Natera, Inc. (NTRA) Earnings Call Transcript & Summary

Great. Welcome. This is Dan Brennan. I cover tools, diagnostics, pharma services here at UBS. Day 1 of our virtual conference. So thanks for anyone on the phone or on the webcast participating. Really pleased to be joined with me -- on the phone with the Chief Financial Officer of Natera, Mike Brophy. Mike and I actually go way back, having overlapped at a predecessor broker firm before Mike went on to greener pastures at Natera. So Mike, welcome, and thanks for being with us.

Thanks, Dan. It's good to be with you.

Awesome. Well, feel free, anyone on the phone, to punch in some questions into the webcast. I will do my best. And we've gotten 1 or 2 each presentation, certainly, will do my best to kind of get to those during the presentation. But I thought the road map -- Mike, I don't cover the company, but you've been generous with your time, and it's certainly a very exciting story. I mean not transformed, but certainly evolved from a reproductive health company now towards one that is addressing some significantly bigger markets with a lot of the core technology similarities. So it's nice, gives you guys a really nice leverage point, but there's a lot to talk about. I thought we could maybe start off tactically with some COVID questions and then move on to just kind of go through reproductive health, oncology, transplant, the pharma business and at the end, maybe hit upon financial. So maybe with that, Mike, if you could, just kind of remind us like how COVID has impacted your business. If there's any incremental update you want to provide on May, anything of that sort, great. And then kind of -- what's kind of baked in for 2020 from a COVID impact?

Yes. Thanks. So as many of you know, we're having an absolute blowout Q1 and even the full Q1 results were very, very strong. We saw in the last 2 weeks of March, the average weekly received units over the last 2 weeks was about 15% off of the average weekly received unit volume that we had experienced in the first 10 weeks of the quarter. Since then, we have seen a healthy recovery, particularly in our existing accounts. So I'm not -- really not seeing anything new versus what was on the earnings call, other than to say that we were -- we've been pleased with the resiliency of the business, and we're constantly optimistic about being able to grow again here in the calendar year. So a good resilience in the business and happy to kind of dive into that and a bit of the details of that, if you like, Dan.

Got it. So just qualitatively, we did some calls, really over in Europe as it relates to Vanadis back in March because we were just doing this conference and just trying to understand that product, which we'll get into later in the discussion. But just in terms of NIPT, in particular, just -- is there a way to characterize, maybe qualitatively, how vital maybe, if you will, I don't know what word to choose, Mike, is -- as Quest and LabCorp have discussed, patient visit's down, whatever, 40, 50 volumes, I don't know exact to discussed volumes, down significantly greater than that or 65%. Just broader for the NIPT class, could you just discuss like how patients are viewing the inability to get to doctors and how quickly they need to get there? Just maybe any high-level color on NIPT as a category in COVID.

Yes. I mean going into this, we would have argued that NIPT is a critical and time-sensitive test. It's really -- it's baked into a lot of OB/GYN's practices to have this test run early in the pregnancy, usually in the first 9 to 11 weeks or so of the pregnancy. And obviously, we -- as I just mentioned, we were off a little bit in the kind of the onset of the disruption and the shelter-in-place orders and things like that. I think that was largely people just missing their appointments and the doctor's office trying to get organized and that type of stuff, more than people just skipping the test altogether. Beyond that, we've seen people really find a way to get back to their doctor's office or take advantage of our mobile ordering platforms. So the physicians can order any of our tests from a web portal and a patient can get their blood drawn remotely. I mean we'll send a van to their house to draw their blood, freeze and do. They just -- when they -- once their physicians order the test, they go on to the Natera app, and they place a request for a mobile blood draw. A van comes to their house, takes their blood and sends it back to a blood -- on to our lab in California. It's not a new service for us. We did about 10,000 units this way in 2019. So it's obviously not -- we do run rate of north of 800,000 units a year. So obviously, it's not like -- it wasn't a huge piece of our business, but you don't see 10,000 of anything for a patient -- without it being a pretty mature offering. And that's what we've seen during this COVID-19 outbreak, is that, that offering has scaled really, really nicely and it's gone very smoothly. So that's been an important kind of supplementary offering that's really come to the fore here recently. So no need to go to the doctor's office to continue to just maintain that kind of care and monitoring for these patients.

