CareDx, Inc.

Thank you for standing by. This is the conference operator. Welcome to the CareDx, Inc. Fourth Quarter 2021 Learnings Conference Call. As a reminder, all participants are in listen-only mode and the conference is being recorded. After the presentation, there will be an opportunity to ask questions. To join the question queue, you may press star, then the one on your telephone keypad. Should you need assistance during the conference call, you may signal an operator by pressing star and zero. I would now like to turn the conference over to Ian Cooney, Vice President of Investor Relations. Please go ahead.

Good afternoon, and thank you for joining us today. Earlier today, CareDx released financial results for the quarter and year ended December 31st, 2021. The release is currently available on the company's website at www.caredx.com. Reg Seto, President and CEO, and Ankur Ninkra, CFO, will host this afternoon's call. Before we get started, I would like to remind everyone that management will be making statements during this call that include forward-looking statements within the meaning of federal securities laws, which are made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Any statements contained in this call that are not statements of historical facts should be deemed to be forward-looking statements. All forward-looking statements, including without limitation, are examination of historical operating trends Expectations regarding coverage decisions, pricing and enrollment matters, and our future financial expectations and results are based upon current estimates and various assumptions. These statements involve material risks and uncertainties that could cause actual results to differ materially from those anticipated or implied by these forward-looking statements. Accordingly, you should not place undue reliance on these statements. For a list and descriptions of the risks and uncertainties associated with our business, please see our filings with the Securities and Exchange Commission. The information provided in this conference call speaks only to the live broadcast today, February 24, 2022. CareDX disclaims any intention or obligation, except as required by law, to update or revise any information, financial projections, or other forward-looking statements, whether because of new information, future events, or otherwise. This call will also include a discussion of certain financial measures that are not calculated in accordance with generally accepted accounting principles. Reconciliation to the most directly comparable GAAP financial measures may be found in today's earnings release filed with the SEC. I will now turn the call over to Reg.

Thanks, Ian. Good afternoon, everyone, and thank you for joining us for CareDX's fourth quarter and full year 2021 earnings conference call. Before I start, I want to thank the TransLink community for all the efforts during COVID over the last two years. It's been a tough two years treating and looking after this vulnerable patient group, but your tireless efforts have made a difference for transplant patients. We are proud to have also played our role with the transplant community, consistent with our vision of being the leader in the transplant ecosystem and delivering on our mission of providing innovative solutions that make a difference in patient outcomes during the transplant patient journey. At CareDx, we do not just measure success and revenues, but Q4, was another record quarter where we delivered revenues of 79.2 million, representing a growth of 35% over the prior year quarter. For the full year 2021, we reported revenues of 296.4 million, representing a growth of 54%. Notably, our record fourth quarter testing services volume of 41,900 tests represented a 67% year-over-year growth and led to our full year volume growth of 94% versus 2020. This result was achieved despite Q4 being the second straight quarter of sequential decline in transplant volumes as Q4 saw the initial impact of the Omicron surge with kidney transplants down 4% and heart down 2% sequentially versus Q3. Over the longer term, however, we believe the number of organ transplants could increase significantly. For example, in kidney. This could double through living donors, improvements in transportation logistics, increased use of high-risk organs, new government initiatives, and xenotransplants. On the topic of xenotransplantation, this is an exciting field, and we've recently built out a xenotransplant team. This team is proud to be working with the University of Maryland team to complete the first successful human xenotransplant with a PCARD. We achieved Q4 year-over-year revenue growth of 36% and 29% in the testing services and products business, respectively, and we delivered revenues of 68.6% and $7.7 million, respectively, and digital and other revenues contributed $2.9 million to the top line. Adjusted EBITDA for the fourth quarter and full year were negative $1.4 million and positive $17.8 million, respectively. Our profitability in Q4 was impacted by an increase in legal spend. During Q4, we continued on our strategic plan, focused on three goals. The first, further deepening the competitive moat around transplant centers. Two, resetting and raising the innovation bar to stay years ahead of our competitors. And three, digitally connecting the patient, which was the 2021 theme. On goal one with the competitive mode, we further deepened our presence around transplant centers reflected by the commercial success across kidney, heart, and lung. In kidney, we saw continued strength of adoption of AlloShore with now 75 AlloShore kidney protocols in commercial use. The ability to bring a new standard to improve outcomes and to have AlloShore as the standard now in one in three centers is a real testament to the innovation we have brought. AlloShore is the