All right. It's good to see a packed house on day three of TD Cowen's 43rd Annual Healthcare Conference. Pleased to be joined by Natera. Got CFO Mike Brophy, CEO Steve Chapman. I figured because we have a decent list of questions, we could just dive right in. But maybe before, what do you consider, you know, the key highlights of 2022? Let's keep it to maybe one or two each. Okay. Key highlights, 2022. Wow. Well, I mean, look, we continue to have incredible volume and revenue growth in addition to hitting major milestones for Signatera. Muscle-invasive bladder coverage. You know, I think in continuing to grow the volume in Signatera, getting the CIRCULATE study done and submitted allowed us to put ourselves in the position that we're in right now. We've been covering the stocks since 2017. You were the first salesperson hired, I believe, at Natera, correct? For the most part, yeah. Yeah. We've watched the evolution of Natera, and there's been little to no management turnover, particularly in oncology, which is, I would say, a bit unique in today's market environment. Just wanted to start off with the conversation and ask, you know, given that that team is still in place, you know, do you feel like the cohesiveness and the chemistry of having that oncology, you know, leadership team in place, you know, has been a, you know, competitive advantage and a, and a reason why you've been able to sort of leapfrog a bit in, you know, margin? I mean, I, I do think the cohesiveness of the team has been super important. For myself, I mean, I've been in genetic diagnostics and lab diagnostics for now 20 years. I worked as a sales rep for 10 years out knocking on doors, you know, so I know what it takes to sell a product. You know, as we built our team and brought people into the company, we've gotten a great group of people, many of which have been here now for, you know, seven, eight, nine, 10+ years at Natera. It's great to have, you know, our GM Solomon Moshkevich, he's been with the company now 11 years. Our Chief Medical Officer Alexey Aleshin, who joined in 2017, but he'd been on since the very beginning. Our senior R&D leadership that have been with the company for a long time, they've been in from the very beginning. Our Chief Commercial Officer, Head of Sales, has been with the company since 2013. We know how to go out and execute, and I think that's why you're seeing the track record that you're seeing. Yeah. From one to 40 cumulative Signatera publications over that period since we started covering. Yeah. I'll actually just mention on that too. You know, we learned our lesson very early on in NIPT, where, you know, in 2011, 2012, 2013, when we launched our product, you know, we had a relatively, you know, limited set of data. We had good data, but it, but it wasn't, you know, these multi-site prospective studies that you needed. When we went to launch Signatera in 2015, eight years ago, we started going out, putting the data strategy together, and we hired an entire team of folks that all they did was go around the world meeting with academics, setting up studies, and finding big cohorts and big previously collected biobanks. All the data that you're seeing now, these 40 studies, most of this work happened seven, eight years ago while we went out and did this. I think that's a big advantage for us, and that's why we've been able to now get to 40 clinical trials that have been published for Signatera. Yeah, also, you know, the SMART study in NIPT. Right. Like, likely and, a reason why you're the fourth entrant into that market. Right. Quickly became the market leader in volumes. All right, one more big picture question before we sort of dive into the details. Just because it's, you know, it's been a unique market environment. Natera, you know, despite the operational execution and whatnot, it seems to be considered somewhat of a, you know, more controversial stock, at least in our coverage. You've built a, you know, a great body of evidence in all three of your segments. Given where the company stands today, you know, what would you view as the most credible bear thesis? You wanna take that one? Mm-hmm. Yeah. I mean, look, I think, so most credible bear thesis. This is fun. The, you know, Steve kind of gave you a quick summary of some of the progress we've made over the last decade. You know, the volume growth, the execution on clinical data, the leveraging of the core technology from first women's health now to these other very exciting areas of healthcare where we're serving really massive unmet needs, has been pretty unprecedented, I think, in the kind of the evolution of molecular diagnostics space. I think there's always a, there's always a consideration, always something that we're very focused on is, you know, can that continue? I mean, we've gone, for example, in the launch of Signatera, we launched it in 2019. I think we offered, you know, this is a brand-new category that we created, basically. When we launched the test, there was a lot of skepticism. I think we did, like, 3,000 tests at the end of 2019. Fast-forward to 2022, we've, you know, processed 200,000 Signatera tests in the year, and about, you know, 30% or so of oncologists are now ordering the test. I think kind of the standard, you know, bare thesis there are like, well, you know, that was successful, but, you know, how can that continue? That can't, you know, continue on that kind of a run. I think that's always a reasonable position to have. The, you know, the things that we've built here, I think Steve touched on, but I think that they have shown to be pretty sustainable sources of success for us. One is the core technology has been getting honed for the last 10 years, and we've seen how well it performs in these different areas of care. The focus on publishing large prospective datasets is what professional societies, payers, and physicians wanna see to, in order to fully, you know, adopt a product. Then you've got to supplement that with a really first-class focus on commercial execution and user experience. I think the question of, you know, can we continue to have the success we've