Revolutionizing the Standard of Care with Next-Generation, Cell-Free DNA Testing with Steve Chapman, Chief Executive Officer at Natera: Audio automatically transcribed by Sonix
Revolutionizing the Standard of Care with Next-Generation, Cell-Free DNA Testing with Steve Chapman, Chief Executive Officer at Natera: this mp3 audio file was automatically transcribed by Sonix with the best speech-to-text algorithms. This transcript may contain errors.
Saul Marquez:
Hey everybody! Welcome back to the Outcomes Rocket, Saul Marquez here. Today, I have the privilege of having the amazing Steve Chapman with us. He is Natera’s Chief Executive Officer and serves on the company’s Board of Directors. Mr. Chapman joined Natera in 2010 as the Vice President of Sales, later becoming Chief Commercial Officer and then Chief Operating Officer. As COO, he led the company’s commercial entry into the highly competitive, non-invasive prenatal testing market in which the company’s panorama test became the market leader despite being fourth to market. Mr. Chapman was appointed CEO in January of 2019 and has been instrumental in extending Natera’s core technology to address new organ health and oncology markets, achieving rapid commercial growth for the Prospera transplant assessment test and establishing Natera’s leadership in molecular residual disease testing with another product they have called Signatera. Since he became CEO of Natera, Natera’s achieved year-on-year revenue growth of over 40 percent and has consistently outperformed earnings expectations. Prior to Natera, Mr. Chapman worked at Genzyme Genetics, where he was credited with delivering record-breaking commercial growth and strategies that change pregnancy genetic testing. He’s no stranger to this genetic testing environment, and today I’m privileged to have him here. He actually started his career as a researcher in the Department of Human Genetics at UCLA, designing arrays, identifying SMPs associated with multiple sclerosis. Just an incredible individual, a very brilliant mind, and super excited to chat with him today. So, Steve, really appreciate you joining us.
Steve Chapman:
Yeah. Thanks, Saul. I really appreciate you having me. Great to be here.
Saul Marquez:
Absolutely. The work you’re doing is making a huge difference. Steve, you guys are on the cutting edge of genetic testing and how we’re actually using it to make a difference. What inspires your work in the space?
Steve Chapman:
So I think the diagnostic space in genetics, genetic testing in particular, is a very fast-growing sector of the health care market. And it’s very exciting. There’s a lot of change, very fast pace of innovation. So it’s a very exciting place to be. But I think my inspiration has grown over time to really be more about the impact that we’re making on patients. And a lot of that has to do with two of my personal experiences. Having kids using the Natera products and using genetic testing as part of growing my family. It’s really showing me how we’re personally impacting patients on a day-to-day basis. And now I look at as we move into cancer, moving away from prenatal health, having had friends and family members that have been diagnosed with cancer and some that are being tracked with our current monitoring products Signatera, I see the impact that we can make there as well. So it really is truly inspiring to be making an impact on patients and their lives in such an exciting field as genetic testing.
Saul Marquez:
Yeah, I really agree. The opportunity is huge, what we could do with this testing and so many different applications. So walk us through what you believe, Steve, are the big ways that you guys are adding value to the health care ecosystem?
Steve Chapman:
Yes. So we’ve developed a technology that can look at extremely tiny quantities of DNA, so down to less than a single molecule in a tumor board. And we’ve deployed that technology across women’s health oncology in organ health. So in the women’s health space, from a simple tube of blood, as early as nine weeks of pregnancy, we can diagnose genetic conditions in the fetus. And that’s very important for women and for the pregnancy and for the family to be able to get that kind of information very early on in the pregnancy and potentially avoid a diagnostic procedure. So this idea that you can just simply do a blood draw rather than having to go in for an invasive procedure that’s costly, carries some risk, is very important. In the oncology space, we developed a test called Signatera where we’re focused on detecting disease recurrence. And there we’ve shown with our test that we can actually detect the recurrence of diseases up to two years in advance of imaging. And so being able to detect cancer recurrence early can have a very significant impact on patients’ lives. And overall, I think is going to change in many ways, change the way oncology medicine is practiced today as the technology evolves further. And in organ health, we’re going to have again, we’re noninvasively detecting organ rejection. So unfortunately today, about 30 percent of patients that get a kidney transplant will lose their kidney within five years, and about 50 percent of patients will lose their kidney within 10 years. So. With our technology, we’re detecting organ rejection early so the patient and physician can alter the treatment course and potentially save the kidney. So across each area, women’s health, oncology and organ health, we’re making a very significant impact and really changing the way medicine is practiced.