Got it. Mike, so maybe just kind of going a little big picture just on reproductive health. Maybe just remind me, and many on the phone may know this, but when we think about your current mix between average risk and high-risk volumes, obviously, we're still waiting for broader incurrence and recommendations on average risk that you could get better payment and coverage, but what's the mix of volumes today? And maybe within that, what percent of the average risk lives actually have a positive coverage decision already even before you've got broad-based adoption?

Yes, good. So thanks for that. The waterfall that I'd like to talk about with people is as follows. You can do this for any -- just about any quarterly volumes that we report. So you take our NIPT number, about 85% or so of that reported volume will come through our direct channel in the United States. The other 15% is like we've contracted directly with clinics, and largely, that's international business. It's not we're getting paid directly by the clinic or something like that. But within that 85%, it's about a 60-40 mix between average risk and high risk. And so then drilling down a little bit more into that average risk bucket, we're getting paid -- right now, we're getting paid about 35% of the time. So that kind of -- the remainder is kind of what -- if you got paid out theoretically on all those things, that would be just cash upside, just purely on the volumes we do in our business today. Separately, we think there's also a case where there would be some strong volume upside in the business. If there were a case where we're able to get a strong guideline, and it was kind of largely recommended that all women just get an NIPT, right now, that's the case for high-risk women. It's about 65% penetrated among high-risk women. It's only like 20%, 25% penetrated among average-risk women. So no reason for those 2 penetration rates to be any different. So if you had -- that average-risk penetration went from 25% to 65%. That's on an average-risk pregnancy base and that states about 3.3 million pregnancies. So obviously, that is 1 million-plus additional NIPTs coming into the system. We've got very strong market share. So there's an opportunity to get paid on our existing volumes, but also, I think, a significant opportunity for the sector to grow really meaningfully.

And in terms of pricing -- I know you've discussed material upside, but I do understand there is a case sometimes when you're not in network, you can actually collect a fairly high price on some of those. So it kind of makes it harder to see actually what the ASP increase would be from a realized basis. But maybe just walk us through, as coverage expands, what type of upside that you've talked about in terms of your realized price?

Yes. I mean -- so we talk about ASPs and our realized revenue per test on every quarter. And I try and just kind of blend all these kind of puts and takes together for you into one number. And I often remove revenues that I view as more onetime or lumpy, so you can kind of get a cleaner sense of like what the run rate insurance reimbursed ASP truly is. And in Q1, we actually saw an ASP of about $416. That's up from about $384, I think, in Q1 of 2019. So between -- over the last years' worth of quarters, we've just kind of steadily grown that ASP between $384 and $416. And that's not really average-risk NIPT reimbursement, that's just continuing to just grind up on our -- the fraction of time we get paid through a bunch of kind of micro projects with various payers to try and continue to improve that. So we've seen good ASP growth just by enjoying kind of a relatively stable payer environment and having time to really just to improve the fraction of time we actually get paid. In terms of kind of the dollar value of the upside of the average risk opportunity, what we've quoted historically is that we think that's about a $60 million annual opportunity in both revenue and cash flow just from the units that we've run today. Now what that presumes is that we get paid -- I gave you that 60-40 number and the 35% of the time we get paid, that presumes that we get paid on every single one of those ones -- those -- that 65% of the average risk that we don't get paid on today. So it's a bit of a TAM number. You never actually get paid on every single one of these, but it does indicatively kind of give you a sense of what the opportunity is there. So a significant opportunity just in our [ medical ] business, and that leaves aside the volume growth that I alluded to earlier.

But what do you think -- like if you looked out -- I don't know. If you put your forecasting or crystal ball down and you wanted to look out, would you expect -- imagine you get average risk later this year, early next year, great realized pricing goes up, like what's the like-for-like trend in pricing, you think, as you look out over the next year? If someone is going to build the model, is pricing down 5% a year, 10% a year? Is it stable? I don't know. I'm just trying to think through what the kind of...

Yes, yes, yes. So contracted rates right now are in the, call it, $700 to $900 range as a general rule. And those have been very stable for the last 4-plus years since we went in network with most of the payers. In return for a huge growth in volume, I wouldn't be surprised if contracted rates eroded and then kind of got to kind of that more kind of slow single-digit, heavy erosion you just alluded to, Dan. So when I'm calculating that 400 -- sorry, when I'm calculating that $60 million number, I'm actually just taking the units and I'm multiplying it by $450. Now like I said, contractor rates are much higher than that, and I actually think that our -- there's no reason for them to come down all that rapidly, but I feel like that's a good, conservative, long-term ASP number, presuming kind of broad reimbursement for average-risk NIPT. And hopefully, it's much higher than that.

