We're a couple of minutes away, but I think we can get started given there's a lot to cover. I'm Kallum Titchmarsh, the Life Sciences Analyst here at Morgan Stanley. Really pleased today to be joined by the team at Natera. We have Steve Chapman, CEO, and Mike Brophy, CFO. Thanks guys, for being here. Yeah. Cheers. Thank you. Thanks for having us in. Just before we get started, for all disclosures relating to this presentation, please see morganstanley.com/researchdisclosures. Now that the fun stuff's out the way, maybe we can start on that Q2. We're expecting strong numbers, but I think even the Q2 came comfortably above our expectations. Just under 40% year-over-year sales growth, record sequential Signatera tests, and then a healthy raise on the back of that. Maybe just stepping back, how has your confidence in the business evolved year- to- date? Where do you perhaps think investors may still be underestimating that durability of growth? Yeah. I'd say obviously, very strong quarter and year- to- date. We've had multiple revenue raises. We've seen acceleration in Signatera volume and really just strength across the business overall. I think in Q2, we had 34,000 quarter-over-quarter growth, which was just an all-time record for Signatera. Super exciting. I would say, the area that I think is maybe most underappreciated is just how big the MRD market opportunity is. When we start to look, drilling into the numbers, looking at territory by territory, each sales rep, and just understanding how much additional opportunity there is, it's really remarkable, and I think we're going to be in this period of very strong growth for a very long time. You've made some comments pointing to that tipping point underway in MRD adoption. What are you seeing from oncology practices that gives you conviction in that transition? Yeah. A couple of years ago, we'd go speak to doctors, and they'd really be focused on, "Well, hmm, not sure how the test should be used," or, "I'm not really sure what I should do if I get a positive result. Maybe we may consider using it. We're just sort of waiting for the evidence." I would say now we really don't hear that anymore. We've just had so much peer-reviewed evidence and prospective data, overall survival data, disease-free survival data, that's read out, that doctors, I think now have come to the appreciation that MRD testing and Signatera particularly, has been thoroughly validated, thoroughly proven in the peer-reviewed evidence. Now it's really about, "Well who do I use it on?" Not "Should I use it?" But, "Who do I use it on and how often?" The discussions now center around putting protocols in place, EMR connectivity, expansion within the practice from, say, CRC and breast to other indications, which is exciting. I think that really means that we've crossed this threshold and are gearing up for a period of very deep growth. I think the last metric we saw was just over 70 prospective studies in the pipeline, and expectations for a kind of an accelerated pace of readouts now. What evidence do you think being generated today has the chance to most meaningfully impact practice in the near to medium term as we think about that next unlock? Yeah. So we've published several hundred peer-reviewed papers at this point. As I just mentioned, there's a sense that we've sort of crossed the evidence threshold, especially now with the FDA approval and so forth. But we're not done there. We're continuing to invest in peer-reviewed evidence, really across histologies. So that's going to continue. We have some great readouts coming in the second half of this year and into 2027. Just to give you kind of a flavor, I think there's continued exciting data in CRC, continued exciting data in breast. We've got a big readout in head and neck, gastroesophageal, in lung, several pan-cancer readouts. So we've got a lot to keep the team busy and we're excited about these new readouts coming. I want to touch on just the FDA approval of CDx in MIBC back in May. Feels a little like a step change in the kind of clinical decisions MRD can inform. Maybe just unpack a little how significant that is for the business and how much that could expand the traditional MRD market that we think of. Yeah. So achieving FDA approval and then getting NCCN guidelines has really, I think, changed the way doctors think about the test. Now they really are required to have an MRD strategy in their practice. I think that that has sort of put us on a new trajectory. Again, kind of thinking about, "Okay, how do I use the test? Which patient should I use it on?" Versus, "Whether I should use it." There's also some exciting things in the protocol. If you look at the IMvigor protocol, just how the testing is used every 6 weeks, versus maybe traditionally once a quarter or say, twice a year. We're now looking at sort of a six week protocol in the IMvigor study, and under the approval. I think that's an exciting opportunity as well. So overall, on the right path. We now have multiple NCCN guidelines for MRD, not just muscle-invasive