CDNA - Earnings call transcript Q2 2018

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Operator

Greetings, and welcome to the CareDx Second Quarter 2018 Earnings Conference Call. At this time all participants are in a listen only mode. A question-and-answer session will follow the formal presentation. [Operator Instructions] As a reminder, this conference is being recorded. It is now my pleasure to introduce your host, David Clair, Investor Relations for CareDx. ahead. go Please David

David Clair

Company's thank Chief financial joining ended results release afternoon's President, on XXXX. and Chief Peter today, Officer call. Officer Executive June today. will CareDx The and the available currently released for Michael is at you afternoon www.caredx.com. us Maag, Bell, for and Earlier XX, website Financial Good the this quarter host

provisions the forward-looking management of statements All call get harbor limitation, upon that I'd historical safe the decisions, to uncertainties facts made future forward-looking statements. call examination like risks based Litigation not the this will Any statements not that be deemed started, of everyone statements. this historical are making we federal are Reform pricing statements, XXXX. Before Act or forward-looking to that of anticipated remind results materially involve and of enrollment trends, forward-looking differ coverage financial matters are material and our on include including, and within our actual meaning cause those in that which securities should Securities during statements various to by assumptions. contained laws, statements be current to expectations pursuant Private results regarding reliance these Accordingly, These without undue could of estimates expectations you from place these statements. should implied statements operating and be

Principles. other is future required new today's whether of release I Exchange or with and the a CareDx by is Reconciliation also to accurate as descriptions Accounting statements, financial XXXX. or risks in filings the Generally the business, of of not calculated accordance call filed uncertainties of contains measure and conference August or sensitive X, discussion GAAP the may see list events over call because directly will projections information, most today, any earnings Peter. the and intention financial that update live to obligation, comparable with disclaims include information otherwise. with Commission. found with This a This turn and Accepted or as financial revise broadcast call associated our in forward-looking to For now a the only law, will measure please any be Securities except SEC. our

Peter Maag

you David, everyone. Thanks, and quarter. us. had good second afternoon, an joining Thank exciting We for

You patients at have the of about heard me individual calls. these beginning speak

supports kidney Now U.S. nine CareDx approximately less the AlloSure patients. than into of transplant months living the all launch, X%

patients the services testing bring and key It's $XX quarter our mode is to total financial growing then and performance afternoon, testing details our execution update Mike additional second million. performance great will our year-over-year financial XX% on see our $XX.X provide services to guidance. strategy the and driven increase provide I recent lap in XX% strong to percent an transplant Our achievement high by line across on acceleration now revenues diagnostic million to year-over-year a with of transplant business drivers, revenue products. XXXX to discuss the two in solutions show commercial in value quarter. This will transplant top

quarter prior adjusted the second quarter. in improvement Our $X.X of $X.X million million loss from a a and loss EBITDA was of

for to XXXX. reimbursement continued track to multiple in in with adjusted growth the AlloSure clearly our peer is remain of positioned and are quarters We years the growth business seeing supporting our and place analytical and back the Medicare validity, in robust remains ahead. exceptional momentum in publications on half EBITDA and reviewed AlloSure deliver contributor clinical positive biggest

quarter recommended Multiple centers our by roughly added of of In our results their patients. kidney half it initial centers. patients since U.S. patients the patient provided the of were one-year. which both standing of represents transplant the in launch, quarter, the continues patients with CareDx provided from both describe patients. centers quarter to recently order volume second for use patients key better with basis is recurring At AlloSure as than the as in are patients utilizing new be represent higher surveillance we routing of protocol includes Outcome quarters at which adhering is routine remains is Our transplantations. XXXX, the now of as to dynamic, to strategy. our testing or part our a to the Driving attributed received kidney our transplant kidney transplant XXX follow that K-OAR. laser patients Registry the to revenue AlloSure and Demand X,XXX XXX projections. our sharp transplant, as the a results our XX XX% order end patients transplant effect that patients volume is the had to XX the of will of approximately schedule Medicare focus for this quarters, the rollout second protocol receive years. transplant reimbursement AlloSure internal Kidney total to flywheel standing important protocol surveillance Overall, to on previous establish second Tracking trial least previous schedule. adherence embraced into kidney for the patients centers allograft at and clinical element AlloSure being X,XXX standing from the patients And defined important These impact in translating to the testing to approximately order also XX% known second the We was X,XXX order standing consistent on protocol patients well standing quarter. end order the kidney who AlloSure as previous kidney AlloSure testing broad