And then -- yes. Okay. And then obviously, you've been asked every quarter, every investor meeting for the past X number of years on ACOG. And since I don't follow the stock, I don't have the quarterly updates, but I don't believe you baked anything in the guidance this year. I don't know. What's -- I know there's been a lot of incremental positives towards a decision. Just what's the official commentary on when and if you think this ultimately occurs? And any color about why it's taking so long?

Yes, it's a good question. Could have asked me the same question in '16. I think like as a public company, those of you who followed us for a long time, I mean this has been -- I think this has been -- there's been a lot of success. This has been one of the big disappointments is that we don't have a strong guideline, kind of ubiquitous coverage for NIPT just yet. So we have had actually some good incremental progress very recently. So as part of the COVID-19 outbreak, one of the professional societies that's relevant here, the Society for Maternal-Fetal Medicine Specialists posted a -- what I think is called a practice recommendation. Just a posting, just saying, "Hey, physicians might consider using cell-free DNA during the COVID-19 outbreak as a -- in lieu of having patients in for multiple visits for ultrasounds." And maybe 3 or 4 days later, Aetna came up with a coverage policy that was specifically tied to the duration of the COVID-19 outbreak that basically covered -- so they're -- cover average-risk NIPT during the current situation. And indeed, we've seen them reimburse per our contractor rate now on the average risk units as well. So that's great. So that is incremental progress. The -- we still think that the -- that an important driver would be an updated guideline for the American College of Obstetricians and Gynecologists. And they withdrew what was kind of the middle-of-the-road guideline back in the summer of 2018. And we continue to hear -- they've gone through a couple of different leadership changes and things like that. But we continue to hear that they've -- the guideline is being worked on. We don't have good clarity, obviously, on when exactly that would come through. I mean I will tell you guys, the way that we think about it and the way that I model it for our Board is that the #1 goal in this company is to get the women's health business to cash flow breakeven without the ACOG guideline or without significant average-risk NIPT upside. And I think we're well on the path to achieving that goal. So that's the way that we're operating the business, and we view this average risk as -- really as an upside that we think we'll get, but we don't know specifically when.

Got it. Okay. So you wouldn't be surprised if it happened this year or next year, a year after? I guess it could be a little -- be 2022 and we're still kind of...

Yes. I'd -- you could call me -- we can wake up tomorrow and we could have it. We could have full coverage by the end of June, I would not be surprised by that. It could be -- this time next year, you could be asking the same questions, I also would not be surprised by that. But again -- I mean to a large extent -- I think if you rewind 3 or 4 years, I think this was really -- this was existential as a question, investment question for Natera. And now it's really less, though, because we've shown that we can stabilize and even in the ASP under the current landscape, and we can get that business to cash flow breakeven and continue to grow the volumes without significantly increasing the spend that we put into that business year after year after year. So we're getting real leverage on this business even without that upside.

Got it. And kind of -- you mentioned leading share. I'm just wondering with -- Verinata, I don't think, has had much of a presence in the U.S. yet, but they have a low-cost alternative. You already discussed pricing. Obviously, Invitae has been out there with a low-cost alternative. Just what -- 2 questions in terms of your own share trends, and then what are the factors, if we were to pull 50 doctors, about why they decide to use a certain test? How much is sensitivity, specificity, no call rate, negative predictor? How much of the -- that aspect versus pricing or service? Like what are the key factors? Why do you think doctors' practices decide to use your test versus another?

