immediately spun down and shipped on dry ice. Since our test is a simple blood test, patients can access our convenient mobile phlebotomy service, which can be important given the frequency of testing.

In addition, the competitive test in heart charges Medicare twice for every multi-modality patient timepoint since separate DNA and RNA tests are being performed on each patient. Because we are delivering excellent performance on a cell-free DNA-based test alone, Prospera Heart reduces the cost of the system and it's less than half the price of the expensive multi-modality approaches. We think this combination test performance, convenience, and cost represents a compelling offering for physicians and patients.

We keep the product expansion opportunities rolling on the next page with our lung transplant launch. We are getting a lot of the same efficiencies with this launch, the same robust Prospera workflow and leveraging a lot of the same commercial infrastructure that we've built. The sales and commercial teams overlap with the heart team, so again, it's very efficient for us to go after this opportunity. We think the validation data and results in lung are very strong. The study was run by the lung transplant program at the Ohio State University and was presented at [Indecipherable] a few weeks ago and very well received.

Prospective study examined 204 plasma samples obtained with concurrent bronchoscopy biopsy procedures from 104 lung transplant recipients between September of 2020 and June of 2021. Using the Prospera lung test, donor-derived cell-free DNA levels were compared across clinical histopathological diagnostic cohorts. During the study, 35 episodes of acute rejection were analyzed. This study represents the largest trial of a commercially available donor-derived cell-free DNA test for lung transplant assessment and once again the AUC was incredibly strong, underscoring the power of our technology. For both the heart and lung products, we plan to submit dossiers for Medicare reimbursement under the existing local coverage decision and we anticipate receiving coverage in 2022.

As you can see we have a lot of exciting opportunities. We've made a lot of progress in kidney and we're now expanding to other organs. We've been hard at work in developing very strong data sets, and now we have, in some cases, the largest prospective datasets available. We're innovating, we're launching improvements, such as Prospera with Quantification, and we're seeing exceptional AUCs. I think we're in an excellent position long-term to compete very well in the organ health space.

I'm going to hand it over to Solomon in a minute to walk through all the recent news on Signatera, but first, I want to spend a moment describing the effort we have underway in early cancer detection. Our strategy here is to pursue a capital-efficient development program that does not distract from the work we are doing the Signatera but instead leverages the technology we are already developing, along with the data we are generating with our growing base of clinical and volumes in oncology. That last item is critical because we run an upfront exome on every Signatera sample. We are accumulating a dataset of tens of thousands of early stage cancer exomes that have never existed before.

We can now interrogate that dataset to assist in the design of a DNA-based signature that maximizes test performance. We've already completed the initial design of the colorectal cancer early screening DNA component. Now, we're excited to validate and expand on that effort with our new partnership with Aarhus University. In the partnership, we secured access to a biobank of 40,000 colorectal screening samples, prospectively collected and would match outcome data -- outcomes data. More than half of the expected examples are stage 1 or 2 cancers. We've also secured an exclusive option to license IP and access to a methylation signature from Aarhus, which demonstrated strong potential in a recently published study. The methylation signature alone reported an average sensitivity of 85% with the specificity of 99% across stage I through IV colorectal cancers. The performance was also very strong in early stage cancers with an 80% sensitivity in stage I and 85% sensitivity in stage II cancers. We will, of course, see to replicate these results and we also believe we can improve upon the methylation signature by incorporating it into our own unique methylation workflow and adding in our DNA technology. We will start off with the colorectal assays and then have the potential to add additional cancer types in the future. So while we continue to build on our lead with Signatera in MRD, we've got a targeted program running in this adjacent and very large market. I look forward to providing periodic updates on our progress here in the future.

With that, let me now hand it over to Solomon to cover the other oncology updates. Solomon?

Solomon Moshkevich -- General Manager of Oncology

Thanks, Steve. I want to start on the next slide with our selection as the MRD partner for the US arm of the CIRCULATE trial. We were very pleased to win a competitive process for this trial, which is funded by NCI, the National Cancer Institute, and led by NRG Oncology, a leading academic consortium with hundreds of clinical sites across the US. We have just started to see some of the potential for practice-changing data emerge from the Japanese arm of the CIRCULATE trial. And we think the US arm is similarly destined to be the definitive prospective US trial for MRD-guided management of colorectal cancer.

