Q4 2023 Natera Inc Earnings Call

Operator: Ladies and gentlemen, thank you for standing by. My name is Desiree, and I will be your conference operator. At this time, I would like to welcome everyone to the Natera Inc. fourth quarter 2023 earnings call. All lines have been placed on mute to prevent any background noise.

Ladies and gentlemen, thank you for standing by my name is desert right and I will be your conference operator today.

At this time I would like to welcome everyone to the Natera, Inc. Fourth quarter 2023 earnings call.

Desert Right: All lines have been please on mute to prevent any background noise.

Operator: After the speaker's remarks, there will be a question and answer session. If you would like to ask a question during this time, simply press the star button followed by the number one on your telephone keypad. If you would like to withdraw your question, again, press the star button. I would now like to turn the conference over to Michael Brophy, Chief Financial Officer. Please go ahead. Thanks, Operator. Good afternoon.

Desert Right: The speakers remarks, there will be a question and answer session if.

If you would like to ask a question. During this time simply press star followed by the number one on your telephone keypad.

Desert Right: If you would like to withdraw your question again press the star one.

Desert Right: I'd now like to turn the conference over to Michael Brophy Chief Financial Officer. Please go ahead.

Michael B. Brophy: Thanks, operator, good afternoon. Thank you for joining our conference call to discuss the results of our fourth quarter of 2023 on the line I'm joined by Steve Chapman, Our CEO Simon Moss switch President clinical diagnostics on the obsolescence general manager of oncology and Chief Medical Officer, John Susko, President and Chief.

Michael B. Brophy: Thank you for joining our conference call to discuss the results of our fourth quarter of 2023. On the line, I am joined by Steve Chapman, our CEO, Solomon Moshkevich, President, Clinical Diagnostics, and Alex Aleshin, General Manager of Oncology and Chief Medical Officer. John Fesko, President and Chief Business Officer, is also on the line and will be available for Q&A. 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 posted to our IR site as soon as it's available.

Speaker Change: This officer is also on the line and will be available for Q&A.

Speaker Change: 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 Dot com a replay of the call will also be posted to our IR site as soon as it's available.

Michael B. Brophy: Starting on slide 2, 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, and expected results, 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 are asking you to accept that such statements reflect our best judgment, based on factors currently known to us, and that actual events or results could differ materially. Please refer to the documents we file 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. Those documents identify important risks and other factors that may cause our actual results to differ materially from those contained or suggested by these forward-looking statements. Forward-looking statements made during the call are being made as of today, February 28, 2024. If this call is replayed or reviewed after today, the information presented during the call may not contain current or accurate information. The Territories do not claim any obligation to update or revise any forward-looking statements.

Speaker Change: Starting on slide two 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 projections, our assumptions for that outlook market size partnerships clinical studies and expected results opportunities and strategies and expectations for various current and future products, including product capabilities.

Speaker Change: Expected release dates reimbursement coverage and related effects on our financial and operating results. We caution you that such statements reflect our best judgment based on factors currently known to us and that actual events or results could differ materially. Please refer to the documents we file from time to time with the SEC, including our most recent Form 10-K or 10-Q.

Speaker Change: From 8-K filed with today's press release.

The documents identify important risks and other factors that may cause our actual results to differ materially from those contained.

Speaker Change: Or suggested by the forward looking statements forward looking statements made during the call are being made as of today February 28, 2024, and just cause replay to reviewed after today. The information presented during the call may not contain current or accurate accurate information <unk> disclaims any obligation to update or revise any forward looking statements we will provide.

Steve Chapman: 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.

Speaker Change: 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.

Speaker Change: 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: Great. Thanks, Mike. Natera is focused on transforming the diagnosis and management of disease worldwide. Our growth is driven by combining our innovative technology with significant peer-reviewed clinical evidence that supports the utility of our product. We've had a lot of great news since our presentation at the J.P. Morgan conference, and we're excited to get into the highlights. We finished Q4 with $311 million in revenue, which was $11 million ahead of the pre-announcement we made in January and represents 43% growth over Q4 of 2022. Full-year revenues were $1,080,000,000, an increase of more than 30% compared to 2022.

Steve Chapman: Great. Thanks, Mike.

Steve Chapman: <unk> is focused on transforming the diagnosis and management of disease worldwide. Our growth is driven by combining our innovative technology with significant peer reviewed clinical evidence that supports the utility of our products.

Steve Chapman: We've had a lot of great news since our presentation at the Jpmorgan conference and we're excited to get into the highlights. We finished Q4 with $311 million of revenue, which was $11 million ahead of the pre announcement, we made in January and represents 43% growth over Q4 of 2022 full.

Steve Chapman: <unk> full year revenues were $1 billion $80 million, an increase of more than 30% compared to 2022 on.

Steve Chapman: On volumes, we processed 2,496,000 tests in 2023, which is roughly 6,000 units ahead of the pre-announcement. We processed 341,000 oncology tests in 2023, representing year-over-year growth of 73.5%, and we also saw strong growth metrics in women's health and organ health. Gross margins in Q4 came in at 51.4% compared to our Q1 margin of 39.9%.

Steve Chapman: On volumes, we process 2.496 million tests in 2023, which is roughly 6000 units ahead of the pre announcement, we processed 341000 oncology tests in 2023, representing year over year growth of 73, 5% and we also saw strong growth metrics and win.

Steve Chapman: <unk> and organelles.

Gross margins in Q4 came in at 51, 4% compared to our Q1 margin of 39, 9%. We finished the full year at $45, 5% above the top end of the Q3 guide.

Steve Chapman: We finished the full year at 45.5% above the top end of the Q3 guide. As Mike will cover later in the call, we had some revenue true-ups and lab savings in Q4 that don't repeat every quarter. We estimate organic revenues in Q4 were roughly $306 million, and gross margins were roughly 49%, which still represents a significant improvement versus previous quarters. And, as we discussed at the JPMorgan Conference, we also made great progress on cash burn throughout the course of the year, ultimately reducing our cash burn by roughly $193 million in 2023 compared to 2022.

Steve Chapman: As Mike will cover later in the call. We had some revenue true ups to lab savings in Q4 that don't repeat every quarter, we estimate organic revenues in Q4, roughly $306 million and gross margins were roughly 49%, which still represents a significant improvement versus previous quarters and.

Steve Chapman: As we discussed at the Jpmorgan Conference. We also made great progress on cash burn throughout the course of the year ultimately, reducing our cash burn by roughly $193 million in 2023 compared to 2022.

Steve Chapman: The guide for 2024 reflects the continued momentum in the business that generated these very strong results in 2023. We are guiding revenues of $1,320,000,000 to $1,350,000,000, gross margins of 50% to 53%, and cash earned for the full year of $50,000,000 to $75,000,000. On cash, we estimate we will be cash flow break-even by Q3 or sooner.

Steve Chapman: The guidance for 2024 reflects the continued momentum in the business that generated these very strong results. In 2023, we are guiding revenues of $1 $320 million to $1 $350 million gross margins of 50% to 53% and cash burn for the full year of 15.

Steve Chapman: To $75 million on cash we estimate we will be cash flow breakeven by Q3 or sooner.

Steve Chapman: What's most impressive is we will be achieving this cash flow breakeven quarter while still making very significant investments in our core business. You'll see later in the guidance that our investment in research and development and commercial operations remains robust in 2024. This includes major investments in core product enhancements and line extension, plus potentially guideline-enabling clinical trials that we believe could benefit patients in the years to come. We can do this because our core fundamentals are so strong.

Steve Chapman: What's most impressive is we will be achieving this cash flow breakeven quarter, while still making very significant investments into our core business Youll see later in the guidance that our investment in research and development and commercial operations remains robust in 2024. This includes major investments in core product enhancements and line extension.

Steve Chapman: Plus potentially guideline, enabling clinical trials that we believe could benefit patients in the years to come.

We can do this because our core fundamentals are so strong.

Steve Chapman: We're in large, expanding markets. Our volume is growing rapidly, and our margin is expanding with ASP increasing and COGS going down. I'll now hit a few other highlights before we go into more details on each.

Steve Chapman: We're a large expanding markets our volume is growing rapidly and our margin is expanding with ASP, increasing a cogs going down.

Speaker Change: I will now hit a few other highlights before we go into more details on each.

Steve Chapman: First, we think our recent acquisition of Invitae's Women's Health Assets is well-timed given the clinical value of expanded carrier screening and the strong trends we are seeing there, and we're feeling positive about our progress on the acquisition thus far. In organ health, we're building momentum as we complete enrollment and read out major innovative clinical trials. We'll be talking today about some big, first-of-their-kind, prospective studies in donor-derived cell-free DNA and how they may positively impact patient care.

Speaker Change: We think our recent acquisition of in VK is women's health Women's health assets is well timed given the clinical value of expanded carrier screening and the strong trends. We are seeing there and we're feeling positive about our progress on the acquisition thus far.

In Oregon Health, we're building momentum as we complete enrollment and readout major innovative clinical trials, we'll be talking today about some big first of their current prospective studies is donor derived cell free DNA and how they may positively impact patient care.

Steve Chapman: Finally, in Oncology, earlier this week, we were pleased to announce that the Mold DX has expanded coverage for signataria to neoadjuvant monitoring in breast cancer and separately for MRD and recurrence monitoring in ovarian cancer. We've had a drumbeat of exciting clinical developments across a range of indications, including CRC, muscle vaso-bladder cancer, and breast cancer. I'm excited for Alex to also talk about the modern study in bladder cancer, which just enrolled its first patient a few weeks ago. Finally, we've had a string of good results on the IP front that I think puts us in an excellent position in 2024 and beyond. Okay, great.

Speaker Change: Apologies earlier. This week, we were pleased to announce that the mol Dx has expanded coverage for Cigna Jarrod to neo adjuvant monitoring in breast cancer and separately for MLD and recurrence monitoring in ovarian cancer. We have had a drumbeat of exciting clinical developments across a range of indications including CRC.

Speaker Change: Muscle invasive bladder cancer and breast cancer.

Speaker Change: Excited for Alex to also talk about the modern study in bladder cancer, which just enrolled its first patient in a few weeks ago. Finally, we've had a string of good results on the IP front that I think puts us in an excellent position in 2024 and beyond.

Okay, Okay, great, let's get into details of the results on the next slide Red.

Steve Chapman: Let's get into details of the results on the next slide. Revenues exceeded our expectations at $311 million, driven by continued strong volume growth and excellent ASP traction across the business, particularly in women's health and oncology. We previously had a goal to get oncology ASPs above $1,000 by the end of 2024, and we actually hit that level in Q4 of 2023. That's great news because we now think we can get a full year's benefit of higher ASPs in 2024, and we think there's still room to drive signataria clinical ASPs another $50 to $75 higher just by continuing to execute on currently covered indications. Of course, this week's announcement on new Medicare coverage will help us as well. The commentary on women's health ASPs is broadly similar.

Speaker Change: Revenues exceeded our expectations at $311 million driven by continued strong volume growth and excellent ASP traction across the business, particularly in women's health and oncology. We previously had a goal to get oncology asps above $1000 by the end of 2024, and we actually hit that level.

Speaker Change: In Q4 of 2023 Thats Great news because we now think we can get a full year's benefit of higher Asps in 2024, and we think there's still room to drive signature a clinical asps. Another 50 to $75 higher just by continuing to execute our currently covered indications of course.

Speaker Change: This week's announcements on new Medicare coverage will help us as well.

Speaker Change: The commentary on women's health Asps is broadly similar we saw encouraging sequential quarterly progress throughout the course of 2023 and preliminary analysis of Q1 trends suggest that we are on track for continued improvement so far in 2024.

Steve Chapman: We saw encouraging sequential quarterly progress throughout the course of 2023, and preliminary analysis of Q1 trends suggests that we are on track for continued improvement so far in 2024. Volume was a strong driver of Q4 performance as well, and you can see the annual volume trend on the next slide. As mentioned earlier, we came in 6,000 units ahead of our pre-announcement in January. I have a separate slide on ecology coming up, so I'll focus on women's health and organ health here, where we saw strong growth in the full year 2023. As the year ended, we saw an acceleration in women's health, including hitting record units per receiving day in December. This strong momentum carried into January as well, and that was prior to the acquisition of Invitae's women's health assets, where we're just now starting to see volume come in. In organ health, as the year progressed, we saw a return to growth in the donor-derived cell-free DNA business after the initial pullback in early 2023 due to the coverage change. We think we're well-positioned going forward in donor-derived cell-free DNA to compete, given the significant body of peer-reviewed evidence that we generated and the unique features of our tests.

Speaker Change: Volume was a strong driver of Q4 performance as well and you can see the annual volume trend on the next slide as mentioned earlier, we came in 6000 units ahead of our pre announcement in January.

Speaker Change: From slide on oncology coming out so I'll focus on women's health at Oregon Health here, where we saw strong growth in the full year 2023.

Speaker Change: As the year ended we saw acceleration of women's health, including hitting a record units per receiving day in December.

Speaker Change: This strong momentum carried into January as well and that was prior to the acquisition of an Vk's women Women's health assets, where we're just sales starting to see volume come in in Oregon health as the year progressed, we saw a return to growth in the donor derived cell free DNA basis. After the initial pullback in early 2023 due to the <unk>.

Speaker Change: Coverage changes, we think we're well positioned going forward and donor derived cell free DNA to compete given the significant body of peer reviewed evidence that we generated and the unique features of our test.