bladder, but also lymphoma, Merkel cell. I think that kind of starts this sort of flywheel effect of where we're on this path to, in the future, sort of be deeply penetrated into guidelines, and that will continue to help accelerate volume growth. When we're seeing Signatera being used more to identify patients for clinical trials and inform those treatment decisions, I think we're getting a lot of questions now on those biopharma relationships. Maybe just talk us through anything you're seeing in the pipeline there and how big of an opportunity that could be. Yeah. So we're doing exceptionally well in biopharma. That's an area that we've seen very significant increases in interest, really driven by a couple of factors. I think one is this shift towards an MRD-guided strategy for new phase III clinical trials, particularly this concept of ToMR or treatment on molecular recurrence, where big pharma companies are now saying, "We want to be able to move our drugs up in the care paradigm. Rather than waiting for somebody to have a clinical relapse on a scan before we can administer the drug, we want to be able to administer the treatment directly on the molecular relapse itself. Prior to the cancer expanding within the body and becoming stronger, we want to treat on MRD." That's what ToMR stands for, treatment on molecular recurrence or treatment on MRD. I think just the last year, we've seen three or four phase III trials signed and initiated. We think in the future, if you look five years out, there's going to be several hundred of these. This is going to be one of the biggest trends by far in pharma and diagnostics, and we're right at the center of it. That's kind of one. On the other side of things, I think there's very strong interest in the Signatera genome with phased variants. We've actually just gotten some of the analytical validation data, some of the initial clinical validation data, and it looks incredible. I think pharma, who's seen some of the early data there, is responding very well, and there's, I would say, extreme levels of interest in that product. We expect biopharma to be a major growth driver for the business in the future. Great. Mike, maybe just to loop you in. I know you said the Q2 Signatera growth benefited from that lower baseline in Q1, that 34,000 sequential. Just considering the momentum we're hearing of and perhaps your more prudent approach to forecasting numbers out, do you think that $34,000 is totally off the cards for Q3? Maybe just help to ensure that our expectations are well-aligned here. Yeah. I think the broader point is that we're clearly into this kind of S-curve dynamic with Signatera volumes. Steve was just talking about how physicians really feel like they need to have an MRD strategy. That couldn't be more different than what it was a couple of years ago when we were trying to really kind of create this category and generate a little bit of basic data to introduce the topic to physicians. As it relates to forecasting Signatera volumes, we feel like the best way to do that is just to take the rolling four quarters average. The last four quarters, take an average, and I think that's a decent benchmark for the next quarter. That does a couple of things for you. One, it just smooths out any randomness that you might have with weather or receiving days or any kind of seasonality. You smooth that out by taking the last four quarters average. The second is that that is a moving target. That is a treadmill that keeps getting faster. So it does give effect for the fact that Signatera does continue to ramp because you have this effective installed base of current Signatera patients that are getting repeat testing over a long tail of quarters after they initiate with us, on top of very significant new interest from new patients. Okay? That rolling four quarters average, if you just do that math, that growth curve looks incredibly smooth, and I think it'll save you some time and consternation as you try and forecast this going forward. Okay. That's helpful. Just on the ASP, Mike, I think $1,275 from Q2, $2,000 mature target you've discussed as well. Could you just unpack a little the drivers to get to that $2,000 and which ones you have the most near-term conviction and which are perhaps a bit further out? Yeah. There's a couple of broad categories. I'd say continued coverage expansion within Medicare and the MolDx program that would enable coverage for additional tumor types for Medicare Advantage patients. There's extending that same coverage to commercial patients that live in a state where there's a state law that requires insurers to offer the same level of care to their commercial patients as they offer to Medicare patients. Beyond that, I think that the next big driver would be just starting to get more and more into guidelines in these larger indications, as Steve's alluded to. I think there's a path from $1,275- $1,400, $1,450 in that zone, just from grinding, generating additional data, and getting broader Medicare coverage. I think the path