Natera Joins Quest in Four-Way Battle for Prenatal Genetic Tests

2/20/13Follow @xconomy

[Corrected: 9:10 am PT] Parents have long wanted to know whether they are about to bring a child into the world with a chromosomal abnormality like Down syndrome. There’s never been a noninvasive, simple, and highly accurate way to make that call at an early stage of pregnancy. But after a flurry of innovation in high-speed DNA sequencing, four companies are slugging it out to offer such tests in what is becoming a fast-emerging market for genetic information.

San Carlos, CA-based Natera is the latest company to enter the fray, as it has started selling its non-invasive prenatal genetic screening test. The test, called Panorama, is going up against competing services from San Diego-based Sequenom (NASDAQ: SQNM), San Diego-based Illumina’s Verinata unit (NASDAQ: ILMN), and San Jose, CA-based Ariosa Diagnostics. Several of the emerging non-invasive prenatal genetic test companies have already paired up with distribution partners—Illumina with PerkinElmer, Ariosa with LabCorp of America. Natera is also announcing today it will get distribution help from Quest Diagnostics, one of a handful of high-volume diagnostic providers.

The list price for the new Natera test is $1,495. That’s more than Ariosa, but significantly less than Sequenom’s test, which entered the market first in October 2011. [Correction: An earlier version said the Natera test was priced at $1,295.]

The companies will start to find out this year just how much demand there is from expectant parents for the new DNA-based prenatal genetic tests. There are more than 4 million live births each year in the U.S., and more than 500,000 are considered “high-risk” pregnancies, based on the age of the mother, prior childbirth experience or some other factor. Last year, the American College of Obstetrics and Gynecology and Society of Maternal and Fetal Medicine issued guidelines which encouraged members to use prenatal DNA testing in pregnant women considered at high-risk.

That opinion, from influential physician groups, is part of what drove Illumina to pay $350 million upfront to acquire Redwood City, CA-based Verinata Health in January. Illumina, the market-leading maker of high-speed DNA sequencers, said it sees a $600 million market for such tests forming in 2013 based on screening of high-risk pregnancies. Longer term, the market could get much bigger as prenatal genetic tests become part of mainstream maternal medicine.

Gautam Kollu, Natera's vice president of marketing and business development

“We are really excited,” says Gautam Kollu, Natera’s vice president of marketing and business development. “Years of work is finally culminating. We think this is just the start of what can be done to help people manage their pregnancies.”

Pregnant women have long had the ability to find out if they are carrying a fetus with a chromosomal abnormality. There are blood-based tests that look at protein markers of chromosomal abnormalities, and when combined with ultrasound, they can typically detect Down syndrome 60-80 percent of the time. To get a definitive answer, parents turn to procedures known as Chorionic villus sampling (CVS) and amniocentesis. The catch is that those tests are invasive, and come with some risk of miscarriage, so they aren’t done routinely. Switching to a simple blood draw, which is easy and carries no risk of miscarriage, with accuracy rates in the high 90 percent range, changes the dynamic in a big way. Suddenly, the new DNA based tests are becoming more of a typical consumer choice based on the patient’s desire to know the answer, the accuracy/quality of the service, and cost.

Natera has been around since 2004, and already makes money from a test that helps people select embryos for implantation through in vitro fertilization. But the company raised $20 million last year to pursue this much bigger opportunity.

The competition on all key parameters is intense. Natera is seeking to differentiate itself based on what it says is a wider view of various DNA abnormalities, Kollu says. The company uses the same basic instrument to analyze DNA—Illumina’s HiSeq—but it has been tailored differently to look for about 20,000 different single nucleotide polymorphisms (SNPs) in the mom’s blood sample. The workflow is pretty simple—a clinician takes a blood sample from the mom, it gets shipped to Natera’s centralized lab in San Carlos, CA, and results are sent back to the physician and patient in two weeks.