Speaker Change: Also we continue to see strong interest in arena site. After the renal care publication. This momentum is great and we're off to a fast start across women's health, Oregon Health and oncology.

Steve Chapman: Also, we continue to see strong interest in Renosite after the RenoCare publication. This momentum is great, and we're off to a fast start across women's health, organ health, and oncology. On the next slide, we're showing the ramp of our oncology business, which continues to outperform. In Q4, we did 98,000 units, another strong sequential quarter, increasing by 9,000 clinical units over Q3 of 2023. For the full year of 2023, the growth rate was 73.5% over 2022.

Speaker Change: On the next slide we're showing the ramp of oncology business, which continues to outperform Q4, we did 98000 units another strong sequential quarter, increasing by 9000 clinical units over Q3 of 2023.

Speaker Change: For the full year of 2023 the growth rate was 73, 5% over 2022, we're continuing to see strong growth across the core indications, including colorectal cancer breast cancer muscle invasive bladder cancer immunotherapy monitoring even as we add new indications roughly.

Speaker Change: 40% of oncologists use signature in Q4, which shows the strong clinical utility of the test and we have strong momentum going into 2024.

Steve Chapman: We're continuing to see strong growth across the core indications, including colorectal cancer, breast cancer, muscle and vascular bladder cancer, and immunotherapy monitoring, even as we add new indications. Roughly 40% of oncologists use Signature and Q4, which shows the strong clinical utility of the test, and we have strong momentum going into 2024. Just as critical as revenue and volume growth is the gross margin traction we are seeing. I think this slide is a good snapshot of the business maturing. Over the course of the year, our ASP and COGS initiatives delivered above our expectations, particularly in Signataria ASP and COGS, both of which improved over the course of 2023. As I mentioned at the top of the call, we think the underlying repeatable gross margin in the quarter was roughly 49%.

Speaker Change: Just as critical as revenue and volume growth is the gross margin traction we are seeing.

Speaker Change: I think this slide is a good snapshot of the business maturing over the course of the year, our ASP and Cogs initiatives delivered above our expectations, particularly in Cigna, Tara Asps and Cogs, both of which improved over the course of 2023.

Speaker Change: As I mentioned at the top of the call. We think the underlying repeatable gross margin in the quarter was roughly 49% or 2024 guide implies meaningful continued gross margin improvements based on Asps and cost drivers that are within our control. In addition, we've also got a number of potential upside.

Speaker Change: Drivers to both revenue and gross margin that we'll discuss later in the call that are included in our guide.

Speaker Change: So the net result of strong revenue growth expanding margins on stable operating expenses is the dramatic reduction in cash burn we achieved in 2023. This is essentially in line with the data we released in January as discussed previously we accelerated a chunk of 2024 scheduled capex in December.

Steve Chapman: Our 2024 guide implies meaningful continued gross margin improvements based on ASPs and COGS drivers that are within our control. In addition, we've also got a number of potential upside drivers to both revenue and gross margins that we'll discuss later in the call that aren't included in our guide. So, the net result of strong revenue growth and expanding margins on stable operating expenses is a dramatic reduction in cash burn we achieved in 2023. This is essentially in line with the data we released in January. As discussed previously, we accelerated a chunk of 2024 scheduled CapEx in December to take advantage of some large year-end discounts, which has helped us set up for an efficient year in 2024. Two years ago, we set a long-term target to get a cash flow break-even quarter this year. And based on these results, plus the early data we're seeing so far in Q1, we are confident that we can reach that milestone by Q3 of this year, if not sooner. However, cash flows are dependent in part on payer response times to submitted claims, and so are inherently difficult to forecast with precision on a quarterly basis.

Speaker Change: To take advantage of some large year end discounts, which has helped us set up for an efficient year in 2020 for two years ago, We set a long term target to get a cash flow breakeven quarter. This year and based on these results plus the early data we're seeing so far in Q1, we are confident we can reach that milestone by Q3 of this year if not.

Speaker Change: Lot sooner of course cash flows are dependent in part on payer response times to submitted claims and so are inherently difficult to forecast with precision on a quarterly basis, but the point is we're continuing to build momentum and our confidence in achieving this goal is stronger than ever.

Speaker Change: Finally, I think anyone that follows this space has taken note of our results on the IP front.

Speaker Change: Since we created the category of tumor informed <unk> D. In 2017, we've had two companies attempt to follow us into the space requiring us to enforce our IP against them.

Speaker Change: The good news is they've now both been enjoying for violating our IP.

Steve Chapman: But the point is that we're continuing to build momentum, and our confidence in achieving this goal is stronger than ever. Finally, I think anyone that follows this space has taken note of our results on the IP front. Since we created the category of tumor-informed MRD in 2017, we've had two companies attempt to follow us into the space, requiring us to enforce our IP against them. The good news is that they've now both been enjoined for violating our IP. The permanent injunction against Archer Navite was ordered after the conclusion of a jury trial, and then subsequently, a preliminary injunction was entered against NeoGenomics.

Speaker Change: A permanent injunction against Orchard in VK was ordered after the conclusion of a jury trial and then subsequently a preliminary injunction was issued against Neogenomics. What notable point about these results is that different set of patents and different judges are an issue in each of these cases cases, which I think demonstrates the strength of.

Speaker Change: The IP estate that protects our core technology.

Speaker Change: The <unk> IP litigation offers another case in point, which generated a sizable jury verdict for damages based only on past infringement of our patents. The process is still ongoing to determine whether future royalties will be awarded.

Speaker Change: On the <unk> trial, we were found to not willfully infringe the damages awarded were obviously much lower than what Rob Jim was requesting but we still respectfully disagree with the outcomes of the trial and we plan to appeal certain of the rulings.

Solomon Moshkevich: One notable point about these results is that different sets of patents and different judges are at issue in each of these cases, which I think demonstrates the strength of the IP estate that protects our core technology. The CARES D.S. IP litigation offers another case in point, which generated a sizable jury verdict for damages based only on past infringement of our patents. The process is still ongoing to determine whether future royalties will be awarded. And in the Rabjin trial, we were found not to willfully infringe, and the damages awarded were obviously much lower than what Rabjin was requesting, but we still respectfully disagree with the outcomes of the trial, and we plan to appeal certain of the ruling. Okay, now, I hand it over to Solomon to discuss updates in women's health and organ health. Solomon?

Speaker Change: Okay now, let me hand, it over Solomon to discuss updates in women's health and Oregon Health Solomon. Thanks.

Solomon: Thanks, Steve.

Solomon: Let's start with the <unk> deal.

Solomon: Recall, we secured a judgment on past damages and Archer IP litigation roughly $20 million, we anticipated that it could be difficult to collect that amount from and vita given their financial issues. So we applied that judgment amount as part of the consideration in this deal we.

We also paid and Vita $10 million upfront and if we have excellent retention of <unk> accounts or is it potential milestone payment that we can make of up to $22 5 million.

Solomon Moshkevich: Thanks, Steve. Let's start with the Invitae deal. First, recall that we secured a judgment on past damages in our Archer IP litigation of roughly $20 million. We anticipated that it could be difficult to collect that amount from Invita given their financial issues.

Solomon: It would be very happy to make that statement because it would mean that the deal is working extremely well for us.

Solomon: As a reminder, we did not take on any of <unk> products its lab operations, nor its physical assets.

We did hire roughly 30 of their women's health sales reps and our goal is to provide a seamless transition of those and Vijay accounts to <unk> Panorama and horizon products.

Solomon Moshkevich: So we applied that judgment amount as part of the consideration. We also paid Invitae $10 million up front. And if we have excellent retention of Invitae's accounts, there's a potential milestone payment that we can make of up to $22.5 million. We would be very happy to make that payment because it would mean that the deal is working extremely well for us. As a reminder, we did not take on any of Envite's products.

Solomon: Our team is working hard to retain as much volume as we can and we're doing well, we expect to retain at least $20 million to $25 million in high quality recurring revenue per year, but we think there is a potential to increase that up to $50 million to $60 million, depending on how things go, especially if receipt clinical practice.

Solomon Moshkevich: [inaudible] We did hire roughly 30 of their women's health sales reps, and our goal is to provide a seamless transition of those Invitae accounts to Natera's Panorama and Horizon products. Our team is working hard to retain as much volume as we can, and we're doing well. We expect to retain at least $20 to $25 million in high-quality recurring revenue per year, but we think there's a potential to increase that up to $50 to $60 million, depending on how things go, especially if we see clinical practice guidelines for expanded carrier screening or 22Q, which we think could come as soon as this spring and would provide upside to these needs. So we think the deal rationale was strong, and we look forward to providing more updates as the year

Solomon: Lines for expanded carrier screening or <unk>, which we think could come as soon as this spring and will provide upside to these numbers.

Solomon: So we think the deal rationale was strong and we look forward to providing more updates as the year progresses.

Solomon: One of the keys to our offering in women's health as our highly differentiated screening test for the 20 <unk> micro deletion.

Solomon: <unk> goes into society guidelines and becomes commonplace as we believe it will the differentiation that <unk> has in its 20 <unk> test is going to become increasingly valuable.

Solomon: When we run our tests, we are using our core SNP based technology that allows us to target. This very small region of the genome, which is around two five to three megabit Isis.

Solomon Moshkevich: One of the keys to our offering in women's health is our highly differentiated screening test for the 22Q microdeletion until it goes into societal guidelines and becomes commonplace, as we believe it will. The differentiation that Natera has in its 22Q test is going to become increasingly valuable. When we run our test, we're using our core SNP-based technology that allows us to target this very small region of the genome, which is around two and a half to three megabytes.

This allows us to get over two five times more observations in this particular region of interest and companies doing massively parallel shotgun sequencing.

Solomon: Which creates a significant technical advantage that has translated into excellent clinical performance as demonstrated in the smart trial.

Solomon: We think the smart trial represents the gold standard in clinical validation that would be very hard to repeat.

Solomon: As a reminder, smart was a seven year multicenter prospective trial that enrolled more than 20000 patients and collected genetic outcomes from prenatal.

Solomon Moshkevich: This allows us to get over 25 times more observations, Transcribed by https://otter.ai, which creates a significant technical advantage that has translated into excellent clinical performance as demonstrated in the SMART trial. We think the SMART trial represents the gold standard in clinical validation.

Solomon: Estimates and newborn blood spots.

Solomon: In this trial Panorama demonstrated overall clinical sensitivity of 83% and specificity of 99.95%, which translates to PPV of 52, 6% overall and PPV of a 100% in cases with ultrasound anomalies.

Solomon Moshkevich: As a reminder, SMART was a seven-year multi-center prospective trial that enrolled more than 20,000 patients and collected genetic outcomes, prenatal, Specimens, and Newborn Blood Spots. In this trial, Panorama demonstrated overall clinical sensitivity of 83 percent. Specificity of 99.95%, which translates to a PPV of 52.6% overall and a PPV of 100% in cases with ultrasound anomalies. As 22Q has gotten more attention in the wake of a strong guideline from ACMG and anticipated guidelines from ACOG, we have noticed competitors starting to present data sets. PPV metrics that look high, but with screen positive rates that are low or completely unreported, and one report from a lab doing shotgun, the screen positive rate was approximately 1 in 6,500, just three or four times lower than the expected population.

Solomon: <unk> has gotten more attention in the wake of a strong guideline from <unk> and anticipated guidelines from a cogs.

Solomon: We have noticed competitors starting to presents datasets with PPV metrics that look high.

Solomon: But with screen positive rates that are low or completely unreported.

Solomon: And one report from a lab doing shotgun sequencing. The screen positive rate was approximately $1 6500, which is three or four times lower than the expected population incidence.

Solomon: Adjusting that they might be missing a significant number of effective pregnancies and.

Solomon: In addition, other labs are making comparative claims based on patient cohorts that had very high rates of ultrasound findings, where we saw PPV of 100% in the smart trial as I mentioned previously.

Solomon: In our view a test is not appropriate for population screening if you don't know the clinical sensitivity and specificity.

Solomon Moshkevich: Suggesting that they might be missing a significant number of affected pregnant women. In addition, other labs are making comparative claims based on patient cohorts that had very high rates of ultrasound findings, where we saw PPV of 100% in the SMART trial, as I mentioned previously. In our view, a test is not appropriate for population screening if you don't know the clinical sensitivity and specificity of the test.

Solomon: These are typical marketing tactics that we've seen before and we do think physicians will see through it.

Solomon: Moving now on to carrier screening, we've seen really strong adoption in the past year and we believe we are the number one ordered next gen sequencing based carrier screening test in the United States.

Solomon: Our mix of broader panels increased after the exit of summer for from the market in late 2022.

Solomon: And we're finding that quite a few of the new transitioning in retail accounts also have a strong mix of broad panels.

Solomon Moshkevich: These are typical marketing tactics that we've seen before, and we do think physicians will see through them. Moving now into carrier screening. We've seen really strong adoption in the past year, and we believe we're the number one ordered next-gen sequencing-based carrier screening test in the United States. Our mix of broader panels increased after the exit of Semaphore from the market in late 2022. And we are finding that quite a few of the new transitioning Invitae accounts also have a strong mix of broadband. So, in addition to our existing portfolio, we are really pleased to be launching a new 613 gene panel and totally flexible custom panel options to serve these customers. Horizon provides high detection across all, including the challenging ones where other labs may struggle.