Saul Marquez:
It’s these really two things that stand out, Steve, out of what you just shared is, number one, it’s noninvasive. And number two, the leading indicators and we’ve been practicing reactive medicine for so long, having tools like these that are hyper tuned in to certain indications and really help us get the results we’re looking for. And then in the non-invasive nature is also something, especially in the women’s health space, something that could go a long way. Talk to us about what you believe makes Natera different and better than what’s available today.
Steve Chapman:
Yeah. So I appreciate you bringing up this idea of invasive versus non-invasive because I think that that is one of the broader trends, particularly in women’s health, when we look at maybe getting a blood draw rather than going in for a CDS. Historically, every woman that was over the age of thirty-five would get it amniocentesis or CVS procedure automatically. And there was no discrimination around whether you are high risk or not other than your age. And so now with these non-invasive tests, not only do not need to necessarily get the invasive procedure, but we also make sure that only the right people are going in for that procedure. And so we significantly reduce the number of unnecessary procedures. Now, when you look at what makes our technology different, I think the best area for me to highlight that is probably in the field of colorectal cancer on our product Signatera. So in colorectal cancer today, unfortunately, about twenty-five percent of patients experience recurrence. So they’re diagnosed, they get treated and they go into remission. And then, unfortunately, later they recur. And many of those patients have poorer outcomes after they’ve recurred because it’s detected too late.
Steve Chapman:
So with our technology, we take a small piece of the tumor and we create an individual test that’s based on your tumor signature that’s just for you. So there’s no other test out there that’s like your test. And we use that to detect very tiny fragments of the tumor in your blood. Now, the result of that is that we can detect cancer recurrence in colorectal cancer 93 percent of the time, up to eight months earlier than what you would on imaging. And so being able to detect a very high portion of the cancer recurrence much earlier than imaging has a very significant impact. In colorectal specifically, if you can detect cancer sooner you have a chance to operate and remove the cancer recurrence, remove the metastases before it spreads all over the body and that can potentially save patients’ lives. So the ability to detect cancer recurrence early and the ability to allow the physician to take an intervention that can potentially save the patient’s lives are very significant differentiators compared to how cancer recurrence is monitored for today, which is generally with imaging or with generic biomarkers like CEA which have low sensitivity and specificity. So it’s really exciting to make an impact on patients, but it’s also highly differentiated from the traditional standard of care and traditional biomarkers that are out there.
Saul Marquez:
Some great distinctions there, Steve. Appreciate that. I think about the market as it sits today. We touched on this for a long time. It’s been reactive. It’s been a fee for service. It’s been really sick care. And one of the challenges that diagnostics has had, especially stuff like this, is that it’s like, OK, well, how does this fit into my fee for service? Everybody wants to do good. I mean, I’m not saying and everybody listening to this knows we want to do good, but ultimately things aligned to the financial structures, the reimbursements. How much of your success do you think has to do with this corner that we’re turning where more people are wanting to do value-based care?
Steve Chapman:
Yeah, I think it’s definitely very important. And I think what we can do, things like reducing unnecessary procedures, like, for example, I mentioned in the women’s health business, when we tell you you’re positive with our test Panorama, there’s a ninety-five percent chance that the fetus is affected if we’re talking about particular conditions like Down’s syndrome, for example. So when we tell you you’re positive, you really need to get that invasive procedure and get the confirmatory testing. With the old biomarkers, if they told you you were positive, there was only a one in 20 chance that you actually were positive. So that means 19 out of 20 women that went into the hospital had an invasive procedure that’s very costly, they actually didn’t need it. And so when you look at that whole economic impact and you look at truly getting the right procedures to the right patients, I think what we’re doing can have a very significant impact. I think the other area where we’re certainly going to see an impact from the economic standpoint is on Oncology, administration of immunotherapy. So we published a study in 2020 with Princess Margaret Cancer Center and Merck looking at that. And one of the challenges, I think, with immunotherapies today is that it’s difficult. Many patients are overtreated because physicians don’t have good tools yet to know whether the drug is, in fact working or not. And so in many cases, they just continue treating it rather than maybe switching to another drug or another course of treatment. And what we’ve shown with our technology is that we can very quickly identify the patients that are not responding to immunotherapy. And that’s really important because identifying the patients that aren’t responding allows the physician to switch them faster to another course of treatment. So I think that in an area like oncology, there’s also going to be very significant health economic impacts. But it really is more about getting the right treatment to the right patient. And we like to think about it more, not just how we can save money for the health care system, but how we can improve the quality of care for patients and physicians.