from maybe $1,500- $2,000, I think is going to be driven by increasingly getting into guidelines in, for example, colorectal cancer and then in breast cancer. I know Japan is perhaps a part of that as well, and it's a market where the demographics, I think, screen well for diagnostic companies, but we haven't perhaps seen broad-based success from companies that push into that market getting in the U.S. So what's underpinning your confidence for that launch, and how rapidly could we see physician uptake? Yeah. Just one comment, too, on the ASP upside. I think right now we have 11 MolDX submissions that are in and pending, which is exciting because some of those have been in now for getting close to the threshold of where you would normally expect to hear back. I think we've said before, that bucket of submissions is a big part of getting up to that $2,000 ASP target. On Japan, we've gotten approval. We're now waiting for the pricing to come in and for the final structure of how they want the test to be offered. But we feel very positive about the opportunity, particularly because many of the leading academic centers in Japan have participated in the CIRCULATE study. For a period, I think, of about five years, we had about 150 of the leading academic centers enrolling patients into the CIRCULATE trial, where they were getting results back, they were making decisions based off MRD, and there's a very strong desire by those centers to have the test available. We certainly expect there to be some excitement around the approval and I think a very rapid uptake. We're kind of gearing up from a capacity standpoint to have what would be a very sharp ramp, which would make a nice impact. Maybe just talk about the serial testing opportunity there as well and when that could perhaps be uptaken. The sorry? Serial testing. Serial testing? Yeah. Yes, as we've said before, we expect the initial approval to be on that adjuvant window, adjuvant decision making, with the idea that serial testing is allowed under this concept of almost like a coverage with evidence development, if you guys remember that from a couple of years ago from Medicare here, where they say, "Hey, you can do it. It's approved, and there's a path to get to coverage." We think that's exciting. That's kind of, I think, more than what we were hoping for, but we still have to see how that pans out. We don't have the final guideline in place yet, but we should have that soon. I think that's going to be exciting. But we got a lot of work to do. I think we built up building the team right now over there. It's kind of baked into the budget that you've seen. We've got some great people that have come on board with extensive experience and are excited for the ramp there. Amazing. Competition still comes up a lot our way, despite the numbers you guys are putting up. Maybe just unpack a little bit where you see your biggest competitive moat sitting and any areas where you think there's urgency to invest from your end to just keep that competitive gap as it is. Yeah. There's always going to be a lot of competitors in diagnostics, and that's something that I think we've done well in a very competitive environment. If you look at women's health or organ health or even the last five years in oncology, there's been, at any time, multiple competitors that have been in this space, but we've done well. I think we have a very strong position right now when you look at clinical data, when you look at the breadth of our team, when you look at EMR connectivity, when you look at the base of patients, when you look at our coverage we've achieved from MolDX. These aren't things that you can just change overnight as a competitor. You can't just publish an analytical validation and then sort of be on par with all of the prospective multiple years of data that Natera has delivered. I think we're in a very good position. In addition to that, we've taken some very smart steps over the last several years that have put us in a, what I think is a very strong position. If you look at, one, this idea of ultra-sensitivity, and while we do believe our exome product performs exceptionally well, and when you look at a lot of the evidence that's out there, we've actually done better than a lot of the genome providers. Several years ago, we made the decision to move and launch a genome-based MRD, and we now have that on the market, and a certain percentage of our customers want that genome MRD. We acquired Foresight, which we think has the best technology in the field. We're now in the process of putting this phased variant technology onto the genome product. Like I said, we've just seen the analytical clinical validation that's come off, and it is really, really strong. I'm not concerned at all about any of the genome-based or ultra-sensitive competitors. Just based on what I've seen, I think we're in the driver's seat, which is very, very good. On the other side of things, we have this kind of tumor-naive MRD concept of where there's certain patients where you can't get