Solomon: So in addition to our existing portfolio. We are really pleased to be launching a new 613 gene panel and totally flexible customer panel options to serve these customers.

Solomon: Horizon provides high detection across all genes.

Solomon: Reading the challenging ones, where other labs may struggle.

Solomon: With these new panels together with our investments in various curation, our genetic counseling team and lab automation, we think horizon is well positioned to remain a leader in the field.

Solomon: Broad panel carrier screening is also a hot topic for a card where we expect to see an expanded guideline.

Solomon: In 2024.

Turning now to Oregon Health, where we are excited about the prospects for 2024 and beyond.

The strength of our clinical data, our commercial execution and our intellectual property estate enables us to compete for the leadership position in this space.

Solomon Moshkevich: Without these new panels, together with our investments in variant curation, our genetic counselor team, and lab automation, we think Horizon is well-positioned to remain a leader in the field. Broad panel carrier screening is also a hot topic for ACOG, where we expect to see an expanded guideline. Turning now to organ health, where we are excited about the prospects for 2024 and beyond. We think the strength of our clinical data, our commercial execution, and our intellectual property estate enables us to compete for a leadership position in this space. Our clinical data generation and organ health has been prodigious in the last five years, where we now have 39 papers published or accepted in top journals. For the heart indication, we recently had our third paper accepted for publication, the Trifecta Heart Study. Demonstrated strong correlation between Prospera and Endomyocardial Bios, reporting an area under the ROC curve of 0.9, as you can see in these three high-quality data sets on the page.

Solomon: Our clinical data generation and Oregon Health has been prodigious in the last five years, where we now have 39 papers published or accepted in top journals.

Solomon: In the heart indication, we recently had our third paper accepted for publication.

Solomon: Sector Heart study, which demonstrated a strong correlation between prospera and <unk> and a myocardial biopsy assessed with the molecular microscope.

Solomon: Reporting an area under the curve of 0.9.

Solomon: You can see in these three high quality data sets on the page the consistent performance across the trifecta <unk> and deduce trials.

Solomon: <unk> in adults and pediatrics.

Solomon: This performance laid the foundation for us to start the randomized controlled <unk> trial, which aims to show the non inferiority of using surveillance with prospera compared to surveillance biopsies that most centers do on a monthly basis in the first year after a heart transplant.

Solomon Moshkevich: Transcripts provided by Transcription Outsourcing, LLC. including in adults and pediatrics. This performance laid the foundation for us to start the randomized controlled ACEs trial, which aims to show the non-inferiority of using surveillance with PROSPERA compared to surveillance biopsies that most centers do on a monthly basis in the first year after a heart transplant. Sites are preparing for their first enrollment this summer.

Solomon: Sites are preparing for their first enrollment this summer.

Solomon: Now in the kidney transplant space, we have finished enrollment of three major trials.

Solomon: Proactive pedal and motor.

Solomon: Our first paper from the proactive study has now been accepted showing that <unk> can detect active rejection. After four months ahead of biopsy.

Solomon: No other cell free DNA lab has lead time data like this and we think the state it might support payer coverage in the surveillance setting.

Solomon Moshkevich: Now, in the kidney transplant space, we have finished enrollment in three major trials: Proactive, Pedal, and Motor.

Solomon: We look forward to this publication and we're already working on additional Readouts from this study.

Solomon: Moving on to the tunnel trial.

Solomon: Over 500 patients enrolled from 28 different sites. This is an important prospective utility study aiming to show how <unk> can be used serially. After a rejection event to predict therapeutic response and outcomes. We believe this study can bring significant value to the field for this important indication.

Solomon Moshkevich: Our first paper from the PROACTIVE study has now been accepted, showing that PROSPERA can detect active rejection up to four months ahead of biopsy. No other cell-free DNA lab has lead time data like this. And we think this data might support payer coverage in the surveillance setting. We look forward to this publication, and we're already working on additional readouts from this study. Moving on to the PEDDLE trial with over 500 patients enrolled from 28 different sites, this is an important perspective utility. Aiming to show how Prospera can be used serially after a rejection event, we believe this study can bring significant value to the field for this important indication. Finally, the MOTOR study is generating novel clinical validity data showing the performance of PROSPERA in cases of multi-organ transplantation. For example, kidney heart, kidney pancreas, and kidney liver.

Solomon: Finally, the motor study is generating novel clinical validity data showing the performance of <unk> cases of multi organ transplantation.

Solomon: Including kidney heart kidney pancreas kidney liver.

Solomon: We expect these key trials to extend our data leadership in a meaningful way. So we're excited about 2024.

Solomon: Moving now to oncology.

Solomon: Second <unk> continues to benefit from a significant first mover advantage across multiple areas.

Solomon: The first is our significant leadership in technology and innovation as exemplified by our strong IP portfolio and two recent favorable injunction decisions.

Solomon Moshkevich: We expect these key trials to extend our data leadership in a meaningful way, so we're excited about 2020. Moving now to oncology, Signatario continues to benefit from a significant first mover advantage across multiple areas. First is our significant leadership in technology and innovation, as exemplified by our strong IP portfolio and two recent favorable injunctions. We will continue to invest in new innovation projects.

Solomon: We continue to invest in new innovation projects with multiple MRV related products that we plan to launch in 2024 and 2025.

Solomon: We also continue to invest in expanding our market leading clinical portfolio now.

<unk> was 70 peer reviewed oncology publications to date multiple prospective randomized trials ongoing many of which were designed several years ago. We believe this pipeline will continue generating data over the coming years that can become practice changing.

Solomon Moshkevich: Multiple MRD-related products that we plan to launch in 2024 and 2025. We will also continue to invest in expanding our market-leading clinical portfolio. Now with 70 peer-reviewed oncology publications to date and multiple prospective randomized trials ongoing, many of which were designed several years ago, we believe this pipeline will continue generating data over the coming years that can become practice-changing. In market access and reimbursement, today, the Signatario test is covered by Medicare and a growing number of private payers. Colorectal Cancer, Bladder Cancer, Breast Cancer, and Pan-Cancer Immunotherapy Monitor

And market access and reimbursement today Cigna <unk> test is covered by Medicare and a growing number of private payers and colorectal cancer bladder cancer breast cancer and Pan cancer.

Solomon: Immunotherapy monitoring.

Solomon: We have now added ovarian cancer to that list, which Alex will cover in greater detail in a moment.

Solomon: This broad coverage allows oncologists to use <unk> across the majority of their patients.

Solomon: Finally, I want to highlight the operational capabilities that we've developed over nearly half a decade of experience.

Solomon: I believe many in the field discount the complexity of delivering tumor informed personalized MRV results back to physicians and patients in a timely manner and at scale.

Solomon Moshkevich: We have now added ovarian cancer to that, all of which Alex will cover in greater detail in a minute. Finally, I want to highlight the operational capabilities that we've developed over nearly half a decade of experience. I believe many in the field discount the complex, Delivering Tumor-Informed and Personalized MRD Results Back to Physicians and Patients in a Timely Manner and at Scale. There is a real experience curve here, which is not easy to replicate.

Solomon: There is a real experience curve here, which is not easy to replicate we continued to expand and refine these capabilities through improvements to the turnaround time expansion of our mobile phlebotomy services integration into electronic medical records and the loss of industry, leading digital solutions for patients and physicians.

Solomon: Now I want to hand, the call over to Alex to cover recent clinical updates.

Solomon: Alex.

Solomon Moshkevich: We will continue to expand and refine these capabilities through improvements to the turnaround time, expansion of our mobile phlebotomy services, and the ability to provide a more efficient and reliable service. Integration into Electronic Medical Records, and the launch of industry-leading digital solutions for patients and physicians. Now, I want to hand the call over to Alex to cover recent clinical updates.

Alex: Great. Thanks, Solomon turning now to key indications.

Alex: Colorectal cancer, there are multiple events worth noting.

Alex: We reported the first data from our bespoke CRC registry study, which enrolled patients across more than 100 centers in the United States.

Alex: Studies initial results were presented at <unk> Gi in this year and showed exceptional assay performance consistent with prior readouts. Additionally.

Alexey Aleshin: Great. Thanks, Solomon. Turning now to key indications, in colorectal cancer, there are multiple events worth noting. We reported the first data from our bespoke CRC registry study, which enrolled patients across more than 100 centers in the United States. The study's initial results were presented at ASCO GI this year and showed exceptional assay performance consistent with prior reading. Additionally, for the first time, it was shown that signatory testing markedly reduced patient anxiety in over 73% of respondents.

Alex: Additionally for the first time it was shown that signals hair testing markedly reduced patient anxiety and over 73% of respondents. Additionally.

Alex: Additionally, 96% of participants reported that they wanted to continue using Sigma Tera going forward.

Alex: The next study I wanted to highlight is the intercept trial that was done by MD Anderson cancer Center with over 1100 patients tested using commercial Sigma Tara.

Alex: The observational component of this study was able to characterize the impact of Sigma Taro testing on a routine clinical practice and showed a median DFS of approximately $5 six months between signature positivity and clinical relapse.

Alexey Aleshin: Additionally, 96% of participants reported that they wanted to continue using Signatarium going forward. The next study I wanted to highlight is the INTERCEPT trial that was done by Amdi Anderson Cancer Center with over 1,100 patients tested using commercial signataria. The observational component of this study was able to characterize the impact of signataria testing in a routine clinical practice and showed a median DFS of approximately 5.6 months between signataria positivity and clinical relapse.

Alex: Interestingly the investigators also presented preliminary results from the phase two paths 102 sub study, which enrolled 13 patients to receive <unk> 102 based on a positive signal Terror result.

Alex: <unk> the small sample size. The study is notable since past one or two is the same drug being used.

Alex: In the randomized perspective Altair study.

Alexey Aleshin: Interestingly, the investigators also presented preliminary results from the Phase 2 TAS-102 sub-study, which enrolled 13 patients to receive TAS-102 based on a positive signoterror result. Despite the small sample size, the study is notable since PAS-102 is the same drug being used. In the randomized perspective, Altair's study. The exciting finding was that 54% of patients had CTA clearance at three months, suggesting high single-agent activity of TASC-102 in this patient population. Compared to an untreated signataria positive population, where our data suggests a spontaneous clearance rate should be around 3 to 4.

Alex: The exciting finding was that 54% of patients at Cta clearance at three months, suggesting high single agent activity of <unk> 102 in this patient population comparison untreated <unk> positive population, where our data suggests a spontaneous clearance rate should be around.

Alex: 3% to 4%.

Alex: Additionally, this study reported a median disease free survival of nine four months, which compares favorably to the five six months I presented a moment ago from the broader observational cohort.

Alex: Though we know the study was not randomize.

Alex: We believe this all provides a positive signal for the Altair study.

Alex: We expect the top line readout from the Altair trial in Q3 of this year with full results being presented and perhaps concomitantly published in Q4.

Alexey Aleshin: Additionally, this study reported a median disease-free survival of 9.4 months, which compares favorably to the 5.6 months I presented a moment ago from the broader observational cohort, although we know the study was not randomized. We believe this all provides a positive signal for the Altair study. We expect a top-line readout from the Altair trial in Q3 of this year, with full results being presented and perhaps concomitantly published in Q4. If the study is positive, we expect it to be practice-changing in the US, in Japan, and likely many other countries. Next, let us review our progress towards key catalysts in bladder cancer.

Alex: If the study is positive we expect it to be practice changing.

Alex: In the U S and Japan and likely many other countries.

Alex: Next let US review our progress towards key catalysts in bladder cancer just.

Alex: Just to remind everyone. We currently have Medicare reimbursement, both in the neo adjuvant adjuvant and recurrence monitoring settings.

Alex: While we do not talk about bladder cancer, often with around 35000, new patients being diagnosed every year. We believe this indication could become highly penetrated and well reimbursed pending the readout of the two studies highlighted on this slide.

Alexey Aleshin: Just to remind everyone, we currently have Medicare reimbursement both in the neoadjuvant and recurrence monitoring setting. While we do not talk about bladder cancer often, with around 35,000 new patients being diagnosed every year, we believe this indication could become highly penetrated and well-reimbursed pending the readout of the two studies highlighted on this slide. We have previously discussed the randomized placebo-controlled global INVIGOR011 study that is being done in collaboration with Genentech. The study continues to enroll well, and if the readout is positive, it would form the basis for our first signataria FDA submission, likely in the second half of 2025. We believe the advanced status of our work with the FDA gives us an advantage. We also want to point out that the prospective non-randomized DFS data from the signatory negative arm of this study will be presented in oral format at the European Association of Urology Conference later this year, and it may create an interim commercial tailwind if it shows convincing data that signatory negative patients have good outcomes.

Alex: We have previously discussed the randomized placebo controlled global and bigger 011 study that is being done in collaboration with Genentech.

Alex: The study continues to enroll well and if the readout is positive it would form the basis for our first signal Terra FDA submission likely in the second half of 2025.

Alex: We believe the advanced status of our work with the FDA gives us an advantage.

Alex: We also want to flag the prospective non randomized PFS data from the Sigma Taro negative arm of this study will be presented in oral format ad.

Alex: The European Association of Urology Conference later this year.

Alex: And in May create an interim commercial tailwind if it shows convincing data that cigna <unk> negative patients have good outcomes, especially if an improvement as noted beyond the great results. We already saw in bigger 010 data set published in 2021.