for XX data years. of follows K-OAR reminder, X,XXX a three and Medicare is patients development coverage commitment As longitudinally patients enroll our transplant this studies The will part centers. across

why Yee, well has reason CareDx for another regarded been programs the expert he’s trials supporting and has highly clinical a in Our transplant is Chief spearheaded in Officer, in clinical field. our care. Medical transplantations as Jim years known trial He landmark partner

The XXXX, well been study a and of competitive have to end internal team of continues patients all which the our sites aspects K-OAR on the Company. is multicenter initiated centers been like for advantage is ahead our of XXX studies running K-OAR execute expectations. tracking have study XX involved, of initial As June

an and the area provide community. centers key these point keep As we surveillance us protocol. opinion us XX% with with our touch leaders. large the study, K-OAR to In studies in transplant additional with target as innovation work AlloSure compliance dialogue protocol and our and hubs key standard We in the transplant see a adherence of to direct adherence

some influence adherence. experience a in processes to centers Our is metric that good place limited this monitor initially have confirms to at

care helpful. very transplantation be can CareDx Our managers

We points. will we and gain our update as you progress additional data

initiative. leading in these contribution incredibly era and CareDx with formidable number we the reimbursement, of supporting studies, personalizing of are business kidney partnering the We are about have scaling our an donor-derived patients. a partnerships, a care. our The cell-free grow. quarter, AlloSure clear be in the operations care in recognized DNA with we CareDx growth of marks increasing to the and drive of excited study, as centers Furthermore, ongoing lab genomic with of building will important investigated are initiated transplant transplant investigation our Medicare various settings on In leader clinical along transplant unrivaled as moat center we're managed tremendous as medicine. this around the K-OAR transplant initiatives patient protocol we peer-reviewed adherence publications,

have patient this will We approach anticipate of our implement we have MiSeq XXXX, throughput technology modular a and planned impact throughput for time In we technology. result. cost workflow, to growth per this Illumina that the on Illumina with turnaround our NextSeq using and plan beginning higher into positive

solution Now X% shifting This weather quarter introduced growth the indicators transplant in in system from inclement physicians in and to graft combines we activity by test concepts last both heart providing with impacted XXXX April. AlloSure-Heart, in AlloMap, several results. and translating volume it U.S. quarter both and patients as found patient X% HeartCare AlloMap territories of quarter increase that the immune health. into increased novel X% our second year-over-year surveillance We X,XXX anticipated The was the

impact as centers. our tool We market view HeartCare to pleased information are patients heart a positive initial from penetration with rate. provide with leading a interest on transplant additional and anticipate We the overall transplant

transplant-led $X.X Roche and both XXXX, we million. mark that increased had April that platforms. Olerup received to available QTYPE revenue Biosystems our turning in product announced CE quarter on Recall Now now to Applied the X% in approval is products, and

growth simple trajectory. We component platforms has to begun product in which workflows customers. and recent have clinically the manufacturing European turnaround fast meet remains labs. on to and U.S. key just been scaling up the impact demand of availability and business our transplant time, now a Mark market both CE Olerup profitability anticipate our XX We transplant is from used QTYPE

of in the growing exclusive currently the became for As beginning TruSight transplant a products and XXXX, typing use the Illumina's in globally. segments CareDx typing rapidly meet of of field sold HLA sequencing diagnostics. the in market product are X, June the generation These HLA next of reminder, distributor application the