You can see a summary of the trial design o the right-hand side of the page. Stage II and III colon cancer patients will get surgery as per the standard of care and then get serial MRD assessment with Signatera. Patients that are MRD positive on Signatera will go on to chemotherapy and that will be randomized between standard of care chemo, which is three to six months of FOLFOX or an intensified regimen with FOLFIRINOX, which is standard treatment today for patients diagnosed with stage IV colorectal cancer.

Also just like in CIRCULATE-Japan, Signatera MRD-negative patients will be randomized as well between standard of care chemotherapy versus no chemotherapy at all, just active surveillance. This is called de-escalation. We've highlighted this arm of the study on the slide because we believe it can eliminate unnecessary treatment for the majority of patients. Right now, adjuvant chemotherapy is standard for all stage III and high-risk stage II patients, even though we know that most patients are already cured by surgery alone and will not benefit from the chemotherapy. The Japanese group may be able to report preliminary results from this de-escalation arm in the next year and we think those results, plus the data from the US will be enough to impact NCCN guidelines and could maybe very unlikely that a study like this would ever be run. I think this really highlights our competitive advantage as we've developed a multi-year lead in prospective clinical data and we think winning this trial is going to significantly extend that leadership position.

Okay. Excited to get into a little more detail now on the new velocity data that Steve touched on earlier in his opening comments. In early October, we published a prospective study with 168 stage III colorectal cancer patients with a total of just over 200 blood samples analyzed. First of all, the study [Indecipherable] our strong test performance in early stage CRC that we published before, this time, with a nice homogeneous population of stage III colorectal cancer. But in addition, we also introduced and validated the new concept of ctDNA velocity. So, as Steve mentioned, Signatera gives more than a qualitative positive or negative results. Every Signatera test result comes with a count of tumor molecules per milliliter of plasma, which represents disease burden.

As patients receive serial testing over time, physicians are able to monitor both the direction and the rate of change in that disease burden. You can visually see this rate of change on the chart on the right-hand side of the page. So each line represents one patient with ctDNA levels tracked over multiple time points. You see the patients represented by the light blue lines have ctDNA levels increasing rapidly, while the patient represented by the dark blue lines have ctDNA that is still present but growing more slowly. The data from this study confirms the intuition that patients with fast-growing tumors have much worse outcomes.

So specifically, the box on the bottom left makes clear how stark the difference is. While all MRD-positive patients ultimately went on to relapse, patients with fast-growing tumors, less than half of them, were still alive at the three-year mark. Meanwhile, the patients with slow-growing tumors, 100% of them were still alive at the three-year mark. We expect this prognostic feature to become increasingly important for oncologists as they work out exactly how to manage their MRD-positive colorectal patients. But we also expect the concept to apply in other cancer types, similar to how PSA velocity is already measured today for prostate cancer. To our knowledge, Signatera is the only MRD test that has been validated for the assessment of ctDNA velocity, which is made possible by our unique approach to quantitation.

So I'm not going to touch on everything we have going on today in oncology because of time, but as Steve said, at the top of the call, we're making a lot of progress in pharma in China and of course, with product innovation. So we're looking forward to provide more updates on those fronts in the future. Now, I'd like to hand it over to Mike to discuss the financials. Mike?

Michael Brophy -- Chief Financial Officer

Thanks, Solomon. The next slide here is just the summary of financial results for the quarter. Steve covered a lot of the trends on volumes and revenues. You see the revenue growth modestly outstripping the volume growth as ASP stepped up in the quarter. Underlying ASPs for our product stepped up modestly again in Q3 as we continue to add some wins from additional NIPT coverage. We also benefited from roughly $5 million in revenue from cash collections from prior periods, which historically is more in the $1 million to $2 million range but can be lumpy as we've discussed in the past.

I call that out to give you some context for the revenue guide for the rest of the year, which implied significant sequential organic growth in Q4. We also got a bump in our realized collections per unit for Signatera from the ADLT pricing going into effect in Q3. We think that ADLT will continue to help grow Signatera ASPs as more and more patients that started with Signatera this year move to the recurrence monitoring setting, which is covered by the ADLT pricing. Overall, though, we've chosen to let Signatera ASPs be much lower than they otherwise could be because we are taking in growing volumes from a range of indications that are not yet reimbursed. Signatera adoption across cancer types has exceeded our expectations so far, which is tough on gross margins in the immediate term but we think is a very bullish sign for the longer-term potential of this market.

