By:
Chez Daggs, AIM Student at Marquette University
Disclosure:
The AIM Equity Fund currently holds this position. This article was written by
myself, and it expresses my own opinions. I am not receiving compensation for
it and I have no business relationship with any company whose stock is
mentioned in this article.
Summary:
• Natera, Inc. (NASDAQ:NTRA) is a worldwide genetic testing and
diagnostics company that’s changing how doctors and patients manage genetic
disease. They develop and commercialize non-invasive methods for analyzing DNA,
and offer a host of proprietary genetic testing services.
• Appointed a new CEO and
COO into management.
• Announced a new
partnership to co-distribute kidney transplant rejection tests.
• Obtained two Z-codes
for their Signatera cancer detection technology.
Key
points:
In January 2019, Natera
appointed Steve Chapman as Chief Executive Officer (CEO) and Robert Schueren as
Chief Operating Officer (COO). Before Chapman stepped into this new role at Natera,
he was the company’s COO. Chapman’s is a great fit as Natera’s new CEO
considering he has a strong track record of past achievements. He has shown
himself to be a great business leader, he has hands-on experience with genetic
diagnostic testing, and has given winning growth strategies with the company. Schueren
is also an expert executive with 30+ years of experience and a record of
achievement with high-growth start up and large companies. Management seems to
be in good hands moving forward.
Natera announced an
agreement early February to partner with Thermo Fisher Scientific’s One Lambda to
co-distribute its kidney transplant rejection test. One Lambda offers human
leukocyte antigen (HLA) typing, antibody detection products and more. One
Lambda’s diagnostic tests are used by transplant centers worldwide. By partnering
with One Lambda, Natera now has an accelerated entrance into new markets by
leveraging the infrastructure of a global leader. They can offer customers an improved
variety of tests that provide better detection performance, ultimately having a
greater impact on patients.
Natera has obtained two
Z-codes which are used for initial and subsequent testing orders for patients.
The Z-codes will be important for the company’s Signatera test. Signatera is a
unique technology that offers a successful approach to cancer detection and is
planned to be clinically launched in Q2 2019. The codes will cover various
cancer types, and the Signatera technology has already shown strong performance
across multiple cancer types including lung, breast, and bladder. Natera has a
goal to establish Signatera as a new standard technology now that the
technology can detect cancer recurrence up to 2 years ahead of other clinical
factors. Natera plans on Signatera being a key tool for oncologists in the
future.
What
has the stock done lately?
The Q4 market turbulence
took a hit to Natera’s price, but it seems to be bouncing back well. Natera’s
stock has performed very well over the past month rising around 27.80% since
the start of January. The stock had a very slight jump in price after the One
Lambda announcement. Management has a positive forward outlook moving into 2019
as they keep the focus on changing the management of disease worldwide with
their unique genetic testing.
Past
Year Performance:
Natera has increased ~78%
in value since last year, but the last four months of 2018 was rough for the
stock. In August 2018, the stock had reached an all-time high of $29.62/share
before tumbling down ~62% to a price as low as $11.34/share in January 2019. Although
they had a rough end to 2018, the past year was great for Natera due to research
collaboration with several leading global cancer centers and key announcements for
new genetic codes for medical testing.
1
Year Stock Chart vs. Benchmark
Source:
FactSet
My
Takeaway:
Natera’s stock price
reaching a new high in 2018 was a positive sign for the company. The current
price is trading above the initial purchase price for the AIM domestic small
cap fund, and has already surpassed its price target of $13.23/share.
Management stated that all the strategic plans they set out to complete in 2018
were in fact completed. With the successful Signatera technology launching
clinically in 2019, and a couple of large deals planned, 2019 seems to be
another promising year for Natera.
1
Month Stock Chart
Source:
FactSet