Illumina We have transplant and commercialize the rights platform. exclusive additional using of products NGS Olerup

products development transplant for few BMT post includes DNA. software product effort, pipeline well these weeks and and timelines. HLA post free AlloSeq The development transplant the and A are reagent the our we of Our the on includes AlloSeq tracking Illumina. collaborations product, integration typing monitoring development that ongoing development and and Cell-free into AlloSeq

the to Company. original our made leadership AlloSeq brings David designs XX CareDx the HLA the of development years the HLA in addition joined inventor the team. AlloSeq some David typing the With of expertise also has what’s and product, into included of Sayer product. changes we

business. to Alex product brought on support of side also board Johnson the We the commercial

the CareDx marrow. donor for progressive any who announce This donates policy living announced quarter proud organ employee policy. bone a or an CareDx corporate to also employee recovery is

provide its leader we be on lot uniquely transplant field patients is based to launch Patients. to Foundation National of transplant the traditional to well company. to news policy established have of market strive We diagnostics transplant genomic has Association the community. patient dedication diagnostic information and with meetings positive We CareDx leadership to the This the value a a ties high Kidney clinical American care initiative with the in close underscores multiple as and our positioned Kidney solutions. at beyond received going this

the Health’s Amy through this to be goes beyond to patient that, focus our interactions. direct population this of Chief Amy we our Our opportunity for addition highlight to start. recent will background informatics of take Abernethy Flatiron and our Officer. care capabilities. I kidney knowledge program, build valuable standing do we to extremely Directors. Amy’s great approximately X% transplant outcomes. focus serves long-term We as we patient the providing is of and want patient and genomic on Officer management foster results. also order as To Chief patient a Medical impacting care U.S. Board Scientific Today test

brings Amy our company. that We have to skills tremendous respect for the

the gain ambition impact that in Our matching monitor the with the the process the obtained we throughout are than of that is information lifetime. transplantation is recipients to linking field the transplantation We there as estimate information and of transplant of medicine, transplantation more field organ be XXX,XXX to worldwide is I’ll to to participate need Mike, which commercially is to and well CareDx you position and discuss increasingly this call financials. attractive. patients will the exciting hand ever over in for increasing. donors scientifically

Michael Bell

Peter. you, Thank

the statement, second XX% XXXX to first increased quarter year-over-year Turning income XX.X testing our million. revenue

increase to Our and AlloMap volume January rate of testing volume X,XXX reimbursement X,XXX. Medicare a increased Xst the the revenue show tests includes quarter and X,XXX X% X,XXX our XXXX second from AlloMap tests, in

test AlloSure very expectations. be with our to pleased following and continue momentum of the the ahead initial launch We revenue the trajectory with of

million, total XX% XX.X increase compared Our second revenue as quarter increased million. second million in of revenue to XX X.X year-over-year and product the the with representing to X% XXXX quarter year the prior such

net was net quarter XXXX, XXXX. second XX.X in period the a X.X of loss compared For loss same of to million of million,

second Our the $X.XX quarter XXXX. the to share compared loss $X.XX per was net of in for quarter

quarter same net XXXX, X.X X.X a loss non- million GAAP of loss in our million, non-GAAP period was of compared second The to the net XXXX.

disclosing our XXXX before $X.XX quarter define same Starting and Our in this loss of non-GAAP we to share of the interest, second other adjusted $X.XX net expense tax, the non-GAAP EBITDA. in period compared We amortization, was to attributable per EBITDA loss interest. as net are adjusted quarter, loss depreciation, non-controlling net XXXX.

line EBITDA and XXXX. quarter the with adjusted activities cash of the XXXX, in of compared XXXX million, quarter in of was equivalents second operating in a second the quarter million. million cash loss which June of million $X.X and loss $X.X to a Net XXXX expectations used XX, second $X.X cash was at was $XX.X in For our was our

$XX Medicare product AlloSure partnership, positive during in progresses. on of Company to the guidance, giving expectations and AlloMap driving reaching profitability our QTYPE our AlloSure contribution million the increasing half to and million the XXXX remain for anticipate Turning XXXX expectations profitability XXXX. call focused to are from $XX growth we for for a the Illumina EBITDA our I'll revenue The ramp of open Olerup price and revenues that We and to towards the growth our now reflect adjusted of the continue second increase anticipate we for questions With year.