tissue. It might make sense to have a tumor-naive MRD. We've also launched a tumor-naive MRD, the Latitude product that's available in CRC, and they will be expanding it to other tumor types. Now if a physician wants any flavor of MRD, they can get it all from us. You want the exome that has the most data, tried and true, we have that. You want ultra-sensitive on the genome. We have that. You want tumor naive, we have that. We are in a good position based on the decisions and the investments that we made. There is not a sense that right now we have to rush and do the next investment, but of course, we are always very smart about investing in the future of the technology, and we will continue to do that. Amazing. I think we covered the bulk of oncology, so maybe shifting over to women's health. A pretty strong Q2 in terms of the typical seasonality we see. What is your level of visibility to continued performance at around this level? How do you think momentum has trended during the third quarter? Yeah. Women's health, we are having a very strong year. I would say if you look over the history of time, we have continued to do well. While the competitive environment has changed, sort of different names, we have continued to do well, and that is because we follow the standard playbook of generating good peer-reviewed evidence, continue to invest in the product, have a good sales team, and have a good user experience. This year, we have launched Fetal Focus, which is a single-gene NIPT. If a prospective family gets carrier screening and the father is not available, we can now directly assess the cell-free fetal DNA for some of these autosomal recessive disorders, like cystic fibrosis, for example. That has done incredibly well. We have seen very strong uptick there. But we have also closed one of the other gaps. For a long time, we took the approach in NIPT where we said, "We are going to give you a result back, but we are only going to give you a result if we are very confident in the performance of the test at a particular fetal fraction." We kind of had a no-call rate that was maybe 3%-4%, because if the fetal fraction was low, we just said, "Look, we are not going to be able to generate a result that we feel confident in at this level." Now, some doctors didn't like that. Most of them did, as you can see by the volume, but some didn't like that. So we launched a new product, probably about three months ago, that really closes that last kind of competitive gap. Now, we can generate results down to, I think, maybe less than 0.5% no-call rate, which is on par with anybody else. We are seeing a lot of interest in that, physicians that maybe at one point wouldn't consider Natera are now switching over. Volume is strong. Competitive field is strong. Sales team is motivated, feeling excited about the opportunity in women's health. Mike, just any color on the ASPs across women's health? We've done a remarkable job of maintaining and even improving ASPs over the last three or four years. Maybe a quick case study, the ASP is now, the realized pricing is actually better now for the women's health business than it was when we went public more than 10 years ago. Even as the list prices have come down, and we've made a lot of important price concessions along the way, the fraction of time that we're actually paid for services that are covered has gone through the roof, is now extremely high. Two components of that. One is, thankfully, NIPT and carrier screening are now much more boring, I'm saying that in a good way, kind of boring parts of the standard of care. When we launched, this was kind of a new category that we had to convince the world on. Now, these tests are universally covered and in guidelines, so that helps. Then second, we've engaged in an enormous execution effort just to make sure that when we have a covered service, that we're actually reimbursed for those services. So both those together has allowed us to maintain a very sustainable business and continue to innovate for patients and doctors. Great. Maybe just over to the financials, I think a lot of people were pleased to see revenue grow considerably, but also the OpEx growth as well and how that sat in Q2. Mike, just help us to better understand what we can expect over the midterm as it relates to kind of banking those wins on the top line versus perhaps reinvesting into the business. Yeah. We're very much in reinvestment mode right now, and that's for the immediate term. I think, hopefully, over the next couple of years. We're in the very early stages of this change in cancer care that's being driven by Signatera. Steve alluded to the size of the market opportunity. It's something like a $15 billion-$20 billion market opportunity. We're going to do something like $1 billion in revenue in Signatera this year. So there's just an enormous amount of things to do, particularly with pharma and new product innovation. So that's really going to be our focus, rather than rushing to deliver a nominal amount of EBITDA in the immediate term and then