had historically comes down to can we stay focused on those kind of three core attributes? Yeah. I think, you know, we think that we can. Mm-hmm. That's great. All right, maybe just given the body of clinical evidence in oncology at this point, you know, you do have a slide where there's a couple highlighted areas. You know, if you were to pick, say, you know, three major re-readouts, you know, over the next, call it 12 to 18 months, which ones would you be focused on? Right. you know, in addition to publishing, I think, you know, 40 peer-reviewed papers to date, in the next, you know, six months, I think we have another seven or eight publications that are coming out that have more than 500 plasma time points per study. Comparatively speaking, those are big studies, and there's some with multiple thousands of patients. When you look at, you know, the publications coming, pancreatic, melanoma, gastroesophageal, additional large-scale studies in colorectal cancer, breast cancer, we have additional studies coming. There's opportunities where we're generating more data for tumor types where we already have coverage, and this will help to, I think, grow the commercial usage in those tumor types. There's opportunities where we're expanding to new categories that we're not in today, like melanoma, for example, in recurrence monitoring or pancreatic or gastroesophageal. I would actually estimate, you know, when we look at our schedule of MolDX submissions, you know, it's possible we could have up to 8 additional submissions that are going in in the next 12 months. That's fantastic. You started accepting samples outside of, CRC, I think, in mid-2021. Right. At that point, did you open it up to all other solid tumor cancer types, or was it just a sub-subset? Yeah. We opened it up to all other solid tumor types because, you know, we think that every patient should have access to Signatera, and we're getting that demand from patients and physicians. What tends to happen is doctors tend to order the test in the areas where you've generated more data and in the areas where, you know, the use cases are more established. We actually saw breast cancer being one of the areas where we saw more increased utilization. That's why, you know, I think this breast cancer coverage is meaningful because, you know, about 15% of our volume today is breast cancer, and that's really without even having coverage, because we opened the door and we said, "Look, you know, where would you like to use the test?" The doctors organically came in and started ordering in, you know, these certain indications in breast cancer. We previously published really good data in the neoadjuvant setting, in the adjuvant and the recurrence monitoring setting. You know, I think that predated that usage. You know, it is great to see the kind of leading indicators such as the growth that we see in breast cancer now to come get that coverage in place. I think we said on the call about 80% of our usage is within colorectal, muscle-invasive bladder, immunotherapy monitoring and breast, and the remaining 20% is outside of that. Yeah. Okay. 'Cause the reason why I asked the question was I was curious if there were different start dates for when you started accepting samples for, say, breast versus, you know, other solid tumor types. Yeah, I mean, 15% of clinical Signatera volumes, that was in basically exiting the year, right? That's a pretty high number, and obviously it's, you know, it's the largest newly diagnosed cancer indication each year. You know, how are you framing, you know, the Signatera breast volume ramp? Yes. I guess how, you know, how could you compare it to what you saw in colorectal? You know, I think, I think from, you know, upside opportunity, if it was similar to colorectal, that would be an incredible upside opportunity for us. I mean, we, you know, we're generally pretty conservative with our growth estimates and, like, we haven't included that level of growth in our, in our modeling. You know, when you just think about, like, what this can mean from a kind of number of test standpoint, we got coverage for all histologies, you know, hormone receptor positive, HER2 positive, triple negative breast cancer. You know, basically across all of those indications, stage IIB and higher, we think that that could be about 1 million tests per year when it's fully penetrated. That's very similar to the stage II and III colorectal opportunity. Now, we still have an opportunity to expand that further as we, you know, look at additional submissions that we'll be doing for breast cancer that go beyond just adjuvant and recurrence monitoring for stage IIB and higher. You know, even without that expansion opportunity, just going after this 1 million tests per year is an incredible upside opportunity from where we are today. You know, the momentum is with us here. As we, as we said, you know, even pre-coverage, we're seeing the usage increase because there's an organic demand coming from patients and coming from physicians. Yeah. Do you think... It seems like clinicians were sort of primed and ready to go on breast. I mean, look, I think one of the advantages of the tumor-informed approach is that it's the same protocol and the same workflow, and generally it's the same clinical results across all different tumor types. You know, it's the exact same process for the doctor to kind of order breast cancer as it is for colorectal. When you look at, you know, the recurrence results and the adjuvant results and what's coming out of the clinical trials, generally the results are the same. If you're MRD positive with this tumor-informed assay, you're gonna recur. In longitudinal monitoring, if you, if you're negative and you turn positive, you're gonna recur. The doctors have become kind of familiar with the use case in colorectal and in the community setting, doctors see all different types of patients, so it's easy for them to say, "Okay, we're already set up and doing it in colorectal. Now you've generated good data in breast cancer. We're comfortable now, you know, turning it on in that setting. We had a great panelist