Operator

you. Thank

conducting is Instructions] coming first We session. be Piper today [Operator now question-and-answer a Quirk Jaffray. will from Our Bill question from

Your now live. line is

Bill Quirk

So additional beyond some year and couple years? in color think breakdown specifically you previous but of your we've a those between surprised I Can transplant for the questions comments. for give you curious of interest AlloSure first XQ? to at here just a test pleasantly been us year received about one kind one for this little who I me, kidney the versus guess prepared alluded here additional have

Peter Maag

and our beyond patients one Bill, a year. to actually protocol we continue AlloSure Absolutely, of number see the entering

because skewed patients K-OAR I have the probably But K-OAR out patients year stream, on year see probably of in of with the standing or quarters we the XXX the little So transplantation. We'll reported very demand in a amount patience in order years. a after coming X, that X in process, coming there that actually now, patients bit also substantial are to through outer K-OAR to there's transplant earlier in, and see that continue coming are the even strong right X study.

Bill Quirk

then alluded may the nice to that you impact And a that can really and little on to see our what you HeartCare certainly of being AlloMap, expectations, to ahead back, great. this Peter, launched have volumes? sort bit bounce of Okay AlloMap speak on too bouncing the is for that the weather you AlloMap volumes simply back is here do think in and come of simply had quarter? the inclement from Or early, impact sort it's first any

Peter Maag

thanks Bill, think question. for I the

mid see growth on to that AlloMap continue we we portraying. think I been have single-digit volume

I sure think launched is be we'll without provide really many registry this of a in through HeartCare. year. lot not HeartCare believe provided yet. as it's are We'll see primarily It half will too that early launching There really of to our on impact a concept. the HeartCare second that only we

mid-single of aiming here. volume it it's that as growth So little bit what a too a continued say penetration as early to we're think digit

Bill Quirk

for I Okay fair point. one. longer me one if And then quick just two one more

doesn't announcement that came six at competitive the fair just any I Certainly ago. of from be you impact the or XQ? guess had weeks response you Can your about it current about to Given have on talk that growth let's some of the to came end users? center

Peter Maag

very here. Bill same know I It's Yes early. very

here we ear then apart presence we UCSF a I country. lot my XX the with and actually the -- the the success centers across in from And I'm in think we and ground marketplace. tours heard doing spent investments. very have obviously off the vast all these center a anything on don't in haven't the local hear in

process. it's this think early really I in

no, nothing the hear we field. So from

Bill Quirk

it. And the is? then given quick one for remind additional Got the just us you real approaching share Okay. add just count profitability, what diluted Mike

Michael Bell

Bill, is $XX fully I'll including $XX what warrants Yes -- it's diluted options standing million million. and

Operator

Craig-Hallum you. next Our coming [Operator Capital. from Instructions] question Per from Ostlund Thank is

Your line is live. now

Per Ostlund

those I very standing well, and like what rise but solid continuing by early early, get help patients. us as adherence? some thinking to as have guys to give modeling of protocol well place, patients and standing of like put clinicians and congratulations in literally love we're the hearing the to certainly being that protocol are visibility. that by that, that would this a is feedback the I about quarter. Are the to Thanks. that will or Bill's know on inherence as afternoon nice it's get patient echo Good Would to it order order you as would count related to hope drive itself CareDx it is to programs whether sorts that

