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NIPT US Market

|Includes: DGX, ILMN, LH, Sequenom, Inc. (SQNM)

Estimate of the C13 NIPT US market:

High Risk:
MaterniT21 Plus 138k (60%)
148,500 accessions disclosed. Estimated Intl samples per company disclosures 10,500
Harmony 50K (22%)
Company S-1 disclosure was 143,700. Intl revenues were 25%. Estimate 100K of accessions were from US market and 50% for low risk.
Verifi 31K-WAG (13%)
Panorama 11K (5%)
Per March Curnow study published they analyzed 31,032 consecutive samples rec'd of which 28,709 met quality control (ignored no calls). Of this group, 17,524 were low risk.
Total C13 high risk tests estimate 230k

Low Risk:
Harmony 53k (76%) (rounded up a little for round total number)
Panorama 17k (24%)
Total C13 low risk test estimate 70k

Cumulative US NIPT Market 300K C13
Sequenom 46%
Ariosa 35%
Illumina 10%
Natera 9%

I find it unlikely that Sequenom will be able to report on the High Risk market after this year. It has always been hard because the split or totals for competing tests is not available. Now with VisibiliT and InformaSeq it will be that much more difficult. I don't see how they could determine how much of either test is for high risk nor do I think they will want to try to separate them as it creates new disclosures challenges. So it seems reasonable at this point to look at C14 as a transition year and from C15 on the market will be total NIPT with the low risk component hampered by reimbursement issues until overcome.

For C14 I'm going to start considering the Total Available Market to be 1.2m:
- High risk all reimbursable 750k
- Low risk 15% of 3.35m (assumes 15% of market will self pay when no insurance is available)

Once the tests become reimbursable (probably sometime in C15) the TAM will increase to all births or around 4.1 for US.

C14 market recap:
- MaterniT21 looks to be up modestly for this year to around 148k in US plus 7k from Quest per below for a total of 155k-ish

- Verifi is likely in same boat with some pull back due to reimbursement/Medicaid issues. No real info available so use 35K as WAG. Note some impact of nonrenewal of PKI contract.

- Harmony has two significant changes this year:
1) LabCorp revised agreement to apparently stop paying for unreimbursed tests. Assume this reduced tests by 10-15%.
2) Effective 8/19 LabCorp launched InformaSeq (ILMN IP). WIth this being effective only for 4+ mths and brand new, the impact this year is likely far less than it will be next year. Call it another 20%.
Considering normal growth in low risk, the total year test count in US for Harmony will likely decrease but probably not dramatically. Maybe down to 70-80k this year?

- Panorama lost Quest as their partner but only for last couple of months of CY. Given Quest is 50% of the clinical lab market in US, that is likely a big impact, but mostly in C15. If they did around 30k in C13, they likely did most of that with Quest. Perhaps around 90% if they had a similar experience as what Ariosa had with Labcorp. So 27k is at risk for C15 but only 1/4 of that for the rest of this year. That should reduce their accessions by 7k and transfer most of that business to SQNM.

- InformaSeq launch means 1/3 of a year's volume from Harmony. Perhaps 25-35k this year?

- VisibiliT launch is going to be understated this year but I suspect Quest will push it to compete with LH. So we may get 10-15k or so in US this year. WAG only.

If these assumptions are anywhere close:
MaterniT21 155k 44%
Harmony 85k 24%
Verifi 35k 10%
InformaSeq 35k 10%
Panorama 25k 7%
VisibiliT 15K 5%
Total tests C14 350k

No confidence level for the above as it's most guesswork. We will have a much better chance to estimate C15 with some confidence after some data is available on InformaSeq and VisibliT.

Disclosure: The author is long SQNM.