You can see we improved gross margins meaningfully year-over-year, but still, our gross margin from this quarter and for the rest of the year reflects this investment, if you will, and test volume ahead of reimbursement, particularly for Signatera, and that's been balanced out by strong and growing gross margins for our NIPT and Horizon products that are now well above the blended average. To that point, COGS per unit in the quarter were on track as NIPT COGS remained in the 160 range and the path to reducing COGS over time remains intact, but we still have a roadmap in place to meaningfully reduce Signatera COGS per unit over time as we've discussed in the past.

As we covered on our Q2 call, the R&D and SG&A lines also reflect the significant upfront investment we are making in oncology. In research and development, we are adding staff to execute on scaling the lab along with a fulsome slate of clinical trial work we are doing with academic and pharma partners. We've said before that we are not planning to hit back with our current product offerings with version 1.0 of Signatera and Prospera, and I think the update Steve and Solomon provided may clear how quickly we can turn opex investments into differentiating new features for Signatera and Prospera, in addition to the entirely new product launches Steve covered. This productivity also allows us to get more scale more quickly on the commercial operation we've built for these call points. We've needed to build sales channels in the transplant and oncology setting in this year, but now, we can leverage these sales channels across organ types in transplant in a huge range of cancer types in oncology.

Okay, so I think that now gives you some background for the guide that's on the next slide. We are raising the revenue guide for the third time this year. As Steve discussed, this is the function of our efforts, hitting on all cylinders across products with commercial wins coming from all the new data we have generated and the sales team is getting increasingly productive in the transplant and oncology call points. We are trimming slightly on gross margins versus the most recent guide but still better than where we started the year. This is driven by the new volumes outside of what's currently reimbursed, is accelerating as I described and we think that's definitely worth doing.

The build-out of the commercial effort continues to roll out as we described this summer so we are holding that steady for the rest of the year and we are bumping up R&D to accelerate our participation in a range of clinical trials that have become available to us with the performance we've seen in both Prospera and Signatera. We are still very comfortable with where we stand on the balance sheet. We can see the demand for our products in the field and we see opportunities to capture share in markets that can endure for a very long time. We think the decision to remain in aggressive growth mode remains the right one. So it's an exciting time for Natera and we are very pleased to have been able to share these results with you.

Now, I'd like to turn it over to Q&A. Operator?

Questions and Answers:

Operator

Thank you. [Operator Instructions] And our first question comes from the line of Tejas Savant with Morgan Stanley. Your line is open. Please go ahead.

Tejas Savant -- Morgan Stanley -- Analyst

Hey guys, good evening. Steve, one for you on the Aarhus biobank sample project, can you share some color on timelines for the launch and completion of your validation study and at what point do you expect to launch a prospective trial and launch commercially? And then I have a quick follow-up on the guide.

Steve Chapman -- Chief Executive Officer

Yeah, thanks for the question. So we're really excited about this partnership. I mean, the methylation data that they published looks very strong. The biobank obviously is very significant so we are very pleased to get access to this. We hope to generate some combined data on the performance of DNA and the sort of version 2 of the methylation platform in 2022, but there's still a lot of work to do. So we're not putting out any timelines right now, but we do think we can generate some data during that timeframe. It doesn't necessarily mean we'll complete the entire validation of 40,000 sample cohort in that timeframe but just that we would make some additional data available on the combined performance of the assay.

Frankly, we actually hope that we can use this cohort itself to go to the FDA. We plan on going and speaking with the FDA about the use of this cohort. We ultimately don't know what they're going to say and we're not sort of hanging our hat on the fact that they're going to accept this as the final validation. So once we go through that process, we'll have more insight into whether we need to execute a prospective trial or not, but certainly, this cohort alone will provide, I think, very strong validation data that will give us significant confidence about making that decision to move forward to make the investment in a prospective cohort if we do that.

Tejas Savant -- Morgan Stanley -- Analyst

Got it. Very helpful. And then Mike, a quick follow-up on the guide. I mean as you look at the fourth quarter in '22, anything to worry here in terms of supply chain disruptions or consumable shortages or even samples, shipping delays, that could constrain upside in the near term for you?

