What happened
Shares of Natera (NTRA +2.07%) gained nearly 98% in the first six months of the year, according to data provided by S&P Global Market Intelligence. The genetic testing and liquid biopsy company has wooed investors with plans for two new products, including a liquid biopsy test called Signatera. The product earned Breakthrough Device designation from the Food and Drug Administration in May and underpins management's plan to earn $40 million to $50 million in cumulative pharmaceutical contracts by the end of 2019.
Success for new products will be crucial for reigniting growth and shrinking operating losses, especially considering Q1 2019 revenue grew just 7% from the year-ago period and the operating loss held at about $30 million. That performance seemed worse considering that Natera achieved a 22% increase in the number of tests sold. But investors were willing to overlook competitive pressures and instead focus on upcoming products.
Image source: Getty Images.
So what
Natera appears to be positioned to deliver on its goals. Signatera is a simple blood test that has been shown to detect recurrence of disease -- including bladder, breast, colorectal, and non-small-cell lung cancers -- up to two years earlier than standard imaging techniques in use today. That could provide one heck of a head start for patients and doctors, and significantly improve clinical outcomes after initial treatment.
Meanwhile, results presented at the 2019 meeting of the American Society of Clinical Oncology (ASCO) demonstrated that Signatera could detect how well patients with metastatic cancers respond to immunotherapy treatment. That could lead to improved outcomes for patients and doctors, while informing pharmaceutical companies during drug development and clinical studies about the effectiveness of the approach.
Natera also has high hopes for its Prospera liquid biopsy test, to detect whether or not kidney transplant recipients will reject a new organ and, importantly, the specific type of rejection at the molecular level. That information should improve clinical outcomes for patients without the need for risky, invasive procedures.
Now what
The genetic testing and liquid biopsy company exited March with $127 million in cash, and received an additional $104 million in net proceeds from a public stock offering shortly after the first quarter closed. That suggests the business has plenty of cash to hit the ground running with commercial launches of Prospera and Signatera -- once they're ready -- as well as conduct further clinical studies. That said, investors need to see early signs of progress before getting too carried away.