Alexey Aleshin: Especially if an improvement is noted beyond the great results we already saw in the Envigor 010 dataset published in 2021. We are also pleased to announce the Modern Study being done in collaboration with the NCI-funded Alliance Group. The lead PI of the study is Dr. Matthew Golsky, a leading expert in this space, and the study design is a testament to his and Alliance's leadership and forward thinking, with the study incorporating both an escalation and a de-escalation cohort similar to the design of the circulate trial in colorectal cancer. The de-escalation cohort has multiple similarities to the VAGA study and, if it meets its primary endpoint, could have significant implications for patient management. For example, making it possible to reduce unnecessary and expensive treatment in the MRD negative patient population.

Alex: We are also pleased to announce the modern study.

Alex: Being done in collaboration with the NCI funded Alliance group.

Alex: The lead Pi of the study is Dr. Matthew <unk>, a leading expert in this space.

Alex: The study design is a testament to his and alliances leadership and forward thinking.

Alex: With the study incorporating both an escalation and the escalation cohort similar to the design of the circulate trial in colorectal cancer.

Alex: The escalation cohort has multiple similarities to the Vegas study and if it meets its primary endpoint could have significant implications for patient management.

Alex: Making it possible to reduce unnecessary and expensive treatment.

Alex: In the <unk> negative patient population.

Alexey Aleshin: Moving on to the next slide, we were excited this week to announce the expansion of Medicare's coverage of signataria to include ovarian cancer, as well as the neoadjuvant setting in breast cancer. Ovarian cancer affects close to 20,000 women per year in the United States, has a median age of diagnosis of 63 years, and is the fifth leading cause of cancer death in women.

Alex: Moving onto the next slide we were excited this week to announce expansion of Medicare coverage of Sigma Taro to include ovarian cancer as well as the new adjuvant setting in breast cancer.

Alex: Ovarian cancer effects close to 20000 women per year in the United States.

Alex: As the median age of diagnosis of 63 years and.

Alex: And as the fifth leading cause of cancer death in women.

Alexey Aleshin: Current tools, including imaging and biomarkers, such as CA-125, are inadequate to guide adjuvant and surveillance decisions in stage 2-4 disease. Based on Natera's perspective, a multi-center study evaluating 69 patients across over 160 time points, we reported longitudinal sensitivity and specificity of 100% to detect recurrence with an average lead time of around 10 months. In breast cancer, as a reminder, signatairre has already been reimbursed in the post-operative setting for stage 2B and higher patients, regardless of disease subtype. What's interesting is that up to 50% of all resectable stage 2 to 4 breast cancer patients currently receive neoadjuvant therapy, which is any treatment prior to surgery, both to improve surgical outcomes and to assess tumor sensitivity to systemic therapy.

Alex: Current tools, including imaging Biomarkers, such as CA 125 are inadequate to guide adjuvant and surveillance decisions in stage two for disease.

Alex: Based on the tariffs prospective multicenter study evaluating 69 patients across over 160 time points, we reported longitudinal sensitivity and specificity of a 100% to detect recurrence with an average lead time of around 10 months.

Alex: In breast cancer as a reminder, signal Taro has already been reimbursed in the post operative setting for stage, two b and higher patients regardless of disease subtypes.

Alex: What's interesting is that up to 50% of all Resectable stage III for breast cancer patients currently receive new adjuvant therapy, which is any treatment prior to surgery, both to improve surgical outcomes and to assess the tumor sensitivity to systemic therapy.

Alexey Aleshin: However, as the MCCM guidelines themselves note, current tools available for assessing new adjuvant treatment response are not perfect. Signataire has been extensively validated in this setting, particularly through our collaboration with the I-SPI2 Consortium, which is a leading group we have now been working with for over half a decade to study how bespoke CTA dynamics in the neoadjuvant setting can further improve on existing methods. In a study of over 280 patients and over 1,000 time points, we have shown that early signataria clearance was highly predictive of therapy response, and persistent ctDNA detection was associated with poor surgical response, as well as very poor distant relapse-free survival.

Alex: However, as the NCC guidelines themselves out current tools available for assessing new adjuvant treatment of response are not perfect signal.

Alex: <unk> has been extensively validated in this setting, particularly through our collaboration with Eisai to consortium, which is a leading group we have now been working with for over half a decade.

Alex: How bespoke Cta and dynamics in the neo adjuvant setting can further improve on existing methods.

Alex: In a study of over 280 patients and over 1000 time points. We have shown that early signals here a clearance was highly predictive of therapy response, and persistent CTD detection was associated with poor surgical response as well as a very poor distant relapse free survival.

Alexey Aleshin: We believe this expanded coverage can help inform care for tens of thousands of patients every single year. These coverage determinations are a great way to start the year, especially as biomarker legislation kicks in across multiple states. We look forward to additional indications for Moldex in 2024 based on our published clinical data. Now, let me hand the call over to Mike to cover the financials. Mike.

Alex: We believe this expanded coverage can help inform care for tens of thousands of patients every single year.

Alex: These coverage determinations are a great way to start the year, especially as biomarker legislation kicks in across multiple states and we look forward to additional indications for <unk> in 2024 based on our published clinical data.

Alex: Now, let me hand, the call over to Mike to cover the financials Mike.

Michael B. Brophy: Great, thanks, Alex. The first slide here is just a summary of our Q4 results compared to Q4 last year. Steve hit some of the highlights already.

Mike: Great. Thanks, Alex first slide here is just a summary of our Q4 results compared to Q4 last year, Steve had some of the highlights already revenues were up 43% and gross margin expanded by almost 10 full percentage points on revenues, we estimate that we had roughly $5 million in true ups beyond what we typically get in.

Michael B. Brophy: Revenues were up 43%, and gross margins expanded by almost 10 full percentage points. On revenues, we estimate that we had roughly 5 million true ups beyond what we typically get in a quarter, which contributed to the $311 million in total revenues. So I would estimate the organic revenue number to be roughly $306 million. Steve also mentioned some lab-related savings that helped gross margins in the quarter. The way the holidays landed this year, with the entire last week of December being bracketed by Christmas and New Year's, meant that we had fewer cases coming in from customers that last week of the quarter.

Mike: Quarter that contributed to the $311 million in total revenues. So I would estimate the organic revenue number to be roughly $306 million. Steve also mentioned some lab related savings that helped gross margins in the quarter.

Mike: The holiday and landed this year would be entire last week of December bracketed by Christmas and new years meant that we have fewer cases coming in from customers that last week of the quarter and so it didn't experience a typical cogs related expenditures, we would normally expect in a week.

Michael B. Brophy: And so we didn't experience the typical COGS-related expenditures we would normally expect in a week. It takes about a week for us to report out most of our tests. So this resulted in slightly lower COGS expenses but did not significantly impact revenue, which is only accrued on reported units. Netting all of that benefit out from our Q4 gross margin of 51.4% gives you our estimate of roughly 49% repeatable gross margins, which, of course, still represents a huge sequential step up from Q3 of 23. We were able to drive these results on operating expenses that were stable compared to 2022. As Steve described, we've invested heavily to build the critical infrastructure needed to rapidly scale the business. And we believe we're in position to drive significant future innovation with relatively modest increases in operating expenses from our current level. This combination of expanding revenues and improving margins on stable expenses fits precisely with the multi-year strategy we've laid out in the past.

Mike: It takes about a week for us to report out most of our tests. So this resulted in slightly lower cognizant expenses did not significantly impact revenue, which is only accrued annual reported units netting all of that benefit out from our Q4 gross margin of 51, 4% gives you our estimate of roughly.

Mike: 49% repeatable gross margins, which of course still represents a huge sequential step up from Q3 of 'twenty three.

Mike: We were able to drive these results on operating expenses that were stable compared to 2022 as Steve described we've invested heavily to build the critical infrastructure needed to rapidly scale. The business and we believe we are in position to drive significant future innovation with relatively modest increases in operating expenses from our current lead.

Mike: <unk> this combination of expanding revenues and improving margins on stable expenses fits precisely with the multi year strategy, we laid out in the past. The net result of that is that we cut our Q4 loss per share by more than half compared to Q4, 2022, and now have clear line of sight to a cash flow break.

Michael B. Brophy: The net result of that is that we cut our Q4 loss per share by more than half compared to Q4 2022 and now have a clear line of sight to a cash flow breakeven quarter, as Steve described. Okay, that's a good segue to the guidance on the next slide. We're excited to be initiating the revenue guide at $1.32 billion to $1.35 billion, gross margins at 50 to 53%, with relatively stable operating expenses leading to another dramatic reduction in our cash. While there are a lot of variables that will cause cash flow to fluctuate from quarter to quarter, we now believe we can get to a cash flow break-even quarter by Q3, if not sooner.

Mike: <unk> quarter as Steve described.

Speaker Change: Okay. That's a good segue to the guidance on the next slide we're excited to be initiating the revenue guide at 132 billion to $1 35 billion gross margins at $50 to 53% with relatively stable operating expenses, leading to another dramatic reduction in our cash flow.

Speaker Change: While there are a lot of variables that will cause cash flow to fluctuate from quarter to quarter. We now believe we can get to a cash flow breakeven quarter by Q3, if not sooner.

Speaker Change: This guidance assumes a steady continuation of the strong underlying trends in volumes Asps and Cogs, we've seen over the past year, but does not rely on upside drivers for potential guideline changes any spike in volumes from further cigna, Tara data or any meaningful bench.

Michael B. Brophy: This guide presumes a steady continuation of the strong underlying trends in volumes, ASPs, and COGs we've seen over the past year but does not rely on upside drivers from potential guideline changes, any spike in volumes from further signatariat data, or any meaningful benefit from the biomarker legislation of the calendar year. And it's just a modest contribution from the recent MulVX Covers decision. That approach leads to a fairly cautious guide on further margin expansion. I would expect to start the year in the high 40s, consistent with our organic estimate for Q4, with the goal of getting gross margins to the top end of the range and possibly beyond that by Q4 of 2024.

Speaker Change: And the biomarker legislation in the calendar year.

Speaker Change: And it's just a modest contribution from the recent <unk> coverage decisions that approach leads to a fairly cautious guide on further margin expansion I would expect to start the year in the high forties consistent with our organic estimate for Q4 with the goal of getting gross margins to the top end of the range and <unk>.

Speaker Change: But beyond that by Q4 of 2024.

Speaker Change: We have also assumed a relatively modest volume contribution from <unk> accounts, we are picking up now consistent with Steve's base case described earlier, but hopefully raising that forecast as we get more clarity on account retention in the coming months.

Michael B. Brophy: We have also assumed a relatively modest volume contribution from Invitae accounts, which we are picking up now consistent with Steve's base case described earlier, but hope to be raising that forecast as we get more clarity on account retention in the coming. In our R&D organization, the team has a steady drumbeat of product launches, clinical trial work, and COGS initiatives slated to launch this year. Once those initiatives are complete, we anticipate having bandwidth to keep driving innovation in future years without large increases in. The SG&A guide includes the hiring of the Invitae sales reps and several other product launch initiatives we have slated for this year. So at the midpoint of the guide, we are forecasting revenue growth well above 20%, about 650 basis points of expansion in the gross margin against annual 2023, full year actual margins, and operating expense growth of about 4%. Those of you that have followed us for a few years know that we prefer to start the year with a guide that feels challenging but achievable for us.

Speaker Change: R&D organization. The team has a steady drumbeat of product launches clinical trial work and Cogs initiatives slated to launch this year once those initiatives are complete.

Speaker Change: We anticipate having bandwidth to keep driving innovation in future years without large increases in spending.

Speaker Change: The SG&A guide includes the pickup of the <unk> sales reps and several other product launch initiatives, we have slated for this year.

Speaker Change: At the midpoint of the guide we are forecasting revenue growth well above 20% about 650 basis point expansion in the gross margin against the annual 2023 full year actual margins and operating expense growth of about 4%.

Speaker Change: Those of you that have followed us for a few years know that we prefer to start the year with a guide that feels challenging but achievable to us and I think there are several sources of upside that could allow us to outperform once again this year.

Speaker Change: And thats another good segue to the next slide which summarizes those catalysts.

Michael B. Brophy: And I think there are several sources of upside that could allow us to outperform once again this year. And that's another good segue to the next slide, which just summarizes those catalysts. We are making great progress on ASPs, volume growth, and COGS in our core business, as I just described. And I'm looking forward to sharing our progress on earnest calls this year as we continue to just execute on the initiatives within our control. If we can do that, I think we are in a position to outperform once again in 2020.

Speaker Change: We are making great progress on Asps and volume growth in Cogs in our core business as I, just described and I'm looking forward to sharing our progress on earnings calls this year as we continue to just execute on the initiatives within our control. If we can do that I think we are in position to outperform once again in 2024.

Speaker Change: And that we have some potentially significant catalysts on tap.

Michael B. Brophy: Beyond that, we have some potentially significant catalysts on TAP. Of course, we have the potential guideline expansion and carrier screening and 22Q that Steve described earlier in the call. The timing of those updates is always uncertain and subject to change, but you could tentatively see some society guideline updates as early as this spring. In oncology, we are working to expand MOLDI-X coverage to several additional tumor types, and the advent of biomarker legislation in a number of heavily populated states creates an opportunity to drive commercial coverage higher for signataria in those states.

Speaker Change: Of course, we have the potential guideline expansion in carrier screening in 'twenty, two Q that Steve described earlier in the call.

