Business Context and Reporting Period
This Form 8-K Current Report for Natera, Inc. covers events occurring on June 7, 2016, and June 8, 2016, with the report dated June 13, 2016. The filing details a strategic amendment to a supply agreement with Illumina, Inc., the results of the company's Annual Meeting of Stockholders, and the adoption of Rule 10b5-1 trading plans by key executives.
Key Financial Metrics
This filing is a current report regarding specific corporate events and does not contain financial statements, revenue, profit, cash flow, margin, debt, or liquidity metrics. The filing text does not provide a clear value for these financial indicators.
Material Changes and Agreements
Amendment to Supply Agreement with Illumina
- Extension: The term of the Supply Agreement with Illumina, Inc. has been extended to June 8, 2026.
- Expanded Rights: Natera received rights to use Illumina products for oncology and transplant diagnostic testing in its CLIA laboratory. Additionally, Natera gained worldwide rights to develop and sell in vitro diagnostic (IVD) kits and services for oncology.
- Financial Obligations: Natera agreed to make milestone payments and royalty payments to Illumina based on sales and use of the IVDs.
- Pricing and Termination: Illumina retains the right to adjust prices for sequencers and reagents under certain conditions. Illumina may terminate certain rights with two years' prior notice (no earlier than June 8, 2021) or terminate Natera's IVD rights if a U.S. FDA premarket approval (PMA) is not obtained by June 8, 2021, unless a PMA application is actively being pursued.
Corporate Governance and Executive Actions
Annual Meeting Results (June 7, 2016)
As of the record date (April 19, 2016), 51,051,701 shares were outstanding and entitled to vote.
- Proposal 1 (Election of Directors):
- James I. Healy: 33,946,002 votes For; 2,298,580 Withheld; 10,720,373 Broker Non-Votes.
- Edward C. Driscoll, Jr.: 34,034,854 votes For; 2,209,728 Withheld; 10,720,373 Broker Non-Votes.
- Proposal 2 (Ratification of Auditors): Ernst & Young LLP was ratified with 46,962,154 votes For, 2,801 Against, and 0 Abstentions.
Executive Stock Sales (Rule 10b5-1 Plans)
CEO Matthew Rabinowitz and CTO Jonathan Sheena have adopted Rule 10b5-1 trading plans to sell up to 1,380,000 shares of common stock (approximately 2.67% of outstanding shares as of June 10, 2016). These sales are intended to satisfy approximately $10 million in aggregate tax liabilities on non-cash income incurred in 2016.
Investor Verification Checklist
- Verify the full text of the Third Amendment to the Illumina Supply Agreement, which is expected to be filed as an exhibit to the next Form 10-Q, to review confidential terms and specific pricing adjustment conditions.
- Monitor Natera's progress toward obtaining FDA premarket approval (PMA) for at least one oncology IVD by the June 8, 2021 deadline to avoid termination of IVD rights.
- Track the execution of the Rule 10b5-1 plans by the CEO and CTO to assess potential dilution from the sale of up to 1,380,000 shares.
- Review the upcoming Form 10-Q for the first financial disclosure of the impact of the new royalty and milestone payment obligations.