Michael Brophy -- Chief Financial Officer

No, I don't think so, Tejas. I mean you can see what the implied growth in Q4, I think, tells you that all the trends that we're seeing here in Q3 are looking really stable. It's not really about a one-time benefit or anything like that and so we were able to blow right through any concerns related to the Delta variant as you can see in our Q3 performance. So maybe that affected us, but you just can't tell that in the numbers. So we're feeling great about the trajectory that we're on.

Operator

Thank you, and our next question comes from the line of Tycho Peterson with J.P. Morgan. Your line is open. Please go ahead.

Tycho Peterson -- J.P. Morgan -- Analyst

Hey, thanks, and congrats on all the progress, guys. On Prospera -- Prospera with Quantification, is that an incremental pricing opportunity or is that more about capturing market share? And then secondly on Prospera, obviously, your competitor has gotten in a fair amount of trouble. I'm just curious if there is blowback and how you think about that and others saw directly too for you guys. And then I had one follow-up in screening after that.

Steve Chapman -- Chief Executive Officer

Yes. So the Prospera with Quantification technique is obviously something that's unique to Natera. It's performing exceptionally well. We've designed this in a way that we really don't have to do any additional workflow and so although I think we could go try to take price, we made the decision to just pass this through as a benefit to patients and to physicians without increasing the price in any way, but it's an exceptionally streamlined workflow where we've leveraged some novel microbiology and novel bio-informatics techniques to be able to provide this without really increasing our COGS.

With regards to some of the challenges with the competitive landscape, we don't think that there is any blowback to Natera. I think we're in a very good position and we look forward to competing hard.

Tycho Peterson -- J.P. Morgan -- Analyst

And then I think there was screening. I'm just curious--

Steve Chapman -- Chief Executive Officer

One last one there... Go ahead.

Tycho Peterson -- J.P. Morgan -- Analyst

Yeah, on the screening, I'm just curious how you're thinking about kind of the multi-cancer opportunity, I mean obviously, it's great you've got biobank of 40,000 samples for colorectal, but as we think about additional cancer indications, any rough sense of the timeline. I mean, will this be over the next year or two, or how do you think about multi-cancer?

Steve Chapman -- Chief Executive Officer

Yes. So I think our plan includes the ability to extend into additional cancers. And I think we've enabled that opportunity through the partnership with Aarhus. As far as our internal methylation and DNA discovery work, we've built discovery platforms that aren't specific to colorectal that can extend into other cancer opportunities. So, while, our initial focus is on generating a proof of concept and then validation data for colorectal, moving toward a commercial launch, longer term, our point is to have a pan-cancer assay but the initial work will be focused on colorectal.

Tycho Peterson -- J.P. Morgan -- Analyst

Okay, thank you.

Operator

Thank you, and our next question comes from the line of Puneet Souda with SVB Leerink. Your line is open. Please go ahead.

Puneet Souda -- SVB Leerink -- Analyst

Yeah. Hi, Steve. Thanks for taking the question. Just on the screening point, I just wanted to understand how are you positioning in terms of potential trials there for CRC and in terms of given the competition that's already out there. There are three trials in this space. So I just wanted to understand how you're positioning for that? And for the multi-cancer timing for these trials, the large-scale trials, those are obviously more than 50,000 patients or 100,00 patient trials. So, how are you thinking about that sort of investment overall and the timing for that?

Steve Chapman -- Chief Executive Officer

Yeah, I mean, our approach thus far is to take a very sort of cost-efficient approach and sort of have some phase gates as we move along here and so far we've leveraged the significant amount of information that we have coming from all the tumor exomes that we've run and we use that to build a proprietary DNA-only aspect of the test. Now, we're combining that with this methylation signature that we gained access to through the partnership with Aarhus. It is performing very well, plus some internal discovery work in methylation workflow work that we're doing at Natera.

So we plan on putting those two things together, generating some proof of concept data in early '22 and then running the 40,000 sample biobank thereafter. Our hope is that the 40,000 biobank itself is enough for us to get approval from the FDA for the test. We don't know if that's the case. We haven't yet gone and spoken with the FDA and it's very likely that it won't in fact be sufficient to get approval. But that's what we hope and if that turns out to be the case, that would be a massive win for us because we wouldn't then subsequently have to do the prospective study. I think we plan on having that conversation with the FDA sooner rather than later, so we can understand if we do have to do a prospective trial, we can start planning for that and start executing on that.