Speaker Change: The timing of those updates are always uncertain and subject to change, but tentatively you could see some society guideline updates as early as this spring.

Speaker Change: In oncology, we are working to expand <unk> coverage to several additional tumor types and the advent of biomarker legislation in a number of heavily populated states creates an opportunity to drive commercial coverage higher for sitting in terror in those states we.

Speaker Change: We are excited about the Altair CRC escalation in treatment on molecular relapse study readout in colorectal cancer that <unk> touched on in his remarks, which we expect to get in the summer or early fall as he described.

Michael B. Brophy: We are excited about the Altair CRC escalation and treatment on molecular relapse study readout in colorectal cancer that Solomon touched on in his remarks, which we expect to get in the summer or early fall, as he described. And finally, we are really excited about a number of significant product launches in women's health and oncology we have planned for this year. Consistent with our typical practice, we will dive into each of those product launches in the first earnings call post the launch. So, in summary, I don't think we've ever been in a stronger position to start the year, and we are very pleased to be sharing these updates. Let me now hand the call over to the operator for questions. Operator?

Speaker Change: And finally, we are really excited about a number of significant product launches in women's health oncology. We have planned for this year consistent with our typical practice, we will dive into each of those product launches in the first earnings call post the launch.

Speaker Change: So in summary, I don't think we've ever been in a stronger position to start the year and we are very pleased to be sharing these updates with you. So let me now hand, the call over to the operator for questions operator.

Speaker Change: The floor is now open for your questions to ask a question. This time. Please press star followed by the number one on your telephone keypad.

Speaker Change: Maybe you provided the opportunity to ask one question and one further follow up question.

Operator: The floor is now open for your questions. To ask a question this time, please press star followed by the number 1 on your telephone keypad. You'll be provided with the opportunity to ask one question and one further follow-up question. And we will pause for just a moment to compile the Q&A. Your first question comes from the line of Subhu Nambi with Guggenheim. Your line is:

Speaker Change: Apostrophe, just a moment to compile the Q&A roster.

Speaker Change: Your first question comes from the line of Susan <unk> with Guggenheim. Your line is open.

Susan: Hey, guys. Thank you for taking my question.

Susan: You guided to $1 32 to $1 <unk> 5 billion in 2020 for revenue.

Susan: This is all about seats expectations that said as you noted on your last slide there is still a lot of sources of upside to unpack. This a little bit can you talk more about the key assumptions for things that are not in the guidance specifically how are you thinking about the potential for immediate upside potentially ASP increases for Cigna.

Steve Chapman: Hey guys, thank you for taking my question. You guided us to 1.32 to 1.35 billion in 2024 revenue. This is well above STREET's expectations.

Susan: Omar Codell 22, Q potentially the NSA, what I'm trying to get at is is essentially the magnitude of upside for each of these in to anything for it I can easily see about $250 million to $75 million in upside to you.

Steve Chapman: That said, as you noted on your last slide, there are still a lot of sources of upside. To unpack this a little bit, can you talk more about the key assumptions for things that are not in the guidance? Specifically, how are you thinking about the potential for NBD upside, potential ASP increases for Signatera, the biomarker bill, 22Q, and potentially Renaside? What I'm trying to get at is essentially the magnitude of upside for each of these in 2024. I can easily see a path to 50 to 75 million in upside when I look at these components. Does that seem reasonable? Yeah, thanks. Thanks for the question. This is Steve.

Omar Codell: Your guide when I look at these components does that seem reasonable.

Speaker Change: Yes, thanks, Jason.

Speaker Change: The question. This is Steve So maybe I'll just make a couple of comments on these different things and then Mike you can sort of talk about the magnitude I mean, certainly theres a lot of opportunities for upside you've listed a couple of them.

Steve Chapman: Within <unk>, we're working hard too.

Mike: Move as many of those accounts over as we can and we think that it's going well as we said in the prepared remarks.

Mike: Have a little more visibility as time goes on from a guideline standpoint, all we can really do on guidelines has produced the peer reviewed evidence.

Steve Chapman: So you know, maybe I'll just make a couple of comments on these different things. And then Mike, you know, you can sort of talk about the magnitude. I mean, certainly there's a lot of opportunities for upside, you know, you've listed a couple of them. I think, you know, within Vitae, we're working hard to move as many of those accounts over as we can. And we think that is going well. As we said in the prepared remarks, you know, we'll have a little more visibility as time goes on. So from a guideline standpoint, you know, all we can really do on guidelines is produce peer-reviewed evidence.

Susan: And we feel incredibly good about the evidence has been produced and particularly our 'twenty two two and a broad panel of carrier screening.

Susan: Now I think it's really up to the societies and the physicians to decide what they want to do.

Susan: But certainly that would provide a lot of upside as we are the market leader in non invasive prenatal testing now we have a high attachment rate of micro deletion testing and as we said here. We believe we are the market leader as well in next Gen sequencing based broad panel Tesco.

Steve Chapman: And, you know, we feel incredibly good about the evidence that's been produced, particularly on 22Q and on broad panel carrier screening. And, you know, now I think it's really up to the societies and the physicians to decide what they want to do. You know, but certainly that would provide a lot of upside as we're the market leader in noninvasive prenatal testing. We have a high attachment rate for micro deletion testing.

Susan: When you look at Signet, Kara and ESP, certainly theres a lot of opportunities for upside.

Susan: Same with biomarker bills.

Susan: So Mike do you want to comment further.

Mike: I mean, I think those are the really the kind of the key drivers as we kind of think about catalysts.

Mike: And beyond I mean, I would just reiterate what we said in the prepared remarks, which are.

Mike: The underlying trends in the core business that we've been seeing these last couple of quarters have been quite strong.

Steve Chapman: And as we said here, we believe we're the market leader as well in next-gen sequencing-based broad panel testing. When you look at Kignotera and ASP, certainly there's a lot of opportunities for upside, you know, the same with biomarker bills. So Mike, do you want to comment further?

Mike: And if we can just continue to.

Mike: To see those continue to hit our marks as best we can I think we're in a good position for 'twenty four.

Speaker Change: Thank you guys I'll get back in the queue.

Speaker Change: Yeah.

Speaker Change: Our next question comes from the line of Puneet <unk> with Leerink partners. Your line is open.

puneet: Hey, guys.

puneet: First of all congrats on the quarter beyond the pre announced numbers really.

Michael B. Brophy: I mean, I think those are really the kind of key drivers if you kind of think about kind of catalysts and beyond. I mean, I would just reiterate what we said in the prepared remarks, which are, you know, the underlying trends in the core business that we've been seeing these last couple quarters have been quite strong. And if we can just continue to see those and continue to hit our marks as best we can, which is we're in a good position for 24. Thank you guys. I'll get back in the queue.

puneet: Great momentum youre seeing in the business.

Speaker Change: Maybe.

puneet: Just wanted to follow up on that on the guide.

Speaker Change: You know.

Speaker Change: Steve.

Speaker Change: Mike maybe can you elaborate a bit more.

Speaker Change: Putting together the pieces here I mean, if I look at where you have guided to versus the consensus and our expectations I mean, obviously, increasing the ESP on the <unk> side, you have recent indication expansion that youre seeing here.

Michael B. Brophy: Our next question comes from the line of Puneet Souda with Lyrinc Partners. Your line is open. Hey, guys. First of all, congrats on the quarter beyond the pre-announced numbers and really great momentum you're seeing in the business. Maybe just wanted to follow up on the guide. You know, Steve, or Mike, maybe could you elaborate a bit more?

Speaker Change: Obviously, there is a momentum on panorama ESPN Panorama from last year carrier screening I mean does this list is fairly long.

Speaker Change: So and then we have <unk> volumes, adding on top of it so maybe just walk.

Speaker Change: Walk me through sort of why.

Speaker Change: Prudent.

Speaker Change: Guidance still.

Michael B. Brophy: Putting together the pieces here. I mean, if I look at where you have guided to versus the consensus and our expectations, I mean, you're obviously increasing the ASP on the MRD side, you have recent indication expansion that you're seeing here. Obviously, there's momentum on panorama, ASP on panorama from last year, carrier screening. I mean, this list is fairly long.

Speaker Change: Just given sort of the momentum you have.

Speaker Change: And also maybe if you can talk a little bit about the 22 <unk> micro deletion timing I know you mentioned that briefly but what else needs to happen there.

Speaker Change: And I have a follow up.

Speaker Change: Yes, Mike do you want to take out.

Mike: Sure, Yes, I mean, I think like so plenty I think thats a good.

Michael B. Brophy: So, and then we have in vitae volumes adding on top of it. So, maybe just walk me through sort of why this prudent guide still applies, just given sort of the momentum you have and also maybe if you can talk a little bit about the 22q microdeletion timing. I know you mentioned that briefly, but what else needs to happen there? and I have a follow-up. Yeah, Mike, you want to kick that?

Mike: That's a good summary.

Mike: While the drivers we have going for us in 'twenty four as Steve covered in it.

Mike: Prior question.

Mike: I would just go back to in each of these drivers you're going to take like some judgment around.

Mike: Setting the guidance for the year, we want to set something that.

Mike: Clearly as you referenced requires really good execution is going to require good volume execution. It is going to require continued.

Michael B. Brophy: Yeah, sure. Yeah, I mean, Puneet, I think that's a good summary of, you know, a lot of the drivers we have going for us in 24, as Steve covered in the prior question. And I would just go back to, you know, in each of these drivers, you're going to take some judgment around, you know, setting the guide for the year.

Mike: Momentum in Asps and Cogs, we think we can deliver that.

Mike: And it's just a matter of kind of setting the level of what's challenging but achievable.

Mike: From the beginning of the year got so really no change in philosophy from what you've seen from us.

Mike: Prior years.

Mike:

Mike: On the on the <unk> front.

Mike: I think.

Michael B. Brophy: We want to set something that clearly, as you referenced, requires really good execution. It's going to require good volume execution. It's going to require continued momentum in ASPs and COGs, but we think we can deliver that. And it's just a matter of kind of setting the level of what's challenging but achievable for the beginning of the year guide. So really, no change in philosophy from what you've seen from us in previous years. Unknown Speaker, On the 22Q front, you know, I think, really, it's the same commentary that we provided previously.

Mike: Really it's the same commentary that we provided previously.

Mike: The the smart trial.

Mike: We covered in our prepared remarks, we really feel like is the landmark trial.

Mike: In the space those results were excellent they've now had time.

Mike: To kind of get those data out get them published have been presented at multiple conferences I think we've got.

Mike: Four or five publications that have now come out.

Mike: Of that study.

Mike: And so we think that merits further guideline consideration of course the guidelines committees.

Michael B. Brophy: The SMART trial, as we covered in our prepared remarks, we really feel like it is the landmark trial in the space. Those results were excellent. They've now had time to, you know, kind of get those data out, get them published, they've been presented at multiple conferences. I think we've got four or five publications have now come out of that study. And so, you know, we think that merits further guideline consideration. Of course, the guideline committees, you know, run their own show, and we don't have perfect visibility into the timing of those things. And hence, you'd never benefit from guideline inclusions in a guide to start the year, but we remain very optimistic about our process. I got it.

Mike: Rather on shell and we don't have perfect visibility.

Mike: And to the timing of those things and once you've never include.

Mike: Benefit from guideline inclusions.

Mike: And a guide to start the year, but we remain very optimistic about our prospects.

Mike: Okay.

Speaker Change: Got it and then.

Speaker Change: If I could cover on the MRM side you.

Speaker Change: You had ovarian cancer and as well as new adjuvant breast cancer expansion. When do you think that starts to come in.

Speaker Change: Two into the volumes just wanted to confirm they should also benefit from the <unk> rate that you have currently and also maybe Alex can talk about it within the framework of the clinical trials that you have with Altair.

Steve Chapman: And then, If I could cover on the MRD side, you have ovarian cancer as well as neoadjuvant breast cancer expansion. When do you think that starts to come in? Just wanted to confirm that they should also benefit from the ADLT rate that you have currently. And also, maybe Alex can talk about it within the framework of the clinical trials that you have with Alpair and the new trial that you announced today. Can you maybe just sort of stack them because this does look like a series of data sets that enhance your position in the marketplace. But also, maybe just how does all of this play into the NCCN guideline update when we do hear that? And if you have any updates on that front, that would be great as well. Thank you. Yeah, thanks.

Speaker Change: And the new trial that you announced today can you maybe just.

Speaker Change: Sort of stack them because there is this does look like a series of sort of datasets that enhance your position in the marketplace, but also maybe just how does all of this play into.

Speaker Change: The end CCN guideline update when we do hear that and.

Speaker Change: If you have any updates on that front that'd be.

Speaker Change: As well thank you.

Speaker Change: Yes, so first.

Speaker Change: First I'll, just say on ovarian and neo adjuvant breast deal. We're really excited about those indications we've got some great data and more data coming out I.

Speaker Change: I think generally once once we get coverage in place that's really when the.

Steve Chapman: So, you know, first, I'll just say on ovarian and neoadjuvant breast cancer. We're really excited about those indications. We've got some great data, and more data is coming out. I think generally, you know, once we get coverage in place, you know, that's really when the, you know, the medical liaison team and the commercial team can start, you know, going out and educating physicians really about the benefits. So, you know, that will take a little bit of time to come in.

Speaker Change: Medical liaison team and commercial team can start going out and educating physicians really about the benefits. So yeah that will take a little bit of time to come in but certainly theres volume there today that will benefit from.