Yes. I think -- so overall, we think our market share is about 1/3 of the market, and we think we're the leading player. Below us, I think, are the larger reference labs, Quest and LabCorp. And then you take another step down, I think it would be some of the specialty labs like Counsyl. Then below that, I put like the Invitaes of the world and some of the more new arrivals to the space. Within that 1/3 market share, we think we've got about 1/4 of the high-risk market, where we're much more balanced in terms of our volume, we think, with Sequenom, which is owned by LabCorp. And within the average-risk setting, we think we've got greater than 50% market share. So that's kind of where we see the share today. Those are estimates. It's hard to get precise numbers on the competitors because many of them are no longer public companies. They are kind of part of larger organizations. A few questions in terms of -- if you pulled 50 physicians, what would they say? Why do they choose Natera? Why would they choose another? I think it does depend on the position, but I think there'd be a critical mass of those docs that would just say, "Well, Natera is a market leader. They've got -- they have their own technology. All the other NIPTs are just clones of the Sequenom approach, and they're all identical, they're just with different packaging on them. And we like the SNP-based approach, that's got the best performance data." I think that's probably reason number one. But really, there's 3 variables. I mean one is the technology. So no one else in this field uses the same approach that we use. And everyone else we compete with literally just clones the test from the Sequenom, Illumina patent pool. So that's one thing. It's -- nominally, there's a bunch of different players. In terms of the technology that's been very durable for 10 years, there's been 2 different technologies, Natera [ is in the fields ]. And we compete very well. We've shown over time with that technology comparison. So that's one, favorable technology comparison. Number two is the sales channel. So we've got now a little more than 125 direct reps in the field, calling on the OB/GYN. And these reps are just -- now they're basically the longest-tenured field force calling on the OB/GYN in this area. And these guys are just solely focused on this kind of premium segment genetic testing area, whereas Quest or LabCorp, for example, has a very broad portfolio of tests and services that they've got to provide, and they've got to emphasize different things depending on what the priorities are. So one is content -- I'm sorry, one is the technology, one is channel. And then the third is really, we've just been able to put more content through that channel. So at the same time, same blood drawn where you get the NIPT, we also offer what we think is the best-in-class suite of carrier screening offerings to offer the patient to see if mom is a carrier for things like cystic fibrosis, SMA, Duchenne's, all the way up to a 270 gene panel we offer. And then we also offer a screen of the feeds for a set of disorders that are collectively known as microdeletions. And these are very small insertions and deletions on the chromosome that are -- they're quite difficult for the competitive technology to detect. We feel like we have, by far, the best game in town on microdeletions, and I think that's an important kind of competitive advantage as it relates to winning business. So the physician has a chance to have a rep that they have worked with for a long time, that they trust and they're focused on this -- these products, using the best technology for NIPT and at the same time, give -- offer a kind of a comprehensive genomic screen. That's really why we win.

Got it. So price really led, as you said -- I mean you've got some low-cost price competitors, but given the factors you just mentioned, price isn't really -- it's a piece of the puzzle, but it's certainly not one of the drivers?

Well, I think if you called those physicians, I don't think that they would discern that there is a real difference in pricing among the various players. I mean we -- perhaps we have a bit of a premium price among our -- with our contracted rates with payers. So physicians don't know or care about that. They only care about what is kind of the out-of-pocket price to my patient. And there are a number of players that have been, for the entire time we've been in the field, who will -- for limited amounts of time, we'll offer caps, [ $50, 12 pays ] and things like that. And we've learned to compete with that in a compliant way. So like, for example, we've launched an algorithm that mines all the data of the 1 million-plus tests that we've run and build [ the assurance ] that just prospectively predict who among those patients is going to owe a copay or deductible higher than our cash pay rate. We -- that's very accurate. If we see somebody that's going to have a high copay deductible, we call and we text them and we counsel them on their bill. And we offer them a cash pay rate, but we also talk to them about, "Hey, like, you're going to run through your whole deductible because you're pregnant." And usually, that's enough to keep people calm about any kind of cash out-of-pocket that they may experience. So that really is not something that's particularly noisy in the field.

Interesting. Okay. So let's maybe switch over to Signatera in oncology. Obviously, this is pretty well vetted with investors who know the story well. But maybe just if you take a big picture of you, you lay out some really interesting opportunities in terms of patients in different areas of this market, but how would you characterize the near- and long-term opportunity for the Signatera in oncology?