this morning on our MRD panel that's supporting the LEADER study, and she's practiced in a variety of settings, including rural, suburban, right? She has experience beyond just, you know, advanced cancer centers. She was speaking to, you know, on the surveillance side, patient anxiety has a really sick breath. If you guys remember, you offered, you know, my mom to be part of the Friends and Family program about two years ago before the data was where it is now. She actually declined because she simply said she was just happy to be here right now. I'm curious of that 1 million per year test opportunity. Is that based on newly diagnosed patients, or does that assume capture of the 3.8 million, you know, living? What we've assumed is, you know, when you, when you sort of look at the indications that are covered, you know, it's in that range of like getting close to like 100,000 patients a year roughly of newly diagnosed. If you assume that they're monitored for five years with two blood draws a year- Yeah. You know, generally kind of mapping over to what was in the EBLIS study. We just use the EBLIS study as the kind of framework for how we would sort out the TAM, and that gets you to, you know, that sort of 1 million tests per year. There's always, there are always different ways to model it. Maybe there's gonna be more tests than two per year. You know, maybe the testing is extended, you know, beyond the fifth year and so forth. You know, so I think there are ways to increase the TAM, but I think that's kind of the sweet spot right now where IIB and higher, adjuvant and recurrence monitoring, year zero through five, and then we kinda go from there. Yeah. You know, obviously some unique risk of recurrence, characteristics for breast versus CRC, which you know, people are most familiar with. I think, you know, availability and pipeline of, you know, of therapeutics, you know, interventional strategies. Like, I mean, do you, do you expect over time in breast, as they look at, reimbursement for the surveillance opportunity to be looking at it by subtype, right? Just given that it can vary, or just 'cause, you know, CRC is sort of standard and pegged to that CEA, you know, marker. Yeah. I mean, I do think, you know, what we're seeing with Medicare, which makes sense, is that they're focusing their coverage, their coverage guidelines on areas where you have published data. Sorry, there's a little bit of an echo. You guys hearing that? Where we publish data is across all histologies. You know, it makes sense then that if the test works across the different histologies, that that's where we would get coverage. I think the ultimate, you know, treatment of those patients downstream once they're positive is gonna vary based on histology. One of the areas that we're really excited about, you know, that we've invested in is this idea of treatment on molecular recurrence. I think, you know, today, you know, we're talking about like excitement around coverage in the adjuvant and the recurrence monitoring setting. In the future, we're gonna be talking about the excitement around treating patients on molecular recurrence. You don't have to necessarily wait until the patient has clinical recurrence, to where the tumor has grown and now can be seen on a scan. In the future, we want pharma companies to be able to treat patients based on just an increase in the ctDNA level as measured by Signatera. As you mentioned, you know, the DARE or the LEADER study, you know, these are studies that are sort of phase II trials that are starting to look at that dynamic. We have a phase III trial, that's ongoing, with one of the top pharma companies that's looking exactly at that, which is treating patients on molecular recurrence. I think that's really the big opportunity, in breast in the future, and that's an area that we've invested heavily. Yeah. This SERENA-6 trials probably one to take a look at for those that are interested in, you know, that aspect as well, right? Treatment switching strategies in addition. Okay. All right. We've still got some time here. Good. 'Cause we could talk about MRD all day, but why don't we move to some other segments? The expanded carrier screening, ASP sort of situation. Just curious, open-ended question, you know, the recent NSGC update. You know, what does that mean for potential official recommendation for, you know, expanded carrier screening? It sounds like you're excluding anything from the guide, but- Yeah. Just based on experience. Look, I think what we've been seeing, you know, as more and more of a trend over the years and, you know, this is back now for us, you know, multiple years is, you know, the, you know, certain payers are not covering the expanded panels. And, you know, I think for, you know, generally a large part of our business doesn't fall into that category, but, you know, as we've seen, you know, groups like Sema4, you know, exit out of the IVF business, for example, we've seen more of that lower margin expanded panel business come over to Signatera. And I think we did, you know, capture a very large portion of that. It's basically zero margin, you know, for us We thought it makes sense to take on that additional business because the guidelines are shifting in a direction towards expanded carrier screening. We've now seen ACMG put out a positive guideline supporting expanded carrier screening. We've just seen the National Society of Genetic Counselors put out a guideline towards expanded carrier screening. The American College of Obstetricians and Gynecologists guideline is actually pretty positive. It says expanded carrier screening is a acceptable strategy, and any doctor that chooses to implement that should implement it routinely in their practice. I think what you're starting to see off the back of these guidelines is payer policies evolving. Now, you know, there's already many payers who are kind of designating coverage for expanded screening. Just three weeks ago now, we saw one of the largest benefit managers issue a new policy that covers expanded screening, and that covers about 15% of covered lives. A lot of the bluest