Speaker Change: Alex you want to talk about all chair.

Speaker Change: And.

Speaker Change: <unk>, therefore, there upside opportunity in guidelines.

Steve Chapman: But, you know, certainly there's volume there today that will benefit from it. Alex, you want to talk about Altair and, you know, the potential there for, you know, upside opportunities and guidelines. Yeah, absolutely, Steve. And Puneet, thanks for the question.

Alex: Yes, absolutely Stephen Puneet, Thanks for the question.

Alex: I think as we presented in our prepared remarks, we're expecting a readout of top line read out kind of in Q3 for the Altair studying.

Speaker Change: And we do believe that this study if positive may.

Alexey Aleshin: I think, as we presented in our prepared remarks, we're expecting a readout, a top-line readout, kind of in Q3 for the Altair study. And we do believe that this study, if positive, may be one of the largest events in how early stage cancer is managed in quite a while. Just to put this into perspective, the last study that truly changed how early stage colon cancer is managed was the Mosaic study published in 2004.

Speaker Change: Maybe one of the largest events.

Alex: And how early stage cancers managed.

Alex: In quite a while just to put this in perspective the last study.

Speaker Change: Truly changed how early stage colon cancer is managed with mosaic study published in 2004. So I think there is a lot of pent up interest.

Alexey Aleshin: So I think there is a lot of pent-up interest in approving new treatment modalities. We believe that any positive, statistically significant result will be significantly impactful in how patients are treated. And, you know, we were frequently asked, like, what are some of the numbers that would be even more significant? And I would kind of guide folks to look at the Mosaic study, which showed a hazard ratio of 0.77 and an absolute risk reduction of 5%. So we strongly feel that if we meet one or both of these metrics, the study would be even more significant.

Speaker Change: In approving new treatment modalities for these patients.

Speaker Change: We believe that any positive statistically significant result will be significantly impactful for how patients are treated.

Speaker Change: And we're frequently asked like what are some of the <unk>.

Speaker Change: <unk>.

Speaker Change: Would be even more significant and I would kind of guide folks to look at the mosaic study which showed.

Speaker Change: Hazard ratio of <unk>, 77, and an absolute risk reduction of 5%. So we strongly feel that if we meet one or both of these metrics on this study would be even more significant.

Alexey Aleshin: And then in terms of the other readouts, the Invigor 011 study, you know, we're expecting top-line readout for that in Q1 of 2025. And again, if that study is positive, we also believe that it would significantly change not just the guidelines but really fundamentally alter how early stage bladder cancer is managed. So I think these are the two most immediate binary events to look forward to. And, you know, we have many other studies currently ongoing that we'll be reading out in the next year or two. Super

Speaker Change: And then in terms of the other Readouts in bigger 011 study, we're expecting top line readout for that in Q1 of 2025.

Speaker Change: And if that study is positive. We also believe that would significantly change the guidelines really fundamentally alter how early stage bladder cancer is managed so I think these are the two most kind of immediate binary events to look forward to and we have many other studies currently ongoing.

Speaker Change: And we'll be reading out next year or two.

Steve Chapman: All right, congrats guys. Thanks. The next question comes from the line of David Westenberg with Piper Sander. Hi, thank you for taking the question and congratulations on an extremely strong quarter. So I'm going to dig in to get the guidance. I'm really happy with the guidance. But I do want to tell you the upside, looking to the outside as well. So just in terms of the MBTA acquisition, I would assume your ASPs are higher than there are in a lot of reproductive health areas. And you know, you're calling for 25%, or 25 million, and I think $100 million business. So can you tell me that, I mean, that would imply a little bit less than maybe say, 25%.

Speaker Change: Alright, guys. Thanks.

Speaker Change: Yeah.

Speaker Change: Next question comes from the line of David lasting Berg with Piper Sandler Your line is open hi.

Speaker Change: Thank you for taking the question and congrats on extremely strong quarter.

Speaker Change: So I'm going to dig into the guidance I'm really happy with the guidance, but I do want to tell you that.

Speaker Change: Looking to the outside as well.

Speaker Change: So just in terms of the <unk> acquisition, I mean, I would assume your Asps are higher then there isn't a lot of the reproductive health areas and youre, calling for 25% or $25 million and I think $100 million business.

Speaker Change: So can you talk to that I mean that would imply a little bit even less than maybe say, 25%. So can you just make walk me through your 50% share.

Steve Chapman: So can you just walk me through, you know, your 50% share, kind of why you would anticipate just maybe that low of picking up that share. And if it's a share you don't really want, I would assume other companies in this space would also not want it, and we maybe see a melt-up in pricing is a melt-up in pricing and kind of those kind of accounts contemplated in the guide.

Speaker Change: Why you would anticipate just maybe that low of a picking up of that share and if it is sure you don't really want I would assume other.

Speaker Change: Companies in this space would also not want it and we may be see a melt up in pricing is a melt up in pricing in kind of those kind of accounts contemplated in the guide and then finally on that one a lot of those Ob salesforce sell bracket two I know <unk> is not that big of a business for you, but is BRCA cross selling also something.

Steve Chapman: And then finally, on that one, a lot of those OB Salesforce sell BRCA too. I know BRCA is not that big of a business for you, but is BRCA cross selling also something to contemplate on that side? That was one question. One follow-up question. They'll be shorter. Yeah, no, no, that makes sense.

Speaker Change: To contemplate in that side that was one question one follow up there'll be shorter.

Speaker Change: Yes, no no that may.

Speaker Change: And that's a good question. So we said we're thinking somewhere in the 20% to $30 million range is a conservative number but we also said that we think that can get up to $50 million to $60 million. So we really have to see how things come in as we.

Steve Chapman: And that's a good question. So, you know, we said we were thinking somewhere in this sort of 20 to 30 million range is a conservative number. But we also said that we think that can get up to, you know, 50 to 60 million. So we really have to see how things come in as we look into this sort of post-acquisition window. A couple of things to note that I think are important. You know, the first thing is that, you know, the volume that we started with, you know, at the end of January, after the acquisition, was, you know, I think, a decent amount less than maybe where Invitae was the last time they reported out their volume in Q3. And, you know, that makes sense because they have announced some initiatives to reduce some of their low margin business. So, for example, some of their low cash pay business.

Speaker Change: If we look into this sort of post acquisition window.

Speaker Change: Couple of things to note that I think are important I think the first thing is that.

Speaker Change: The volume that we started with at the end of January after the acquisition.

Speaker Change: I think.

Speaker Change: Decent amount less than maybe where it was in the last time they reported out there volume in Q3 and that makes sense, because they had announced some initiatives to reduce some of their low margin business. So for example, some of their low cash pay business. So yes, I think the starting point for us is different maybe than what you or what you expect.

Speaker Change: Patients were now with that said, we're working hard now to transition over as many of the accounts, which is generally the high margin accounts because those were the ones that were remaining over <unk> and we think we're doing really well.

Speaker Change: Generally when you look at these things you go back and you look at semaphore.

Steve Chapman: So, you know, I think the starting point for us is different, maybe than what your expectations were. Now, with that said, you know, we're working hard now to transition over as many of the accounts, which are generally the high-margin accounts, because those were the ones that were remaining, you know, over to Natera. And we think we're doing really well. You know, generally, when you look at these things, you go back and look at Semaphore, you know, I know this is a little bit different than that situation.

Speaker Change: I know this is a little bit different than that situation, but net Tara is generally done very very well in these settings retaining the vast majority of the business certainly.

Speaker Change: 50% plus of the business and I think that's what we'll see here.

Speaker Change: Got it and I guess last question, sorry on breakfast I forgot to answer yes.

Speaker Change: Yes, we do think there's an opportunity there on hereditary cancer testing, we have a very good product that we think is competitive we've actually done quite well there.

Steve Chapman: But Natera has generally done very, very well in these settings, retaining, you know, the vast majority of the business, certainly, you know, 50% plus of the business. And I think that's what we'll see here. We do think there is an opportunity there for hereditary cancer testing. We have a very good product that we think is competitive. We've actually done quite well there through the OB channel, and we think there are some opportunities there as well on the oncology side. So certainly, with the disruption happening, there will be some upside opportunities there. I forgot I asked that part.

Speaker Change: Through the OE channel and we think there's some opportunities there as well on the oncology side, so certainly with the disruption happening there there will be some upside opportunity there.

Speaker Change: I appreciate it I forgot to ask that part.

Speaker Change: Just in terms of expectation you have new adjuvant breast adjuvant breast bladder CRC.

Speaker Change: Can you talk about your expectation for long and just given that you have all these tissue types and I'm asking you to predict.

Speaker Change: Bureaucratic agency, but have you had any conversations with moldy acts or expectations on multi acts and just saying.

Steve Chapman: So just in terms of expectation, now you have neoadjuvant breast, adjuvant breast, bladder, CRC, and IO. Can you talk about your expectation for lung cancer and, you know, just given that you have all these tissue types, and I'm asking you to predict a bureaucratic agency, but have you had any conversations with Moldy X or expectations for Moldy X and just said, you know what? This science works in every tumor type. So, you know, when does that get coverage? Thank you. And thank you for taking the time to answer my question. Yeah, that's a good question.

Speaker Change: The science works in every tumor type so.

Speaker Change: When does that get coverage. Thank you and thank you for taking my question.

Speaker Change: Yes, that's a good question so I think.

Speaker Change: This question of Pan cancer is something that I think a lot of people have asked over time.

Speaker Change: Certainly as you start to look at the long tail of cancers getting covered I think I think at some point in the future. There may be an opportunity for just kind of across the board Pan cancer coverage, but we havent set up to be dependent on that what we're doing is we're doing very thoughtful detailed clinical validation.

Steve Chapman: So I think, you know, this question of pan cancer is something that I think a lot of people have asked over time. And, you know, certainly, as you start to look at the long tail of cancers, you know, getting covered, I think, I think at some point in the future, there may be an opportunity for, you know, just kind of across the board pan cancer coverage. But, you know, we haven't set up to be dependent on that.

Speaker Change: <unk> on all the different tumor types and we are generating the data that's needed to obtain coverage and we think thats I think one of the reasons why we're in a leadership position today is because we've done that hard work. We generated these studies, we spent now five or six years working on some of these trials.

Speaker Change: Other companies they may come in and not put that work in and then they end up not getting coverage.

Steve Chapman: What we're doing is we're doing very thoughtful, detailed clinical validations on all the different tumor types, and we're generating the data that's needed to gain coverage. And we think that's, you know, I think one of the reasons why we're in a leadership position today is because we've done that hard work, generated these studies, we spent now five or six years working on some of these trials, you know, and other companies may come in and, you know, not put that kind of work in, and then they end up not getting coverage. So, you know, we think we're a great opportunity.

Speaker Change: So we think we're in a great opportunity, obviously theres more tumor.

Speaker Change: Tumor types that are in submission, we're excited about ovarian and neo adjuvant breast, but you mentioned <unk> you mentioned.

Speaker Change: You Didnt mentioned gastroesophageal, we think is a big opportunity for us.

Speaker Change: That fits nicely with the colorectal.

Speaker Change: Indications so lots of upside, we're continuing to focus here and generate data.

Speaker Change: Next question comes from the line of Joseph <unk> with Morgan Stanley. Your line is open.

Joseph: Hey, guys good evening.

Steve Chapman: Obviously, there are more tumor types that are in submission, you know; we're excited about ovarian and neoadjuvant breast, but you mentioned lung, you mentioned, or I guess you didn't mention, gastroesophageal. We think it's a big opportunity for us, you know, that fits nicely with the colorectal indication. So lots of upside, we're continuing to focus here and generate data The next question comes from the line of Tejas Savant with Morgan Stanley. Hey guys, good evening.

Joseph: Steve Mike.

Joseph: The question on why you've decided to be prudent with the guide and take a slightly different tack here.

Joseph: What I wanted to know is what would carrier screening and <unk> guideline inclusion.

Joseph: Turning to Q mean in terms of gross margin upside I know, it's not baked in but what are those two guidelines to fall in place in the spring what does that look like.

Joseph: And Steve on the on the exit of some of these.

Joseph: A lower margin than VDA accounts over the course of the year is that something that we should be thinking about in terms of just the phasing of the gross margins through 'twenty four.

Steve Chapman: Steve, Mike, I'll spare you the question why you've decided to be prudent with the guide and take a slightly different tack here. What I want to know is, you know, what would carrier screening and ACOG guideline inclusion for 22Q mean in terms of, you know, gross margin upside? I know it's not baked in, but were those two guidelines to fall in place in the spring? What would that look like?

Steve Chapman: Yes, it's a good question. So let me let me just comment on VK first so what I mentioned there is that in VK themselves had actually taken steps.

Steve Chapman: Believe in Q3 timeframe of last year to exit some of their lower margin accounts or.

Joseph: Maybe move away from some of that business and so that's why the starting point of where we took over in January was maybe a little bit different than.

Steve Chapman: And Steve, on the exit of some of these, you know, lower margins in V-Day accounts over the course of the year, is that something that we should be thinking about in terms of just the phasing of the gross margins through 24? Yeah, it's a good question. So, let me, let me just comment on Avitae first.

Joseph: What what you might've seen from a beta in Q3 from the Terra side.

Joseph: Or do we bring this business on.

Joseph: It's obviously through the new Terra contracts insurance contracts and with the new <unk> products and so we think the margins should be in line with.