Now, in colorectal alone, we think that the trial, and we look around, and present trials are taken in the kind of three-year range. That's OK because we don't have to be the first test on the market. I think this is such a huge opportunity that it's not necessarily just about being the first on the market, it's about doing it right and having the right test, having the right customer experience, having the right performance. So if we see in the proof of concept in the subsequent validation data that we really have something here that we think is going to be a winner, we're not going to hesitate to pull the trigger on that prospective trial.

As far as a much broader expansion to pan-cancer, we're going to have to -- we're going to have to get through some of these phase gates and hit some of these milestones before we can really talk about the timeline for doing a prospective study of that size.

Puneet Souda -- SVB Leerink -- Analyst

Got it. That's super helpful. And then on Signatera, I just wanted to get a sense of the sort of the catalyst path ahead, events that we ought to be watching out for in terms of datasets and readouts for Signatera. We obviously saw your data on [Indecipherable] and a number of other datasets. So there is momentum here but sort of in terms of thinking of larger indications, more impactful studies, just -- if you could just walk us through what are some of the things to watch out for and potential conferences, where we should be expecting more data readouts around Signatera that are more meaningful? Thank you.

Steve Chapman -- Chief Executive Officer

Yes, sure. So I'll make a comment and then maybe Solomon, you can comment. So, we have, I think more than 50 different trials that are ongoing at any time or biobanks that are ongoing at any time and various of those are going to be reading out over the next kind of quarter, in the next six months, the next 12 months. We got a lot of data coming out and that's really sort of broad across different cancer types. I'm not going to go through and sort of name each one, but there is additional data in GI. There is additional data in some of the cancer types like melanoma for example or other areas where we haven't had significant readouts that we're pretty excited about. So stay tuned for what's coming.

I do think in the near term, one of the most significant readouts or has the potential to be one of the most significant readouts is coming into the ASCO GI conference in the beginning of 2022 where we expect there to be another very significant report on the CIRCULATE-Japan study in the colorectal space and I think that's going to be exciting and I think that has the potential to be market-changing.

Solomon, do you want to add any additional comments there?

Solomon Moshkevich -- General Manager of Oncology

Sure. I want to reiterate our looking forward to the data at ASCO GI. We also have multiple studies that have been submitted as manuscripts that are under review across many different GI cancers as well as skin cancer, ovarian cancer, some of the data which people have seen previously in a conference, multiple myeloma. And then we have -- we're looking at a pretty exciting slate of abstracts sent to AACR as well, which will be in the spring. And I think it's a little early to say exactly to what extent how we're going to use these to extend our reimbursement pathway, so have those discussions with Medicare and with our other payers, but there's a lot to look forward to here.

Puneet Souda -- SVB Leerink -- Analyst

Got it. Super helpful, and last one if I could just squeeze it in terms of ADLT reimbursement. Was there any contribution in the quarter? And I apologize if I missed that.

Steve Chapman -- Chief Executive Officer

Mike, do you want to take that?

Michael Brophy -- Chief Financial Officer

Yeah. I'll take it. Yes. So we did get a modest bump in the quarter from the ADLT pricing and I think that's something that can be a continued tailwind for Signatera clinical volumes in these going to reimburse cancers, particularly as you get more and more patients that have started Signatera to go through that first, that six-month kind of adjuvant window and then the equipment through the recurrence monitoring indication, that's indication that's reimbursed under the ADLT. So as you kind of build a bigger base of patients that have gone through that first six months, the mix of your volumes is going to shift toward that recurrence monitoring indication as that will tend to -- can be a tailwind for ASPs. But we did start to see a little bit of that in Q3.

Puneet Souda -- SVB Leerink -- Analyst

Super helpful. Thanks, guys.

Operator

Thank you and our next question comes from the line of Catherine Schulte with Baird. Your line is open. Please go ahead.

Catherine Schulte -- Baird -- Analyst

Hey guys, thanks for the questions. I guess first for Signatera, I believe you are waiting on the IO or umbrella LCD to be finalized and then you could submit data pockets for other indications to amend the billing article, is that still your plan and if so, what are the indications that you kind of have ready to go once we have a final LCD? And then obviously Medicare is running behind schedule here. Have you heard anything from them in terms of timing?