only donorized Sophrine test with publications covering use in both full-cause and surveillance settings with prospective long-term outcome data. This has been our recent Admiral publication, the largest conducted multi-center real-world study with over 1,000 patients. I will share more about this exciting results from Admiral in a moment. Further extending our lead in kidney was the completion of OCRA enrollment. With 1,500 patients generating real-world multimodal evidence, we're excited to show how kidney care can further support improvements in clinical utility. Now to heart. In heart, we saw the incredible response to heart care, the first and only multimodal diagnostic test approved by Moldex. The greater than 90% attachment rate reflects the value of improved clinical utility. At CareDx, We're proud of our scientific standards. For example, with Alimap, it's been extensively published in leading journals, including the New England Journal of Medicine, has been FDA cleared, incorporating the international guidelines, and has more than 80% paid coverage. Contrast that with the competitor's recent slate of press releases with no publications or support to substantiate their claims. We have built and earned the trust of the transplant community and patients and continue to do so by the right way by showing published data that has been generated from real-world evidence using a multicenter prospective approach. Now to lung. We were thrilled to launch Alloshore Lung to support a significant unmet clinical need. Although smaller than the heart market, bringing Alloshore to lung patients has been a paramount objective for the team at KDX, especially when you think one in two lung allograft patients will still fail within five years. Achieving a 40% commercial penetration in transplant centers within three months and 700 patient test results was a true testament of the need for this innovation with Allishaw Lung, as well as to the trust that we have built and established within the transplant community over the last two decades. Importantly, we're not a repurposed NIPT, don't derive cell-free DNA test. Allishaw was designed and developed for transplant use and for transplant-specific patients, Moreover, our test was designed to cover all somatic chromosomes, whereas some competitors cover less than 20% of chromosomes. Now on to goal two. CareDx during 2021 has continually set and raised the innovation bar to remain ahead of competition, particularly with real-world data. We are proving through improved clinical utility that multimodality is the future of transplant organ surveillance and investing in strong science that our tests can be relied upon to perform as expected when the health of real-world patients is at stake. We've already moved our testing services portfolio to this next wave of multimodal innovation across heart, and now we're following with kidney, liver, and lung. In Q4, we were excited to achieve the clear validation for Allimap Kidney and publish clinical validation data. As a reminder, Allimap Kidney is our blood-based gene expression test that identifies immunoequiescence, a vital biomarker needed to comprehensively assess the immunological risk of rejection, and allograft health. Data provided by Alimap Kidney and AlloShore Kidney offers a more comprehensive assessment of kidney health than the current standard of care and an either test alone. We also mentioned earlier that we had reset the scientific bar in kidney through Admiral. This multicenter, real-world study showed AlloShore as the first donor isofrenia test with demonstrated long-term utility in both surveillance and full cause. Admiral was demonstrated in over standard of care in more than 1,092 kidney transplant patients from seven leading transplant centers and followed up for up to three years. Based on this incredible publication, the following was seen with AlloShore. AlloShore demonstrated a 62% relative improvement over serum creatinine and ability to differentiate subclinical and clinical rejection. Number two, elevated AlloShore donor-derived sorfamiae strongly correlated with clinical and subclinical allograft rejection injury at two different thresholds. was associated with a 271% increased risk of de novo DSA antibody formation. Thirdly, persistent elevated Alishor levels correlated with a greater than 25% decline in EGFR over three years, EGFR being a monitoring of kidney function. And then four, persistent low levels of Alishor identified allograft quiescence in addition to the absolute score. We believe these data are a game changer for kidney transplant patients and clinicians, and AlloSure is the only test that has shown these results and in a long-term setting. Notably in Admiral, we demonstrated a greater than 60% improvement over creatinine in the accuracy of identifying rejection. By contrast, the improvement over serum creatinine was less than 20% with an NIPT test repurposed for transplant in a single center retrospective biobank study on which a competitor based its clinical validation. At CareDx, we are known for this incredible strength of innovation And as we've built the standards around our shore that others now need to demonstrate, we have further moved the needle with multimodality, and we will further again with our new digital offerings under the AI banner. Now, on to lung. We also raised the scientific bar in lung through the recently published multicenter prospective alarm study done with the NIH during the COVID pandemic. This NIH-led study was designed to demonstrate the ability of Allishaw lung to detect the signs of organ rejection infection in asymptomatic lung transplant recipients in a real-world home-based surveillance setting. This real-world use of Allishaw demonstrated and documented an 83% reduction in surveillance biopsies as compared to a protocol dependent on surveillance