Steve Chapman: And so what I mentioned there is that Avitae themselves had actually taken steps, I believe, in the Q3 timeframe of last year to, you know, exit some of their lower margin accounts or, you know, you know, maybe maybe move away from some of that business. And so that's why, you know, the starting point of where we took over in January was maybe a little bit different than, you know, what, you know, what you might have seen from Avitae in Q3. From the Natera side, you know, when we bring this business on, it's obviously through the Natera contracts and insurance contracts with the Natera products. And so we think the margin should be in line with, you know, what is currently kind of an accelerating and expanding Natera gross margin. Hopefully, that makes sense. From the, you know, from the upside opportunity, obviously, there's an enormous amount of upside in the guidance. You know, we didn't include anything for our 22-2 coverage. We didn't include anything for broad panel carrier screening.

Joseph: What is currently now kind of an accelerating and expanding that your gross margin.

Joseph: Hopefully that makes sense from the.

Joseph: The upside opportunity, obviously, there's an enormous amount of upside in the guidance.

Joseph: We didn't include anything for 2000 to two coverage. We didn't include anything for broad panel carrier screening. So obviously there is upside as these things come in.

Joseph: If you just think about the.

Joseph: The clinical impact and the data that we generated we really think that thats. The most important piece.

Joseph: <unk> is a very severe disorder.

Joseph: Leading cause of congenital heart defects.

Joseph: Causes hypocalcemia, which can lead to seizures and brain damage at birth, if it's not treated so this is a very serious disorder.

Joseph: Test for.

Joseph: I think we're very well validated tests that was prospectively done over seven year period, we think we checked all the boxes for society guidelines.

Joseph: If you look at the <unk>.

Joseph: High attachment rates that we have I think 75% plus of our <unk> get a 'twenty to Q, obviously, theres upside opportunity, but we think it's really important that patients get access to this test and that is covered by their insurance company. The same thing for expanded panel carrier screening as we said today, we believe we are.

Steve Chapman: You know, obviously, there's upside as these things come in. But if you just think about the clinical impact and the data that we generated, we really think that that's the most important piece. You know, 22-Q is a very severe disorder. It's a leading cause of congenital heart defects. It causes hypopalcemia, which can lead to seizures and brain damage at birth if it's not treated.

Joseph: Are the market leader in next Gen sequencing based expanded panel testing, but there's still opportunity there as guidelines come in place both to extend the volume today there are still customers.

Steve Chapman: So, this is a very serious disorder. We test for it with, you know, a very well-validated test that was prospectively done over a seven-year period. We think we've checked all the boxes for society guidelines. You know, if you look at the very high attachment rate that we have, I think 75% plus of our NIPCs get a 22-Q. You know, obviously, there's an upside opportunity, but we think it's really important that patients get access to this test and that it's covered by their insurance company. The same thing applies to expanded panel carrier screening. As we said today, we believe we're the market leader in next-gen sequencing-based expanded panel testing, but there's still an opportunity there as guidelines come in place, both to extend the volume. Today, there are still customers and, you know, OB offices around the country that are ordering smaller panels.

Joseph: Obi offices around the country that are ordering smaller panels.

Joseph: The guidelines come in we think that they will transition to broader panels, which will put in the chair in a good position and there is also a lot of business today that we're just not reimbursed on where payers may be have a negative coverage policy, where theres an opportunity to get paid.

Joseph: <unk> coverage for testing that physicians want and that.

Joseph: We think are important for patients.

Speaker Change: Got it that's helpful.

Speaker Change: And then switching gears to <unk>.

Speaker Change: Apology, Steve just curious as to.

Steve Chapman: Whats your thought process in terms of timelines to reimbursement in the breast recurrence monitoring indication I mean, thats clearly the big Prize.

Steve Chapman: Second can you comment on the foundation, one track our progress I mean, given the broader launch in Medicare coverage.

Steve Chapman: As the guidelines come in, we think that they will transition to broader panels, which will put the carrier in a good position. And there's also a lot of business today that we're just not reimbursed on, where payers maybe have a negative coverage policy, where there's an opportunity to get paid and, you know, get coverage for testing that the physicians want and that, you know, we think are important for patients.

Steve Chapman: Where do you expect that to be in terms of perhaps an attach rate by year end 'twenty four.

Steve Chapman: And then finally the data on early detection I believe the first readout that is relatively imminent, but just curious as to how you're sort of perhaps you've updated your thought process. There in terms of the go no go decision in terms of the performance specs you'd like to see from that data that would be helpful. Thank you.

Steve Chapman: That's helpful. And then, switching gears to oncology, Steve, just curious as to, you know, what's your thought process in terms of, you know, timelines for reimbursement for the breast recurrence monitoring indication? I mean, that's clearly the big prize.

Speaker Change: Yes, so maybe I'll comment quickly on early cancer detection, and then hand, it over to Solomon to talk about breast cancer recurrence monitoring.

Speaker Change: And some of the exciting data potentially coming around treatment on molecular recurrence. So on early cancer detection.

Steve Chapman: Second, can you comment on the Foundation One tracker progress? I mean, given the broader launch in Medicare coverage here, where you expect that to be in terms of perhaps an attach rate by year end? And then finally, the data on early detection. I believe the first readout there is relatively imminent. But just curious as to how you're sort of, you know, perhaps you've updated your thought process there in terms of the go, no go decision, in terms of the performance specs you'd like to see from that data. That would be helpful. Thank you. Yeah, thanks.

Speaker Change: We are planning.

Solomon: Q2 to readout.

Solomon: A case control study that's going to include both colorectal and <unk>.

Solomon: Advanced adenoma patients and we're excited about that readout. The vast majority of those samples were prospectively collected and match.

Solomon: Colonoscopy.

Solomon: Not all of them, but the vast majority were so then after that.

Solomon: Depending where we're going to take a look at how that data looks obviously, we're excited about it after that in October timeframe, maybe sometimes September October we're going to be reading out roughly a 1000 patient.

Steve Chapman: So, maybe I'll comment quickly on early cancer detection and then hand it over to Solomon to talk about breast cancer recurrence monitoring and some of the exciting data potentially coming around treatment for molecular recurrence. So, on early cancer detection, we are planning, probably in Q2, to read out a case-control study that's going to include both colorectal and advanced adenoma patients, and we're excited about The vast majority of those samples were prospectively collected and matched with colonoscopy. You know, not all of them, but the vast majority were.

Solomon: Prospective study that will be 100% colonoscopy match, that's already recruiting patients today and.

Solomon: And then depending on the read out of there we'll make a decision about what we do going forward as far as the FDA, enabling trial, but the way that we've set this up is that the 1000 patient study that's going to readout in Q3, that's actually.

Solomon: The exact same protocol that would be used for the FDA, enabling trials. So if we do want to go ahead with the FDA. We just continue enrolling into that study.

Steve Chapman: So, then after that, you know, depending, we're going to take a look at how that data looks. Obviously, we're excited about it. After that, in the October timeframe, maybe sometime in September or October, we're going to be reading out roughly a 1,000-patient prospective study that will be 100% colonoscopy matched. That's already recruiting patients today. And then, depending on, you know, the readout from there, we'll make a decision about what we do going forward as far as the FDA-enabling trial. But the way that we've set this up is that the 1,000-patient study that's going to read out in Q3, that's actually, you know, the exact same protocol that would be used for the FDA-enabling trial. So, if we do want to go ahead with the FDA, we just continue enrolling into that study. So, you know, it's not like there's going to be a delay in starting the trial.

Solomon: So it felt like there is going to be a delay to kick off the trial now as we said before.

Solomon: <unk> decision for us.

Solomon: It's going to depend on what the performance of the test looks like and everything that we're doing this year is included in our budget.

Solomon: It's not any additional costs, we said, we're moving rapidly to cash flow breakeven, we're going to hit that in Q3 or sooner.

Solomon: So all of the expenses on early cancer detection will be included in that will still be getting to cash flow breakeven the same schedule.

Solomon: If we do decide to move forward and do an FDA, enabling trial that would be based on not seeing market leading performance.

Solomon: And that needs to be I think better than <unk>.

Solomon: Anything else out there from a blood standpoint for.

Solomon: For both.

Solomon: Colorectal and advanced adenoma.

Solomon: So Solomon you want to talk about breast cancer.

Solomon: Sure Yes.

Steve Chapman: Now, as we said before, the decision for us is going to depend on what the performance of the test looks like. And everything that we're doing this year is included in our budget. It's not any additional cost.

Solomon: The question was specifically about coverage in breast cancer recurrence monitoring and we do have that already Cigna Terra was key.

Steve Chapman: We said we're moving rapidly to cash flow break-even. We're going to hit that, you know, in Q3 or sooner. So, you know, all of the expenses on early cancer detection will be included in that. We'll still be getting cash flow break-even on the same schedule.

Solomon: Covered for recurrence monitoring.

Solomon: All subtypes of breast cancer that decision came out early last year.

Solomon: That's been a very high demand.

Solomon: Area for Cigna Tara.

Solomon: So as a reminder.

Solomon: Almost 300000, new breast cancer diagnoses per year in the U S.

Steve Chapman: You know, if we do decide to move forward and, you know, do an FDA-enabling trial, that would be based on us seeing market-leading performance. And that needs to be, I think, better than anything else out there from a blood standpoint for both colorectal and advanced adenoma. So, Solomon, you want to talk about breast cancer? Sure. Yeah, I think the question was specifically about coverage in breast cancer recurrence monitoring. And we do have that already. Signatara was, , , , , , , , , , of area for signataria.

Solomon: We estimate over 100000 of those are eligible under the Medicare coverage, which is stage two being above.

Solomon: And Thats for both adjuvant decision, making and recurrence monitoring.

Solomon: And then for many of those patients, especially in the hormone receptor positive disease recurrence monitoring is something people do.

Solomon: Not just for a few years after surgery, but five to 10 years after surgery. So yeah, that's a very important area.

Solomon: For us to be helping our patients and we've been doing that.

Solomon Moshkevich: So, you know, as a reminder, of the almost 300,000 new breast cancer diagnoses per year in the US, we estimate over 100,000 of those are eligible under Medicare coverage, which is stage two above. And that's for both adjuvant decision making and recurrence monitoring. And then for many of those patients, especially those who are hormone receptor positive, recurrence monitoring is something people do, not just for a few years after surgery but five to ten years after surgery.

Speaker Change: Got it thanks, guys I appreciate the color.

Speaker Change: Our next question comes from the line of Doug Schenkel with Wolfe Research. Your line is open.

Doug Schenkel: Hey, guys. Good afternoon. Thanks for taking the questions first let me just start with the.

Doug Schenkel: I guess a clarification on Altair.

Douglas Anthony Schenkel: In terms of defining success in getting MCC and guideline inclusion and then driving broader commercial reimbursement.

Doug Schenkel: If you get 5% to nine months of disease free survival is that enough is that a win I pick this range because I think that's the range of DFS demonstrated in the to intercept sub studies. So as we think about the readout. This summer.

Solomon Moshkevich: So, you know, that's a very important area for us to be helping our patients, and we've been doing so. Got it. Thanks, guys.

Doug Schenkel: The goalposts that we should be southern.

Doug Schenkel: Alex why don't you take that.

Alex: Yeah, absolutely. So I would think instead of the hazard ratio for DFS.

Solomon Moshkevich: Our next question comes from the line of Doug Schenkel with Wolf Research. Your line is open. Hey, guys. Good afternoon. Thanks for taking the questions. First, let me just start with, I guess, a clarification on Altair. In terms of defining success and getting NCCN guideline inclusion and driving broader commercial reimbursement, if you get five to nine months of disease-free survival, is that enough? Is that a win?

Alex: The mosaic studies any comparator the hazard ratio there was.

Alex: Seven seven and then the second thing that's usually pretty important as the absolute risk reduction so what percentage of patients do you prevent from recurring with a new therapy.

Doug Schenkel: And for that study I think the event rate went down from 26, 1% to something like 21, 1%. With addition of a solid plan. So I would use those two as benchmarks I think.

Doug Schenkel: Median DSS improvement in absolute terms that may be a little bit difficult and I would not extrapolate those numbers from intercept.

Alexey Aleshin: I picked this range because I think that's the range of DFS demonstrated in the two intercept sub studies. So as we think about the readout this summer, is that kind of the goalposts that we should be setting? Alex, why don't you take that?

Doug Schenkel: Two altair instead, I would focus on the hazard ratio as well as the absolute risk reduction.

Speaker Change: Okay that is super helpful.

Alexey Aleshin: Yeah, absolutely. So I would think instead of the hazard ratio for DFS and, you know, if the Mosaic studies were any comparator, the hazard ratio there was 0.77. And then the second thing that's usually pretty important is the absolute risk reduction. So what percentage of patients do you prevent from recurring with a new therapy? And, you know, for that study, I think, you know, the event rate went down from 26.1% to something like 21.1% with the addition of oxalate platen. So I would use those two as benchmarks. I think the median DFS improvement in absolute terms may be a little bit difficult, and I would not extrapolate those numbers from Intercept to Altair.

Speaker Change: Topic I wanted to touch on is MRV competition.

Doug Schenkel: You guys have had a tremendous amount of success boarding competition defending your intellectual property estate.

Doug Schenkel: As said, there's been a ton of focus out there on how this landscape is going to have.