Yes. So we have one core technology that is -- really, it's the same kind of core suite chemistries and algorithms we've been developing for the last 10 years. We've been optimizing it for NIPT, but then that work also puts over perfectly both to the transplant assay and also to Signatera. What we've shown is that we have excellent data in separating out who -- which patients are going to relapse post adjuvant treatment and then detecting those relapses earlier than the standard of care. We've shown that in breast, bladder, colon and lung cancer and leading journals and prospective validation studies. And we've also validated that, the technology, internally in another 10-plus solid tumor types and the test works beautifully across all tumor types. So within our direct channel, there's 2 prongs. One is a clinical test that we sell directly to physicians that we're launching this year. And then the other prong is offering this test to pharmaceutical companies to help them with their clinical trials. So first, in the clinical setting, our first indication is going to be colorectal cancer. We already have a draft coverage decision from Medicare to -- where Medicare will cover the test for Stage 2 and 3 colon cancer and Stage 2 rectal cancer, and I'll get to that use case here in a second. With pharma customers, they are using Signatera across the spectrum of cancer types. So there's no -- there's not like one solid tissue type that is really predominating over all the others. We're using it in a very broad suite of clinical trials there. Outside of our direct effort, we've got 2 important commercial partnerships. One with the Beijing Genomics Institute in China, where BGI wrote us a check for a net $30 million in cash last year in return for the right to sell Signatera on the BGI seat through their network of leading hospital labs in China. And so we're working on that. We'd love to have that launch by the end of the year or early next year. And then the other partnership is with Foundation Medicine, Roche, where essentially the concept is we will -- that best-in-class Roche field force will be able to go back out to their existing customers, both clinical customers and pharmaceutical customers and say, "Hey, look, we've generated some baseline data on your patients when they use our FoundationOne panel to pick a therapy to use. Now let us use that data and just offer you Signatera to just monitor the recurrence of those -- of cancer in those patients." So I feel like that's just a wonderful synergy with what we're doing. And again, we'd like to be engaging with pharma customers, with Foundation Medicine here in 2020, in here in the second half. So it's sort of like an overarching summary of the commercial effort. The strategy from here is really to get these partnerships launched with our partners, continue to drive more and more engagement with pharma customers. And then in the direct clinical setting, just use it without having to make a bunch of technical leads or new innovations or anything, just take what we have shown is working and just methodically go through indication by indication with Medicare and broaden the number of solid tumor types where Medicare will reimburse us. So we -- first, we got this colorectal cancer indication, and we'd love to have a second draft coverage decision for Medicare this year and another indication, and we'll move on from there.

Got it. And Mike, obviously, there's a lot of companies that are looking to target this MRD market. It's still really nascent today. Just maybe a little bit of high level of your approach to technology, maybe even talk about the matrix, tissue, blood and just how you think you'll be able to -- if you look out over the next X number of years, how will your approach compare? Like are you really good in CRC, but these other cancers you're going after, maybe not as applicable? But again, there's so much running room for so many companies to come in here that it's a nice issue to have. And I'm just wondering if it's possible maybe to give a little bit of color about how you think we should think about your approach versus some other.

Yes. So you're right. It's a huge market. Just the colorectal cancer indication, just for the sliver of colorectal cancer patients, for which we've already received a draft reimbursement decision, we think it can be something like 1 million tests per year. By comparison, NIPT as a class of kind of getting to 1 million tests a year, kind of 10 years in. So that just gives you a sense of the scale of these oncology markets relative to, say, reproductive health, which is generally regarded as a pretty good market. So there's an enormous amount of running room. I wouldn't be surprised if, over time, we have some competitive entrants. And that's necessarily a bad thing for us. Like we're no strangers to competition, obviously. And particularly in a brand-new area like this, it can be useful for multiple companies to be out there producing data and banging the drum. So we welcome that. I don't think that's -- that competition question is essential to our success at all. Having said that -- I mean there's a reason why we're in this space. And it's not because we hired some consultants and we did some PowerPoints and we figured out that this was a big market and no one else had and that's why we're here. The reason why we're pursuing these peculiar indications is we took an assessment of what does our core technology already do well? Like what are we good at based on the last 15 years of technology development that we pursued in the course of the company's history. What we decided was we have the PCR-based chemistry that's incredibly sensitive and relatively cheap to run. So it's a good technology to use when you need to do repeat tests and when you've got to be very, very sensitive, okay? That dovetails beautifully with a recurrence monitoring application where you got to do repeat tests and the cost of a false negative are very, very high, like you definitely want to be able to have a highly sensitive test in this indication. Notice that like on the ends of the spectrum of liquid biopsy, the requirements are actually just the opposite. So you think about like Exact Sciences with a asymptomatic screening test. What they really need to be is like highly, highly specific. So when they call someone positive, they really had better be positive. And if they're not as sensitive, they don't catch every single colorectal cancer patient or colon cancer patients, hey, like the alternative was that patient wasn't going to get screened anyway. But you can't have a bunch of false positives, okay? Same goes for Guardant and Foundation Medicine on the therapy selection side, which is from -- on the -- totally in this other -- in the spectrum in terms of patient care, these are stage IV metastatic, very sick patients, okay? The alternative would have been, hey, like they would not have been matched to another therapy. But if you say a patient is BRCA positive and then -- or HER2 positive, and you're going to put them on a course of Herceptin as a result of the test, that really has to be true. I mean they really do have to be HER2 positive. So that specificity is so important. Here in the middle, right after adjuvant treatment, you actually need the opposite. You need to be super, super sensitive. Specificity is preferred but not as critical. So that's why we fit extremely well here and why the likely competitive entrants really do have to retool their technology approach to try and enter this market.