biopsies. I'll just repeat that again, 83% reduction. Allishaw also identified subclinical graft injury in 7% of surveillance tests performed. These were early detections that can now enable treatment before lung function is compromised. These tests define a clear utility for non-invasive surveillance with Allishaw as lung transplant patients. We are the only company with publications using donor-derived sulfonate in lung transplantation. Again, we're the only company with publications using donor-derived sulfonate in lung transplantation, and the only company developing a multimodal solution with our first patient already enrolled in the Alamo study. On our third goal, It was to connect patients, and we made significant progress during 2021. We're the only company that's focused on the transplant patient journey, and our ultimate goal, and our long-term goal, is to connect one in two transplant patients. I would like to highlight two things from 2021. There were many highlights, but these are the two that I'd like to share today. The first is through our acquisition of TX Access, we built a new group aimed at connecting dialysis patients and the clinics with transplant centers. I'm pleased to report at the end of 2021, we have more than 44,000 dialysis patients referred to more than 70 transplant centers, and over 1,000 dialysis practices now have the ability to use TX-Axis. Secondly, during Q4, we accelerated our strategy of connecting the transplant patients and ended the year with more than 14,000 patients on our AlloCare app. Notably, over 6,000 of the 14,000 AlloCare patients were added in Q4 alone. In addition, we have more than 11,000 patients who have direct access to Remotrack. While on the topic of digital, and given the multiple digital acquisitions, we've renamed the digital business to be Patient and Digital Solutions. Patient and Digital Solutions. We're really pleased with the progress we delivered in 2021, and in 2022, revenue in this segment will benefit from our recent medication management acquisitions as we continue to build towards our goal of improving outcomes and ultimately managing one in two of all transplant patients. Our suite of digital offerings now covers broad applications utilized throughout the continuum of care for all transplant patients. Our two most recent acquisitions of MedAction Plan and the Transplant Pharmacy moves us in a very meaningful way into the business of medication adherence, which is the third leading cause of graft loss after infection or ejection. As we continue to execute our vision of being the leading partner in the transplant ecosystem is the focus on adding value to all stages of that patient journey that propels us forward towards our goal of improving long-term outcomes for transplant patients. Now moving to the products business. Q4 and indeed 2021 was a successful quarter and a year for the products team. For the fourth quarter and full year respectively, product revenue increased 29% and 39% year over year. respectively. And we're pleased to now say that over 55% of this revenue comes from our Alloseek growth franchise versus older technologies. We're excited about the progress in this business after COVID interrupted 2020 and are looking forward to further product launches and geographic expansion in 2022 as we continue to drive this business to a meaningful scale. Gathering less of the spotlight, but equally important to transplant patients, has been the pharma partnering business, including Alloseel, as part of our cellular transplant and therapy business, otherwise known as CTT. Although the commercial revenues are longer term, we continue to make progress and initiated multiple new pharma partnerships during 2021. We look forward to building more partnerships during the course of this year. Now, to reflect on 2021, we are pleased by delivering another record revenue quarter and year, but we're even more pleased by how CARE-DX continues to extend its leadership in transplant. As shared during our investor date, Our goal is to connect one and two transplant patients. With that in mind, this is a multi-year journey, and the next 12 months will be another catalyst-rich year, including the coverage of AlloShore lung by CMS, the submission of Allomap kidney, the launch of AlloView and Euromap, the publication of KL1000, and the readout of Shore data at ISHLT and OCRA data at ATC. As a reminder, Shore and OCRA are both multimodal studies in heart and kidney, respectively. 2022 will be an exciting year to capture the growth opportunity with this rich set of catalysts, to execute as we have demonstrated in our five-year plan, and to continue to innovate and generate real-world evidence that sets us apart and to extend our leadership by connecting that patient journey. Before turning over the call to Ankur to discuss the financials, I'd like to spend a moment on equity and transplant. Equity and transplant is an issue we care deeply about And in many parts of society, minorities at high risk and in need of transplant or pre-transplant services often have a harder time receiving adequate and equitable care. CareDx recently announced a partnership with MOTEP, the Minority Organ Tissue Transplant Education Program, founded by Dr. Clive Callender. We're thrilled to be working with MOTEP and thrilled to be working with Dr. Velma Scammerberry, who is one of the board members, but also America's first African-American female transplant surgeon. It's a real honor and thrill to be working with her. We're also honored to be working with Dr. Hannah Valentine, who recently joined our board of directors and who is the head of the diversity at the NIH. Both Dr. Valentine and Dr. Scannabary provide a wealth of expertise in helping us make a meaningful and lasting impact as we work on our mission of improving equity in transplant. Now handing over to Ankur.