Steve Chapman -- Chief Executive Officer

Yeah, thanks, Catherine. So just first on the timing, I think we had initially understood that the final LCD had to publish publicly in September; however, we now clarified that September was the deadline for MolDX to send the LCD to CMS national for approval. And we understand that that's taken place. We've had a lot of consistent and positive dialog with the MolDX program, and their feedback is that the administrative process is just ongoing and ultimately, it's their process, but everything we've heard makes us think that it's on track and it's going to be published soon. And so we'll have more updates on the timeline as we get them.

As far as submitting additional indications, you can basically go back and look at anywhere where we published a paper; muscle-invasive bladder cancer, neoadjuvant breasts; lung; et cetera. Anywhere where we published a paper, we think we are eligible to submit for reimbursement and then Solomon said a moment ago, we have other papers in ovarian and so forth that are already submitted where we've, in some cases we've gotten editor comments back already. So we have a pipeline of papers coming out, and as a reminder, we've already submitted our tech assessment for stage IV colorectal cancer, which we think would fall under the CRC LCD which is already in final stage.

Catherine Schulte -- Baird -- Analyst

Okay, got it. And then maybe just going back to early detection, can you just talk through how you envision that playing out commercially. Is this something you plug into your women's health channel or do you plan to go after the primary care market as well?

Steve Chapman -- Chief Executive Officer

Yes, I think there are some different options there. I mean, look, we're -- we still have a long way to go before we're actually pulling the trigger on commercialization. So ultimately, if we have a product that works well that's reimbursed, the commercialization part is easy. And that's something that we do exceptionally well. So I think we'll have to -- we'll have to deal with that when the time comes, but our women's channel I think is an exceptional channel for commercialization. We're now broadly covering the vast majority of women's health providers and as you know, many women use their OB-GYN or GYN as a primary care provider, but yeah, lots of opportunities for commercialization and we'll cross that bridge in the future.

Catherine Schulte -- Baird -- Analyst

Okay, thanks.

Operator

Thank you, and our next question comes from the line of Max Masucci with Cowen. Your line is open. Please go ahead.

Max Masucci -- Cowen -- Analyst

Hi, congrats on a great update across the board. To start, it's been over eight months since the launch of Altera, is still early days, but how is the adoption then and have customers been purchasing more on a stand-alone basis or are most using the test in tandem with Signatera?

Steve Chapman -- Chief Executive Officer

Yeah, thanks, Max. So things are going well. I think obviously, Signatera as a whole is going well. I mean I'm looking at our volume growth just in that clinical sector and I think we're growing exceptionally well there. I think Altera generally has been ordered alongside Signatera, that's how we've been promoting it thus far. We really haven't been promoting it as that stand-alone indication. Yeah, I think we might in the future, but Signatera is such an enormous market that I think we want to keep our energy focused there and as we bring on additional products in this space, whether that be tissue-based conference in genomic profiling or a liquid biopsy-based conference in genomic profile, we're going to do it in the context of supporting Signatera.

Max Masucci -- Cowen -- Analyst

Yeah, makes sense. Maybe one question for Mike on the core NIPT business, are you still seeing around 80% of NIPT tests include add-on microdeletions testing and think you are getting paid somewhere in the range of 5% to 10% of those microdeletions volumes about a year and a half ago and has the attachment rate for microdeletions testing or the percentage of volumes that you're paid on changed at all over the past year and a half?

Michael Brophy -- Chief Financial Officer

Yeah, hi, thanks for the question, Max. Yes, so on microdels, the attachment ratings remain remarkably stable. It's in any given quarter. It's in that 75% to 80% attachment to NIPT within our direct channel and the pricing for microdeletions in terms of our contracted rates with commercial payers is remarkably similar to that which we have with NIPT. I mean, the contacted rates are in that kind of $600 range for microdeletions as a stand-alone product, so the lot of volume that we run, a lot of results we return to patients and then submit for reimbursement with the constructive contracted rate and then as you alluded to, the fastest time we get paid is quite low.