plans are now covered under that policy. I think we're in a good position. I think that, you know, we've been, again, you know, conservative kind of in implementing this into our guidance, but I think there's definitely a desire from physicians for this type of testing. We're seeing a mix shift that is temporarily kind of hurting the margins, but we think it's worth taking that bet because we think the guidelines are evolving. Yeah. Just on microdeletions, you know, just curious what some of the recent updates and, you know, mean for a potential official recommendation for 22q testing from ACOG. Is that $765 and change rate still intact? Or, if, you know, if there is a positive recommendation, would you expect that rate to be sort of adjusted? Yeah. I mean, the, the good news is when you do an eight-year multi-site prospective study, with 20 centers, leading academic centers around the world, you collect full genetic outcomes on 18,000 roughly live births. The results show that the sensitivity is exceptional, that the disease incidence is much more common than thought. The positive predictive value is very high, 10 times higher than traditionally accepted methods of screening. When you do that type of study and you generate that type of data. The guideline committees look at that and they take that into account. That's what we saw with the ACMG guideline. You know, now that the rigorous study has been done, the results are out, they're published, they're strong. The guideline committee is in a position where they can say, "Okay, we're gonna take that data and we're gonna incorporate it into the guidelines." We were really pleased to see ACMG do that. you know, as far as kind of the next steps there with other societies. you know, we don't necessarily have insight into exactly what their plans are. Again, I would just go back to the data. Is the data strong? Was the right trial done? Was the performance what it needed to be? Was the disease incidence what it needed to be? I think all the fundamentals stack up. Generally, when you're in that position, you know, the end result, you know, tends to be positive. If we were able to get coverage in the future, for microdeletion testing, I think, you know, the impact could be, you know, significant, but we have to kind of wait and see how everything plays out. Yeah. Nothing material included in the guidance? No, nothing any of that's in there. All right. Maybe I'll wrap a couple of questions together for you, Mike. Sure. If you did see, improvements in reimbursement for expanded carrier screening from that 0% margin level, hypothetically, and then, you know, let's marry that alongside maybe a potentially faster, new Signatera breast enrollment pace, is that contemplated in the 41%-44%, I think. Yeah, I think that's the gross margin. Gross margins? No. None of those types of things are really contemplated in the guide. I mean, our philosophy when we guide is to release annual guidance on our Q4 call, and we try to set that up as what we think is as a base case. It requires good execution from us, but does not include things, you know, that are beyond our control, such as, you know, guideline inclusion, significant changes in payer coverage and things like that. What you see there is in our guide is kind of the base case. Okay. I wanna at least see if anybody in the crowd has any questions. If the guidelines for the NCCN comes through and it appears to be economically, what do you think they [audio distortion]? Our default, you know, what we've said for a long time is we don't think that the next version of the guidelines are gonna include Signatera, and that's because the CIRCULATE study wasn't published when the guideline committee met last August. I wouldn't expect, and I don't think anybody expects now for the guideline to come out and kind of say Signatera in there, you know, as a footnote. I think now that the CIRCULATE study is published in Nature Medicine and the data looks very strong, I would imagine the guideline committee is gonna incorporate that the next time they meet into their overall decision making. That's not a guarantee they're gonna cover it, but it means they're gonna be talking about it. Now if in the event that there's no coverage put in place, you know, we have three other large scale, multi-site perspective, registrational level, randomized studies that are going to push the bar forward. We have the CIRCULATE-U.S. trial, where we've gone to the FDA, we've got the investigational device exemption. It has the same setup as, you know, the CIRCULATE-Japan study. We've got the VEGA and ALTAIR, which are the randomized arms of the CIRCULATE-Japan study. You know, we've got the studies going. It's just a matter of time. Now, the real reason why guidelines matter for two reasons. One is commercial usage and the other is for commercial coverage because we already have Medicare coverage. For usage, we're already seeing doctors use the test. Of course, guidelines would really bump that up to another level, but we're already on a good pace right now, that I think is a comfortable pace. From a commercial coverage standpoint, I think everyone saw we're starting to get commercial coverage even without guidelines. We had Blue Shield announcement, we had the Blue Cross Blue Shield Louisiana announcement, and there's others in the pipeline that we think are gonna issue commercial coverage even without a guideline. They are right now, yeah. Oh, well, I mean, as of now it's Blue Shield of California, which is a pan-tumor coverage, and then Blue Cross Blue Shield of Louisiana. We know that there's, you know, probably three to four others that are kind of getting close. I think it's possible you could see more in 2023 and then significantly more in 2024, even in the event of not having a guideline. Now, some of this depends on, I think, the success of the sort of biomarker bill strategy that we've described previously. You know, we'll have to see how things pan out. Great. Well, that's it on time. Appreciate the detailed responses as always. Thanks everybody for joining. Yeah. Thank you. Thanks, guys. Appreciate it.