Saul Marquez:
Well said, Steve, Thank you for that. And so what would you say is one of the biggest setbacks you’ve experienced and a key learning that came out of that?
Steve Chapman:
Yes. So I think one of the biggest setbacks that everybody had was in that sort of March 2020 timeframe when COVID hit. There was, I think, a lot of uncertainty around how we were going to be able to continue to manage the business and access physician offices and patients. And what came out of that for us was really this ability to shift quickly to both remote working for employees, but then also remote access to our tests through things like mobile phlebotomy. So in 2019, for example, we did about 10,000 mobile phlebotomy draws. Now we do about 50,000 a year or more. So we see this very dramatic shift in the business of people accessing testing in a mobile capacity to get their blood drawn or to interact with a medical professional or genetic counselor. So we took, I think, what was a challenging time and we tried to evolve our business not only to serve customers during COVID but to also look at how health care and technology will intersect long term to improve the customer and patient experience.
Saul Marquez:
Yeah, that’s great, Steven. And you are doing a phenomenal job of evolving. I mean, your company has just grown by leaps and bounds and the value you are adding is just phenomenal. So as you think about the future and maybe it could be near our long-term future, let’s do some horizon viewing here. What are you most excited about?
Steve Chapman:
So when I look across each of our business units, we have an enormous opportunity ahead of us. So in women’s health today, the vast majority of pregnancies are still not screened with these advanced tests, non-invasive prenatal testing like our Panorama test. So the overall market is only about 30 percent penetrated. So there’s a long way to go before we’re testing all of the four million-plus pregnancies in the United States. So we have a lot of room to run there, a very big upside opportunity. And then when I look at cancer and organ health together, we’re just scratching the surface of what’s going to be a very large market opportunity. The total available market together for all of our business units is around 50 billion dollars and we’re just at the very early stages of penetration. So, for example, in Oncology our Signatera product has now been approved by Medicare for colorectal cancer. And we estimate that the approval would cover about one million blood draws per year. Now, that’s one of the largest specialty diagnostics ever approved and that’s only in Colorectal cancer. So now as we expand to bladder cancer, lung cancer, breast-ovarian cancer, we’re talking about tens of millions of potential blood draws that could be happening on a yearly basis. And that’s really exciting to think about the growth that’s going to come out of that as we access and start to fully penetrate these markets, not just from the business standpoint, which is obviously exciting, but, of course, thinking about the patients that we’re going to help in. And I think the ability to change the way medicine is practiced.
Saul Marquez:
For sure. Yeah, that’s super exciting. And congratulations on that, by the way. Well, the future is bright and really the way that we approach our patients, the way that we approach our employee health, these types of tests are super important, or if you’re payer managing many, many lives, thinking about the bigger picture of people’s health, and helping stay proactive is truly the future and should be the present. And I think Natera is doing a great job of doing that. And so, Steve, I just want to recognize you and your team over there for the amazing work that you guys are doing. What kind of closing thoughts would you leave us with? And what’s the best place for people to learn more about you and the business?
Steve Chapman:
Well, again, thanks for having me. I really appreciate you spending time. Anyone can go to our website or Google it. Natera. We’ve got a lot of content out there about the company about the different tests and products that we offer. We’re now serving about 25 percent of all pregnancies in the States that we have a very big opportunity ahead of us in both ecology and organ health. This very exciting. So I think genetic testing and diagnostic testing, in general, will continue to play a much larger role in health care as we move forward. And I think this year is in a great position to continue our market leadership there. So we’re excited about the outlook for the company.
Saul Marquez:
Well, Steve, certainly excited about what you guys are doing as well. And I would highly welcome an update call maybe in six months to a year. And you guys are moving fast over there to hear what update you guys have and what difference you’re making.
Steve Chapman:
Yeah, that would be great. We’d love to do that.
Saul Marquez:
Awesome, Steve. Hey, thanks for jumping on, and looking forward to staying in touch.
Steve Chapman:
Great. Thank you, Saul!
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