By looking broadly at so many SNPs, Natera’s chief technology officer Jonathan Sheena says the company will be able to deliver “consistent accuracy.” So far in clinical testing of more than 1,000 samples, Natera’s test hasn’t made any “false positive” errors, and has accurately been able to detect all the chromosomal abnormalities in blood that were later confirmed by standard CVS or amniocentesis, the company has said. The latest batch of data was presented last week at the Society of Maternal-Fetal Medicine conference in San Francisco.

“We have consistent accuracy,” Sheema said in an interview in January. “We have data out there which no one else can touch.”

But no test is perfect. In the latest study of 764 samples, Natera’s test produced an inconclusive result 5.9 percent of the time, Kollu says. Possibly because of the way samples were collected, the sample didn’t yield enough of the quality DNA needed to make the call, Kollu says. When that happens in the marketplace, Kollu says, it will offer the patient a second opportunity to get the test, this time for free.

The Natera test is being marketed for its ability to specifically call out when a fetus has Trisomy 13, 18 and 21, which are otherwise known as Patau syndrome, Edwards syndrome, and Down syndrome, respectively. Natera also claims it can spot monosomy X (Turner syndrome), which doesn’t tend to display clear symptoms in newborns, but which causes problems in young children, and can be effectively managed if caught early, Kollu says.

After meeting with executives from all four major players in the non-invasive prenatal genetic testing market, and many physicians at the Society for Maternal-Fetal Medicine meeting, JP Morgan analyst Tycho Peterson wrote that the market appears poised to take off.

“In stark contrast to just a few years ago, NIPT [non-invasive prenatal genetic testing] is now widely understood and used by the maternal-fetal medicine community, which tends to be an early adopter of new technology and often sees high-risk patients,” Peterson wrote in a note to clients Feb. 18. Still, he cautioned there are “widely divergent views” among physicians about the appropriate use of the technology, particularly on whether it should be expanded beyond high-risk pregnancies and into more mainstream usage.

Natera has staffed up to about 180 employees, including 20 in its sales force, to gear up for the market push.

While the companies will seek to gain the upper hand based on their technology, their clinical data, and cost, all of the companies are up against a pretty sizable obstacle—lack of education. There are about 2,500 fetal-maternal medicine specialists in the U.S., another 2,500 genetic counselors, and about 40,000 obstetrician/gynecologists that Natera wants to impress. Genetic counselors are trained to know about things like chromosomal abnormalities, and how to deal with the ethical decisions around that sort of data, but others with more classic medical training don’t necessarily speak the language.

At Natera, Kollu says he’s encountered healthcare providers who say they are unfamiliar with Trisomy 13, in which a person has three copies of genetic material on chromosome 13 instead of the usual two. And they don’t recognize it by the other name, Patau syndrome. The disorder is said to affect about 1 in every 10,000 newborns, according to the National Institutes of Health.

“They just don’t deal with it on a day-to-day basis,” Kollu says. “A typical OB/GYN gets six to 10 minutes to spend with a patient. In that time, you’ve got to make sure she’s getting enough folic acid, and other things, too. The ability of the current practitioner to process the genetic information is challenging.”

Price is bound to be a barrier as well, as the new tests are likely to make pregnancy more expensive than it already is. Natera has set up a “very broad and generous” patient assistance program to help low-income patients get the test, Kollu says. But even after paying $1,295 for the test, Natera isn’t saying patients can save further money by avoiding the standard amniocentesis or CVS tests. The Natera service should be thought of as a “screening” test that leads to further verification with one of the other diagnostic methods, Kollu says.

Confident as the company may be in its data, doing that kind of double-checking is likely to continue for the forseeable future. Nobody wants to think about getting this thing wrong. People will be making life-changing decisions based on results of this series of tests—like whether to abort a fetus with chromosomal abnormalities. The big question now for Natera and its rivals is whether millions of patients will be willing to pay premium prices for this new kind of genetic information.

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