So, percent paid rates on microdels are in that kind of single-digit percentage kind of range and so the resulting ASPs are -- they are going a few bucks out of the ASP. That can change really meaningfully when we can get the publication out on the smart data that we talked about earlier this year and if we can use that data to see some guideline revisions in favor of microdeletion testings. So I think that's something that we're very excited about seeing more developments on going into 2022.

Max Masucci -- Cowen -- Analyst

Makes sense. Thanks, guys.

Operator

Thank you, and our next question comes from the line of Alex Nowak with Craig-Hallum Capital Group. Your line is open. Please go ahead.

Alex Nowak -- Craig-Hallum Capital Group -- Analyst

Great. Good afternoon, everyone. What is your sales team hearing out in the field among OB-GYNs, is that level of training around average or it's now increasing with the ACOG decision out there? And then just a few commentary if it will change your expectations of this market ultimately having 80% to 90% penetration? And then just what is penetration right now?

Steve Chapman -- Chief Executive Officer

Yeah, thanks. So I think obviously, since the guideline came out about a year -- a little over a year ago, we've seen an acceleration in the percentage of business that we're doing that's average risk versus high-risk and that's something that we tracked. We've also seen just an acceleration in volume overall. I think there are still some big opportunities where average risk is not fully rolled out yet, whether that's big MFM practices that are still sort of working through, exactly how they're going to offer it and how they're going to roll it out to their community-based OB-GYN practices or whether it's big hospital systems that are sort of working through exactly how they're going to integrate it routinely into practice or whether it's state Medicaid programs that are figuring out how they're going to deal with coverage.

So it's not -- it's not sort of this overnight switch where everybody immediately starts giving the testing. But we still do firmly believe that sort of 90% plus market penetration will be hit in this sort of three-year timeframe and that matches I think to the prior testing methodologies on the market. I think that we're kind of tapping out that maybe low '80s but given some of the performance improvements in NIPT, I do think you'll get to that kind of 90% penetration range. We think, overall, high-risk testing is probably in the high 70s, low 80s and average risk testing is probably in the kind of high 20s, maybe low 30s at this point. And we think Natera's market share now is close to 40% or something in that range.

We track our market share and we can see the competitive market shares as well through these detailed market surveys that we do and we've been gaining share relative to the rest of the market and we hope that trend continues.

Alex Nowak -- Craig-Hallum Capital Group -- Analyst

And if you take that penetration benefits still to go on prenatal, Signatera is still in its very early phase of launch as in a single cancer and then the big efforts you're making here in transplant, how are you thinking about growth going into 2022?

Steve Chapman -- Chief Executive Officer

Yeah, well, I mean obviously, there's a lot of stuff going on continuing to execute well across the business, a lot of exciting momentum in transplant as we announced today, a lot of exciting momentum on Signatera. Very, very long way to go in NIPT. So there's a lot of excitement. Mike, do you want to comment specifically on sort of how we're thinking about forecasting or what we're thinking about for '22?

Michael Brophy -- Chief Financial Officer

Yeah, I mean, I think the trends that you saw in Q3, we think are pretty stable trends. I think you see that through the guide that we have out there now for the full year and we've got a couple of pretty important product launches going with Signatera and Prospera and there's a lot for us to learn as we go through the next quarter or so on those launches. So I mean I anticipate providing a guide for '22 on kind of the typical timeline. We'll give an update at the J.P. Morgan Conference and then we'll likely return with a formal guide in Q4, but all these kind of trends, you can kind of see them Q2 and Q3 have been pretty stable and quite instructive.

Alex Nowak -- Craig-Hallum Capital Group -- Analyst

All right, thanks for the update. Appreciate it.

Operator

Thank you, and our next question comes from the line of Mark Massaro with BTIG. Your line is open. Please go ahead.

Mark Massaro -- BTIG -- Analyst

Hey, guys, congrats on a strong quarter. I guess I'm curious when you'd be able to comment on how much revenue contribution you're getting from transplant and oncology. For what it's worth, I'm modeling about $20 million a piece for the full year of '21 and so that's the first part. The second part is that I've seen some data that would suggest that the transplant centers are using both your test as well as the market leader at this current juncture, and I haven't seen much evidence that we're seeing the incumbent getting swapped out for you. And the other thing I'm hearing is that a lot of the revenue that perhaps you're generating is coming from registry trials as opposed to full-blown clinical use. I'd be curious if you could comment on those three. Thank you.