Got it. And in terms of -- so was that then to say that you don't think your technology is applicable towards the screening -- towards a screening approach?

Yes. We don't have aspirations right now to go into asymptomatic screening because as we look at it, we don't -- I think we could do it, but there's nothing about our core technology that we spent so much time getting right that uniquely qualifies us to go after that market. And then there's other players that are going to be just as good as us going there. So we'll focus in on this area where we can really meet at -- this unmet need.

And obviously, you get -- in terms of the LCD turning to a final decision, this obviously is a question that is probably on the top 10 of any investor. But just what is the -- what are the kind of guideposts for when you think you get the final decision? And kind of -- have you expected it to come earlier and it slipped? Or just have -- has it -- have you had a consistent viewpoint about timing?

Yes, yes. We've consistently said we thought we'd get final pricing coverage for the colorectal cancer assay second half of this year. We got the draft in September, like last week of September of last year of 2019. So we're right on track for that. No difference in the timing there. And really, it doesn't matter. I mean if it's in -- I mean, look, it's incrementally better for me in 2020 if it came in September versus December, but it kind of doesn't matter in terms of even an 18-month view of the enterprise. We're planning on the -- we have the draft, and that kind of gives us the confidence to plan for the commercial launch, and we're up and running on that.

Right. And the ongoing trials, I mean you've already presented data, and I don't know how many trials of the data that you have in your decks kind of relate to -- I know you've gotten a number of trials still running right now. Just which -- how would you characterize the importance of those trials? Are they going to help the label? Are they going to help enhance the label? Are they going to help the -- [ try to get the sales force be armed ] or just give you additional areas? Just kind of give us an overall view of the data that is forthcoming.

Yes, yes. So we've got a couple of really important trials ongoing. We are zeroing in on really establishing ourselves as the clear leader in data development for colorectal cancer to support that clinical launch. So we have a registry trial that is now enrolling here in the United States, and that will track outcomes over time. That will be several thousand patients and will hopefully include the vast majority of the NCCN guideline centers in the United States. In parallel, we were selected for the CIRCULATE-IDEA trial in the Japan arm of that study. So CIRCULATE-IDEA is a very well-known consortium trial for colorectal cancer. Basically, the goal of that study is going to track outcomes for patients and see if outcomes are -- how outcomes compare for people who deescalate based on Signatera negative after the adjuvant surgery. So have the surgery, if you're -- if you -- if Signatera says you're okay, you don't have cancer, don't go right to chemotherapy, do kind of a watchful waiting protocol. And then we're going to track outcomes for those patients versus people who were just going on to chemotherapy anyway. And we hope to show that there's no difference, that people who adhere by the surgery don't need chemotherapy, which seems pretty straightforward. Having said that, it's a very prestigious trial, it's 1,500 or so patients. That's the Japan arm. There's also a U.S. arm and a Western Europe arm. We feel like we're in a great position to win those as well. And these are the types of trials that don't get run again. I mean these are large prospective trials that help to establish the standard of care. So we feel like these are the types of data sets that we can generate that can really generate an enduring competitive advantage in the marketplace. Beyond that -- I'm already droning on a long time, so I'll keep it short. I mean what -- our pharma partners are funding a wide array of clinical trials in different cancer types, different indications. For example, later this year, we hope to be publishing some data in partnership with a -- with one of our pharma partners that shows that if you use Natera's [ nutrients ] criteria, a drug that would have failed on all-comers actually works. And results like that are worth $1 billion or more to a particular cancer program within one of these large biotechs. So we think that those types of results will only inspire more demand for the product.

Yes. So maybe we got about 5 minutes left, which probably is not enough time. But let's -- so in the transplant, you have a similarly really compelling opportunity, data looks great. What would you highlight there? It's obviously well understood for the investors who follow. But like what would you point out, maybe some areas where you think -- not necessarily misinformation, but where do you think maybe parts of that test or the -- whether the competitive profile or the opportunity that might not be as -- the emphasis might not be as strong? Just would love to kind of dig into the key aspects of that -- of the offering and the opportunity in the final minutes here.