leaving a flank exposed or failing to innovate for patients like we know that we can. Maybe just zooming in a little more on that. 2027 and 2028, when I kind of eyeball Street, have low double-digit OpEx growth in 2027 and then high single in 2028. Obviously, it's still some way away, but any initial thoughts on that cadence? Rather than give multi-year OpEx guidance, I would just err on the side of just understanding what our strategy is, and that is to be in investment mode over that time horizon. When we see projects that come along that have a high ROIC, we're going to be very focused on funding those projects, because our goal is to win over that time horizon that you're talking about. So I just want to make sure that investors kind of understand that mindset. One of those pipeline assets, the screening asset, I think some initial data there that looked pretty strong. Just lay the framework out for us on how that ramp could look, what you're doing behind the scenes now, maybe a little sense of the data that you're seeing behind the scenes as well. Yeah. So we're really excited about the opportunity in colorectal cancer, early cancer screening. We've had a program there, I would say, for at least five years now, going back to when we first started work on there. A year and a half ago, we kicked off an FDA-enabling prospective trial that's called the FIND study. The goal there was to enroll somewhere between 25,000 to, say, 40,000 patients, all prospectively collected colonoscopy matched, then to run that study and submit to the FDA. We're on track to do that. Actually, the study has achieved the number of patients that we feel we needed to enroll in order to get significance. So we're going to continue to enroll a few more, but basically, we're done enrolling, in many ways. We've achieved what we set out to achieve. Now we're just completing some of the development work on the assay that is required for the FDA. Then in 2027, we're going to be running the clinical validation, and we're going to be submitting to the FDA. So we're in a very strong position here, and I think we're going to be one of the major players in colorectal cancer screening. Mike, how does the OpEx look for that program across kind of the R&D and the SG&A side? Is it a new sales force you'd be looking at then? It seems as though the trial work is in its final stages, so perhaps the R&D aspect of that phases down, too. Yeah. Not to give everyone homework, but if you go back to the Q2 earnings call deck, we included a slide in that deck that was a stacked column chart that just showed the breakdown of our R&D spend by category. You could get a sense of where those dollars are going. To me, the main takeaway from that slide is, what fraction of that R&D spend is required for us to be successful in 2026 and 2027? I don't know, Steve, what you think, but I think maybe 10% of it. I mean, something like that. All of that R&D spend is heavily focused on 2028- 2032 and beyond to make sure that we're at the cutting edge for our physicians and patients, to wit the ECD program is going to be something like $100 million in R&D spend this year. I think if you just screen the business without having that context, it looks like we've got a lot of R&D spend for the revenue that we're generating. But of course, the ECD is a complete zero on the revenue line just for the moment. We now know that this is an enormous market opportunity. There's something like 40 million people in the United States that are going to get no screening, or if we make a high-quality blood test available, they will get a screen. Okay? They need one probably once every three years. So that becomes something like 13 million people a year in the United States that need one of these blood screens. There's a couple of good companies out there also innovating, also delivering good data. We feel very excited about the data that we can read out next year, and we feel like we can be a meaningful participant in that space. So you think about something that right now is just a $100 million anchor on the P&L that then transforms into a product that goes from zero to millions of tests reimbursed at a reasonable level at a supportable gross margin between 2028, 2029, and 2032. It's an amazing growth vector that we will be just adding on top of the existing business. So that's an example of why we're in investment mode right now, is that we see in the near term, an ability to really get to scale really quite quickly in the context of these growing markets. As it relates to the sales team, I'll get Steve to teach you in on this. The best molecular diagnostic sales rep that's ever existed is on the stage. But what we've done historically is we've legged into these commercial teams. We didn't start with 300+ Signatera reps, did we? We started with a modest team. We built on success, we learned, and then we grew the team from there. I think that's roughly what our strategy would be in ECD. But take it away. Yeah. We'll take a very targeted approach. I think like Mike said, maybe