Steve Chapman -- Chief Executive Officer

Yeah, maybe I'll comment on the transplant stuff and then Mike, you can comment on the rest. I think when you look at -- I think we showed a slide today that about 45 of the top 100 transplant centers are using Prospera regularly. I think that probably includes some centers that are splitting with CareDx but that certainly includes some, where we display CareDx and they're using a very significant amount of testing. So I think with the -- we've always seen in diagnostics some doctors want to use two providers or maybe different doctors within a center, want to use two different providers, and that's fine. Because the overall market is still about kind of 8%, 9%, 10% penetrated and there's just a very long way to go here in kidney and now we're talking about going into heart. We've launched [Indecipherable] and there's other organs that we think are going to be important in the future as well. So it's a long way to go.

As far as registry trials and so forth, I think that that's not accurate. It's just simply not true. There is a very small portion of the business that we're doing this part of the registry trial and the remainder is commercial testing.

Michael Brophy -- Chief Financial Officer

Yeah. And I'll take up just on breaking out of the different products. I think for us, it's a matter of just getting to learn how these products perform quarter to quarter and what the right trends are, what the right growth trends are so that we can feel great that we're accurately forecasting them and being able to share those with you guys. Similar to my comment on the last question is that we still have a lot to learn with these products. I mean, I think in a lot of ways, Q3 was really the first full quarter where we had sales teams in place and they had been in place long enough to kind of know which is up and have a locked territory and be able to be productive. And so it's not long until we'll be able to give more detail and give more guidance on it but we're at this time -- at the moment, we're still learning and so watching the launches happen.

Mark Massaro -- BTIG -- Analyst

Awesome. And then if I can sneak one last one in. Congrats on the 40,000 samples from the University in Europe. I guess, can you speak to, why you decided to pursue that option as opposed to something else? And then I'm just curious, I believe the University is based in Denmark. Can you speak to the homogeneity of -- or heterogeneity of the samples and whether or not you think that the sample types would be rich enough for US equivalents?

Steve Chapman -- Chief Executive Officer

Yes. So I think the first thing is the public health sector there, I think there is an exceptional job of collecting these extensive outcomes data and that's what gives you the opportunity to piggyback on something as exceptional as a well-curated 40,000 sample biobank. Part of the reason why we partnered with them is because they have this exceptional biobank, they have great researchers, and they have this methylation signature that is delivering just exceptional performance.

If you look at, I think, across the different stages, 85% sensitivity with a 90% specificity. That by itself actually is exceptional. We're augmenting that to include our own methylation targets and DNA signature that we've mined from tens of thousands of colorectal exomes. So the partnership made sense based on what they brought to the table, what we brought to the table and again, it's a cost-efficient way for us to go after this.

As far as the population goes, I mean, look, that's one of the things we've got to have discussions about, when we go for appreciation [Phonetic] meeting with the FDA, among other things. As I said before, this probably may not end up being the end-all, be-all set that we need to get the test reimbursed. We hope it will be and we think we have a good case when we go, make a pre-submission meeting, but ultimately we might end up having to do a prospective trial.

Now, if the test performs as we expected to, and we continue to believe the market opportunities is big as we think and others think it is, we will not hesitate to pull the trigger and run that trial, even if we're not going to be the first to market, which we don't think matters. If you look at NIPT, we were the fourth to market multiple years after others and now, we have 40% share. So you want to have the best test, you want to have the best distribution, the best customer experience, and you don't have to be first to market to deliver that.

Mark Massaro -- BTIG -- Analyst

Great. Congrats, guys.

Operator

[Operator Closing Remarks]

Duration: 65 minutes

Call participants:

Michael Brophy -- Chief Financial Officer

Steve Chapman -- Chief Executive Officer

Solomon Moshkevich -- General Manager of Oncology

Tejas Savant -- Morgan Stanley -- Analyst

Tycho Peterson -- J.P. Morgan -- Analyst

Puneet Souda -- SVB Leerink -- Analyst

Catherine Schulte -- Baird -- Analyst

Max Masucci -- Cowen -- Analyst

Alex Nowak -- Craig-Hallum Capital Group -- Analyst

Mark Massaro -- BTIG -- Analyst

More NTRA analysis

All earnings call transcripts