Yes. I mean -- I think that there's a natural desire, I think, to want to understand the competitive dynamics between Natera's offering and the CareDx offering. And that's great. I think that's important. But what's more important is that this market is only about 5% penetrated today. And the -- what -- we've learned a couple of things through the Early Access Program that we launched late last year. One is that there are -- the majority of these large transplant centers are kind of in dabbling stage. So they've thought about using cell-free DNA as kind of part of their workflow. They've even started to order the test here and there, but they're not fully committed on all their patients to running CareDx, for example. That's a great profile for a potential center for us to go in and pitch with our data set, and that represents an enormous greenfield opportunity. So I think there's plenty -- again, like -- similar to my comments on oncology, I think there's plenty of scope within this market for both CareDx and Natera to be really quite successful as this market penetrates upward from the current 5%. So if I would leave you with one concept, I think that would be the key one, is that we've got a great assay. It makes perfect sense that it would work extremely well because it really is the same workflow as the NIPT, and it's a really underpenetrated market. And we've got -- we now have final pricing and final reimbursement from Noridian as of last week.

Then -- I don't know what -- can you just walk us through how -- I know we have 3 minutes left here. But when you think about the pace and penetration, I don't know what kind of color you've given thus far, what are the key kind of parts of the commercial strategy, both on oncology and on transplant? Like what are the things you guys need to do, whether it be sales force, whether it be guidelines? I mean it's obviously a lot to tackle in a few minutes, but just what will be some concluding thoughts about how we think about the key milestones or key parts of the commercialization strategy?

Yes. So the goal in both business areas was to really time a full launch, roughly contemporaneously with final reimbursement. And so we've done that with transplant. We had the team hired up in Q1. And we had the Early Access Program rolling, and now we're kind of into the full launch. There, the Early Access Program was very successful. We already enrolled 100 people into our Registry Trial. And we had 45 of the top 100 centers already sending us orders for the test. So that -- we were quite encouraged with the Early Access Program. The same with oncology, we started an Early Access Program. We're starting to enroll a Registry Trial, which is both of these Registry Trials, ProActive trial for transplant and the BESPOKE trial for colorectal cancer. These were very important in terms of generating additional prospective data, which is only right that we should continue to generate that data, but it's also an important call to action for the centers where they know that we're going to -- these are going to be leading kind of prospective data sets. They're going to throw off a lot of podium presentations, a lot of interest in papers are going to come out of these trials. And they generally have an incentive and an interest in participating in those trials because these centers are often run by KOLs. So important reason for them to take the meeting would be to understand at least the trial, if nothing else, and oftentimes that, as we've seen, the centers are interested in both participating in the trial and ordering samples for patients beyond just the Registry Trials themselves. So the summary is drive the launch with this Registry Trial and have the commercial effort roll on, contemporaneous with reimbursement, which is happening now for a transplant and second half for colorectal cancer.

Got it. Okay. And maybe final one, we have -- Mike, I guess we have 1 minute left right now. I know there's a bunch of -- well, not a bunch. There was some news out recently with Illumina with you in terms of settling as a patent. Just -- maybe just high-level comment in terms of your relationship with Illumina. Does the recent news -- how does it impact that relationship? And how do you think about that relationship going forward?

Yes. Look, it's always been a good relationship. I mean we're a large customer of Illumina. We did have an IP litigation going both directions over the last couple of years. That's really been like one prong of kind of a broader renegotiation that we needed to have happen on our supply agreement, just to -- just as we've grown volumes, we want to improve our terms. And so we're very pleased with the outcome. We -- the IP litigation was completely settled, and we drove significantly improved terms on our supply agreement, which we think can just further drive NIPT cost of goods sold per unit down meaningfully further over the next 2 years. And we didn't sacrifice any major strategic imperatives. Mainly, we're totally free still to work with other sequencing platforms and the work with the Beijing Genomics Institute continues, for example.

Okay. And we're out of time.

[ Work with ] Illumina has been great, so...

Excellent. Excellent. Well, Mike, again, thanks for being with us. Thanks, everyone, for being on the phone or the webcast. And good luck with everything, Mike, and look forward to connecting soon.

Okay. Thanks, guys. Thanks, Dan.

All right. Bye-bye.