start off small, but also just be smart about where we're adding things, and go from there. I do think it's a great opportunity, and there's going to be a time in 2027 where there's a press release on the data, and we feel like it's going to look good, and we're going to be off to the races. Great. International broadly is still a very small portion of the business. We hit on Japan already, but anything outside of Japan that excites you across the businesses that you play in the three core segments? Yeah, I think traditionally, international has been really led by women's health. I think we have 70 or 80 labs around the world that are kind of shipping some volume back to the United States to be performed here. More and more, I think we're seeing a shift towards oncology and interest in Signatera, being driven largely by pharma, but also by some academic centers and guideline committees in certain countries in Europe and Asia and so forth. We think that's going to be an opportunity, and I think something that represents a lot of upside from here. I want to talk on the cash flow generation. We've had quite a few questions over the past few weeks on M&A ambitions. Maybe just talk us through whether that would be something of interest to you, whether it would be kind of offensive, defensive M&A. How would you think about the broader appetite there over the next few years? Yeah, just say, if you look traditionally, our approach mostly has been to just invest in our own research and development capabilities, and we've got a very strong team. We've done a, you know, small number of very targeted acquisitions over time, and we're sort of very thoughtful about that. But of course, we always are open to kind of seeing what opportunities exist or, you know, if we think that there's any kind of gaps and so forth where we can improve the portfolio. But, but largely, our approach has been to really focus on empowering our own team for success and, you know, we're in a very good position right now. Mike, you have any comment? Yeah, that's great. Yeah. We also get quite a few questions on the AI winners and losers in our sector. Feels like you guys are in the, in the better camp here, given the amount of data you guys generate each quarter on the test. How are you leveraging that data today, and I guess what could you be doing in the future to make the most of all that volume? Yeah. With AI, we're really thinking about it in kind of three different areas across the company. The first is improving efficiency within the business. Like most companies are looking at, "Okay, how can we kind of make the teams more efficient? You know, improve on some of the processes and so forth." And so we have this goal to save, like, $200 million-$300 million in OpEx through implementation of AI. And really what that does is to help us kind of stabilize the OpEx and reduce the OpEx growth over time rather than necessarily, like, pulling out $200 million-$300 million. But that's on track, and we've seen a lot of performance there that we're excited about. I think the second is this idea of improving the user experience for patients and physicians, our customers. There we've got a lot of activity underway to deliver value back to physicians and patients, where they can generate more insight and get deeper clinical information about their report, interact with the content in a unique and different way. Then the third area is how do we use AI and data to improve the products that we offer, but also to partner more deeply with pharma. There we have a lot of activity ongoing, whether it's developing neoantigen prediction assays and personal vaccines, which we've talked about. We have a program, whether it's generating, you know, new risk scores that can help enhance the product, AI-enabled MRD in some way, or whether it's just looking at partnering with pharma to create new large language models that can help deliver insights for clinical development or within clinical trials or patient matching and kind of some of the more traditional things. We have a lot of programs going there, and I think there's going to be some cool things to talk about in the very near future there, so stay tuned. Great. Final one from me. Of everything we've discussed today and that evolving pipeline, what's the one thing you're the most excited about today that you think investors perhaps don't fully appreciate? Well, I guess it's kind of how I opened the talk today. I think just how big the opportunity is in Signatera and MRD and how kind of very early stage we are. Again, like, when I'm out meeting with doctors, meeting with the individual sales reps, looking at the volume, I just see so much opportunity for expansion of MRD. I think doctors are excited about that opportunity. So we're going to see growth for, you know, extended period of time as we go forward. Then I do think ECD and the data opportunity are going to be big drivers for us in the future. Amazing. Steve, Mike, thank you so much. Thanks so much, guys. Thank you. Cheers. Thanks, guys.