Doug Schenkel: Even with those wins by the terror.

Doug Schenkel: There is a potential bevy of companies intending to launch new products over the next couple of years.

Speaker Change: So two questions. One can you can you talk about what you expect in terms of stickiness associated with existing accounts and really a material first mover advantage that you have and what can be gleaned from your experience in that IPG, which is.

Speaker Change: It's a competitive market, where you have what I think is it fair to say, it's sticky and stable leading share position.

Steve Chapman: Instead, I would focus on the hazard ratio, as well as the absolute risk. Okay, that is super helpful. The next topic I wanted to touch on is MRD competence. So you guys have had a tremendous amount of success awarding competitions and defending your intellectual property estate. That said, there's been a ton of focus out there on how this landscape is going to evolve.

Doug Schenkel: And then the second question is if you were another company and you were trying to move forward with studies in a market today, how much time and how much money would you need to invest to catch up with Natera a company that's still doing more studies, including one that you announced for the first time today. Thank you.

Speaker Change: Yes, that's a great question.

Steve Chapman: Even with those wins by Natera, there's a potential bevy of companies intending to launch new products over the next couple of years. So two questions, one, can you talk about what you expect in terms of stickiness associated with existing accounts and really the material first mover advantage that you have and what can be gleaned from your experience in NIPT, which is a, it's a competitive market where you have what I think is a very, you know, fair to say, sticky and stable leading share position. And then the second question is, if you were another company and you were trying to move forward with studies in MRD today, how much time and how much money would you need to invest to catch up with Natera, a company that's still doing more studies, including one that you announced for the first time today? Thank you. Yeah, that's a great question.

Speaker Change: I'll make a couple of comments and then maybe so maybe you can talk a little bit more about.

Speaker Change: All the things that we've done.

Speaker Change: As we look toward the future first I'll say there is.

Speaker Change: Competition, we think the tumor informed MLR D.

Speaker Change: Companies are real competitors here and particularly.

Speaker Change: I think neogenomics is a strong competitor.

Speaker Change: Of course, they've been enjoying right now, but they have a very.

Speaker Change: Strong footprint and all.

Speaker Change: Although I think when you look at the performance of the Neogenomics product from an analytical standpoint, they've made some very significant claims, but if you dig into the details they have really increased.

Speaker Change: The amount of plasma input to make it make it seem like the test to analytically performs.

Steve Chapman: I'll make a couple of comments and then, maybe, Solomon, you can talk a little bit more about, you know, all the things that we've done, you know, as we look toward the future. You know, first I'll say there is competition. You know, we think the tumor-informed MRD companies are the real competitors here. And, you know, particularly, I think Neogenomics is a strong competitor. You know, of course, they've been joined right now, but, you know, they have a very strong footprint.

Speaker Change: Essentially better than it does.

Speaker Change: And I think that that hurts us when you look at comparative claims that theyre, making.

Speaker Change: Just on different levels of plasma input now when you look at the clinical validation of what we see on the radar product as it is.

Speaker Change: The performance doesn't really hold up and we.

Speaker Change: We see this where analytical validation or maybe it looks good but then you look at the clinical validation and it doesn't quite look as good.

Steve Chapman: And, you know, although I think when you look at the performance of the Neogenomics product, you know, from the analytical standpoint, they've made some very significant claims. But if you dig into the details, they've really increased the amount of plasma input to make it seem like the test analytically performs, you know, potentially better than it does. You know, and I think that hurts us when you look at the comparative claims that they're making based on different levels of plasma input.

Speaker Change: So you just have to be careful of that with.

Speaker Change: Any competitors that are making claims about the performance of their tests.

Speaker Change: Solid and you want to talk about some of the stuff that we've done.

Speaker Change: I think in the investments that we've made into clinical data and clinical trials.

Speaker Change: Sure.

Speaker Change: Spoke about this in the prepared remarks as well.

Speaker Change: I would say that.

Steve Chapman: Now, when you look at the clinical validation, what we see with the Radar product is that the performance doesn't really hold up. And, you know, we see this where analytical validation maybe looks good, but then you look at the clinical validation, and it doesn't quite look as good. You know, so you just have to be careful of that with, you know, any competitors that are making claims about the performance of their tests. Solomon, do you want to talk about some of the stuff that we've done? You know, I think of the investments that we've made into clinical data and clinical trials. Sure. I spoke about this in my prepared remarks as well. I would say that

Speaker Change: One of the most fundamental pieces here is that once a cigna terra patients.

Speaker Change: Always a signature of patient so once you've got a personalized assay designed for a particular patient it's extremely unlikely that they would go design, a new personalized assay with some other labs.

Speaker Change: And there is a ripple effect to that right. So that means a physician's office, that's testing a bunch of signet Terra patients quarterly or every six months.

Solomon Moshkevich: One of the most fundamental pieces here is that once a signataria patient, you know, always a signataria patient. So once you've got a personalized assay designed for a particular patient, it's extremely unlikely that they would go design a new personalized assay with some other lab, and there's a ripple effect to that, right? So that means, you know, a physician's office that's testing a bunch of signataria patients quarterly or every six months, you know, that creates its own level of switching costs for that practice to bring on another lab.

Speaker Change: That that creates its own level of.

Speaker Change: Switching costs for that practice to bring on another lab now that being said we are not resting on our heels from that perspective.

Speaker Change: He's been a part of new tariffs Corp recipe.

Speaker Change: To be on the cutting edge with test performance and to continue pushing the boundaries with clinical validity and utility and I think thats, where you see us continuing to invest and following that strategy. So as I as we pointed out on the call. We're planning to put out multiple new features and enhancements.

Solomon Moshkevich: Now, that being said, we are not resting on our heels from that perspective. You know, it's always been a part of Natera's core recipe to be on the cutting edge with test performance and to continue pushing the boundaries with clinical validity and utility. And I think that's where you see us continuing to invest. Unknown Attendee, Puneet Souda, Thomas Peterson, Alexey Aleshin, Michael Brophy, Natera Inc. And Doug, maybe I'll just add to that a little bit.

Speaker Change: <unk> related products over the next two.

Speaker Change: One months to 24 months.

Speaker Change: And we've got a ton of investment in clinical trials. So I don't think I can give you a specific number that you asked for the number.

Speaker Change: How many hundreds of millions of dollars would you need.

Speaker Change: To be able to catch up.

Speaker Change: But it's definitely in the hundreds of millions of dollars.

Speaker Change: Yes, Doug.

Douglas Anthony Schenkel: Maybe I'll just add to that a little bit I mean, if you look at the different areas Solomon broke out you look at data I mean, we now have a significant number of peer reviewed studies that had been published but not only that we have multiple randomized trials that are ongoing that have been underway. Some now for five years or something in that timeframe.

Steve Chapman: I mean, if you look at the different areas Solomon broke out, you know, you look at data, I mean, we now have a significant number of peer-reviewed studies that have been published. But not only that, we have multiple randomized trials that are ongoing that have been underway for some now for kind of five years or something in that timeframe. And I think the key thing is with these randomized trials that the data really is only applicable to the test that was used in the trial. You know, so I think we're seeing, you know, some groups now coming, you know, doing clinical validations where they're looking just at the performance of their test. You know, as you go forward, that's really not going to be good enough. You have to have a randomized study that shows how patient outcomes were impacted based on using your test in the randomized study.

Speaker Change: And I think the key thing is with these randomized trials that the data really is only applicable to the test that was used in the trial.

Speaker Change: So I think we're seeing some groups now are coming.

Speaker Change: Doing clinical validation, whether theyre looking just at the performance of their tests.

Speaker Change: As you go forward, that's really not going to be good enough you have to have a randomized study that shows.

Speaker Change: How patient outcomes were impacted based on using your test in the randomized study and that's what we're going to be and that's where we think things are going.

Steve Chapman: And, you know, that's where we're going to be. And that's where we think things are going, you know, as we move forward and move away from analytical validations and clinical validation. Thank you very much.

Speaker Change: We move forward and moving away from analytical validation and from clinical validation.

Speaker Change: Thank you very much.

Michael B. Brophy: The next question comes from the line of Matt Sykes with Goldman Sachs. Hey, good afternoon, thanks for taking my questions. Congratulations on the quarter in the year last year. Maybe just given the importance of the gross profit line, could you maybe just talk about your expectations for ASP trends for women's health, kind of ex-potential guideline inclusion, like what do you kind of envision? In terms of ASPs for this year, and then I have one quick one. Yeah, Mike, do you want to take that?

Speaker Change: Next question comes from the line of Matt <unk> with Goldman Sachs. Your line is open.

Matt: Good afternoon, and thanks, taking my questions congrats on the quarter and the year last year.

Matt: Maybe just just given the importance of the gross profit line could you maybe just talk about your expectations for ASP trends for women's health kind of ex petrol guideline inclusion like what are you kind of envision in terms of asps.

Speaker Change: For this year and then I have one quick follow up.

Speaker Change: Mike do you want to take that.

Michael B. Brophy: Yeah, sure. Yeah, thanks, Matt, for the question. Yeah, I mean, we expect to see stable trends in the women's health ASPs that we saw toward the end of last year. So, as folks that have followed us for some time will recall, we saw really strong kind of sequential movements upward in the ASPs, particularly for carrier screening, but also for the NIPT product through the course of the year. And that was a big driver, along with obviously, the Singletary ASPs of the margin expansion you saw in the calendar year 23 results. And now in 24, what the guide implies is that you get the full year benefit of the ASPs that we saw in Q4.

Mike: Sure Yeah. Thanks, Matt for the question, Yes, I mean, I think we expect to see.

Mike: Stable trends in the <unk>.

Mike: In the womens health Asps that we saw towards the end of last year. So as folks that follow us for some time will recall that we saw really strong kind of sequential movements.

Mike: Poured in the Asps.

Mike: Particularly for carrier screening, but also for the <unk> product through the course of the year and that was a big driver along with obviously singletary Isps of the of the margin expansion you saw in.

Mike: In the calendar year 'twenty three results.

Mike: And now in 'twenty four with the guide implies is that you get the full year benefit.

Mike: The asps that we saw in Q4.

Michael B. Brophy: So, you know, that obviously, that does leave room for continued improvement. And we're working every day to continue to do what we can operationally to make sure that we get the reimbursement for the covered services that we think we deserve. So, you know, there's room for that to continue to improve beyond the expectations we've set this year. But I think that's a good kind of starting point for the guy.

Mike: That obviously that does leave room for there to be continued improvement and we're working every day to continue to.

Mike: Do we can operationally to make sure that the.

Mike: Then we get the reimbursement for the covered services that we think we deserve so.

Mike: There is room for that to continue to improve above expectation. We've set this year, but I think thats a good kind of starting point for the guide.

Speaker Change: Got it and thank you for that and then just on Mike and just on Cogs reduction and you guys have done a good job. It's obviously been a key gross margin driver as you kind of look across your businesses, where do you see the most upside for for reduction in Cogs, whether it's in women's health material, we're going to have et cetera.

Michael B. Brophy: Transcribed by https://otter.ai. Thank you for that. And then just on, Mike, again, just on COGS reduction. You guys have done a good job as a cross-margin driver. As you kind of look across your businesses, where do you see the most upside for a reduction in COGS, whether it's in women's health, Natera, Organ Health, etc.

Speaker Change: Like where do you think the biggest levers are for cost reduction this year that could actually drive those gross margins to the top end of that guide like you talked about.

Mike: Okay.

Speaker Change: Yes, I mean, I think that Mike.

Speaker Change: Yes, the first project that comes to mind, there obviously is.

Speaker Change: The announced project for Secretary Exome, and Austin, So as a reminder, we launched our exome capability in San Carlos last year, we've driven a significant portion of the volumes to the Opex and then launching in Austin unlocks another.

Where do you think the biggest levers are for COGS reduction this year that could actually drive those growths? Yeah, I mean, I think the first, yeah, the first project that comes to mind there, obviously, is the, you know, the in-house project for Signataria Exome in Austin. So as a reminder, we launched our Exome capability in San Carlos last year, and we've driven a significant portion of the volumes to the in-house Exome. And then launching in Austin unlocks another wave of cost efficiencies, just because you know you've got more space, you can you can deploy more automation, so on and so forth, in that awesome lab. So we're very excited about that. We'd like to have that launched in the summer or early fall. In addition to that, though, I think we've got across each of the major products, I mean, panorama, carrier screening, and, Ladies and gentlemen, this concludes today's conference call. You may now disconnect.

Speaker Change: Another wave of cost efficiencies, just because you've got more space. You can you can deploy more automation and so on and so forth.

Mike: And that often lab. So we're very excited about that we'd like to have that launched.

Mike: In the summer or early fall in addition to that though I mean, we I think we've got across each of the major products Panorama carrier screening answering in Tara, we've got workflow launches and improvements.

Mike: Coming this year that can drive.

Mike: Drive Cogs lower across the business and those Cogs projects, because Matt like as you've mentioned like we have a long track record of putting those cogs projects on the board scheduling them investing in them and then hitting our marks in terms of actually yielding savings those cost projects are in the guide so there's not a lot of hedge in the guide for this.

Mike: Yes.

Mike: Again, we are excited to deploy those and we think they can help us for sure.

Speaker Change: Thank you.

Speaker Change: Ladies and gentlemen. This concludes today's conference call you may now disconnect.

Speaker Change: Yes.

Speaker Change: Okay.

Speaker Change: [music].