Peter Maag

the see stronger us you probably to And We on in use adherence that be Per. study. gives an will even And gave the that adherence. that question, number population. adherence regulation than on at yardstick Excellent we do XX% protocol indication that I the our internal to KOR our range KOR

the population third in the somewhere would higher always initially adherence What for year. the guess. first XX% adherence probably between case and regulation So second the these be actually I protocols than that will is XX% in the in in example adherence and year

right place that managers. what about our is knowing in that put absolutely expectation So care have you're we on patient asking adherence,

a these actually AlloSure a a the given blood second have that that up we a place and the these in that they sure that test make and call the time and the protocol for makes their have patients are that for sure results which order think group AlloSure on third years, we them important right And and draw. three patients that an delivered show and this very need center subsequent to that We to fourth on now to have model is get back the is back sophisticated AlloSure to bring center. in

concept. to core us be is our going to flywheel adherence for So, going a forward theme establish

Per Ostlund

that around follow-up that you just the AlloSure early side? there of learnings newer that. the block Are test standing on on adherence you admittedly Maybe actually apply for the the their learnings can and but order is and to are from on turn driving patients AlloMap

Peter Maag

the AlloMap in that numerous on States based program. think, we that protocol. actually using I United program see every talked biopsy is And times differently heart absolutely. on slightly the We Yes, that heart

AlloSure protocol think make we’ve basic successful a the testing said, enroll when to the especially mainstay. follow corner to our very routine we arts So K-OAR that that this with making been it only registry mainstay, ARTS establish the study I AlloSure, in can you and really you patients the turned And and let’s schedule, schedule.

change this transplantation, the study. of field the K-OAR follow that bring a that probably where the XX, country XX minimum we to So protocol for now in sea we centers is a standard have

Per Ostlund

of along? weeks The quarter frankly kind you a Congress? Transplant AlloSure to me of did volume you in you quarter, I’m out you gotten met that that and in kind hear were just a event Congress guess I tracking very positive was get I’d inflection and say the that And Transplant blew on the point, inflection, all how high number would to a CareDx? that the obviously days to your expectations, kind because love you’ve for the the were away. -- of of Or curious, feedback profile subsequent

Peter Maag

and thank I was put the started Per, you the always We ATC the ATC, symposium. you into this when And that concerned quarter. it. call you much. has nailed No, solid now little highlight the think with I a year value And a think I team of knew the is think the very bit I that perspective.

the at guidance this we interest and see and your we questions, are we the earlier have you guidance. of new tracking end expectations, that So was we have to so feel of think increased I with tremendous in quarter, our terms our seen comfortable

and very on and has So highlight really we symposium well executed yes, that. we’re well continuously ATC executing the extremely been

Per Ostlund

came apologize. granted it your on and a again it level prepare this if through you Or it’s experience expected? Excellent. being is How mix reimbursement you share can AlloSure? many reimbursement last standpoint Is you from One in today anything patient But Medicare? you have question do But Peter, still early. the standpoint? remarks address I

Peter Maag

think I answer. for to a good Well, Mike that’s question

Michael Bell

going expected. reimbursement as the is Yes, we

something volume. Medicare. which getting revenue on show, the the We’ve seeing be would paid reimbursement We covered our always to have, for is by efficiently what quarter. said Medicare XX% the like the we’re Actually we’re driving reimbursement is XX% of XX% that

Operator

you. Thank

our management turn end the reached session. have closing further question-and-answer for I’d to to any floor back or the We like of over comments.

Peter Maag

the Well, our you very AlloSure, product you forward thank you grow Thank today. commercialize joining to and us for business and updating call. profitability. to transplant everyone much you progress joining towards AlloMap, look much continue very for as Thank We

Operator

does That teleconference. today's conclude you. Thank

you line for at your wonderful your participation and time day. You this have today. a may We disconnect thank

CareDx (CDNA) 12 Aug 182018 Q2 Earnings call transcript