CareDx, Inc.

Good day and welcome to the CARE DX first quarter 2022 earnings conference call. All participants will be in listen-only mode. Should you need assistance, please signal a conference specialist by pressing star then zero on your telephone keypad. After today's presentation, there will be an opportunity to ask questions. To ask a question, you may press star then one on your telephone keypad. To withdraw your question, please press star then two. Please note this event is being recorded. I would now like to turn the conference over to Ian Cooney, Vice President, Investor Relations. Please go ahead.

Good afternoon and thank you for joining us today. Earlier today, CareDX released financial results for the quarter-ended March 31, 2022. The release is currently available on the company's website at www.caredx.com. Reg Seto, Chief Executive Officer, and Ankur Dhingra, Chief Financial Officer, 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 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 included 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, May 5, 2022. CARE-DS CARE-DX 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 the generally accepted accounting principles. Reconciliation to the most directly comparable GAAP financial measure 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 first quarter 2022 earnings call. The first quarter was a tale of two contrasts, where January was the lowest month in transplant volumes since April 2020, while March was our highest ever month in patient test results in testing services. With that in mind, I'd like to provide the following highlights for the quarter. Number one, delivery of a strong revenue quarter achieved in spite of the slow start to the year for the testing services and the product's business line. Number two, accelerating performance in patient and digital solutions driven by our recent acquisitions. Number three, extending our scientific leadership with real-world, multi-center, prospective, and long-term data generation. Four, help ensure that the transplant community receives accurate information about our tests after a jury found that Natera's superiority claims were false and awarded CareDx $44.9 million in damages. And five, leading with innovation in artificial intelligence and xenotransplantation and taking responsibility as a transplant company to increase equity in transplant. Now on to performance. We recorded our highest ever revenue quarter in spite of a slow start. Q1 marked the third consecutive quarter of flat to negative sequential transplant volumes with January and early February most notably impacted by Omicron, followed by a strong rebound in March. With no sequential transplant volume growth for three straight quarters, we hope transplant volume declines have hit a nadir, and the Q2 will reverse this volume trend. Note, our transplant volume numbers are based on the full month of UNOS data versus weekly data, which are directional, until the full month of data becomes available. Now for kidney testing services, we continue with our winning formula of adding AlloShore name protocols, adding new centers, and expanding further into community nephrology. At the end of March, we have more than 80 AlloShore kidney protocols in commercial use. Offsetting the fewer transplants being done, we had our second highest quarter with AlloShore volume in community practices. The peak Omicron wave had an acute impact on our kidney testing services, including staff shortages in transplant centers. However, I'm pleased to report that March, we set a record for testing services volume. On the pipeline side, we're excited in progressing the next wave of innovation in the kidney space. For Allomap Kidney, another recent publication confirmed the clinical validation of Allomap Kidney using data generated in the validated clear workflow from samples in the OCRA study. For heart and lung testing services, the heart care attachment rate was over 95% continuing to highlight the value of multimodality to physicians. We're also pleased to run over 900-hour short lung tests in its second quarter since launch. At ISHLT, the largest heart and lung transplant conference in the world, the full force of CARE-DX was on display, with the highest number of industry presentations, and with my appointment as the corporate chair for the ISHLT Foundation, and with our board member, Dr. Hannah Valentine, being awarded the prestigious Lifetime Achievement Award. On to the second topic. We accelerated performance in our patient and digital solutions with first quarter revenues of 6.2 million, driven by our recent acquisitions of MedAction Plan and the TransLand Pharmacy. Our AlloCare app now has more than 17,000 users and serves as the foundation for digitally connecting patients across the TransLand journey. We have expanded this functionality by incorporating TX access into this AlloCare app to now help pre-transplant patients navigate the waitlist process as we digitally connect patients across the patient journey. We are thrilled to have built this de novo digital business over the last three years and have started to scale with revenues. And these revenues are now comparable to our products business line, which achieved $6.8 million in revenue in Q1. On the third topic, we further extended our scientific leadership during Q1. with real-world data generation across kidney with Admiral, heart with Shaw, and lung with our multicenter lung study. In kidney now, the Admiral publication showed Alloshaw as the first and only donor-derived sulfurase DNA test with demonstrated long-term utility in both surveillance and full-course testing. Alloshaw also demonstrated a greater than 60% improvement over creatinine in the accuracy of identifying rejection. By contrast, our competitors have not been able to come close to showing this magnitude of improvement over standard care. In heart, SHORE, our multimodal registry with our FDA-cleared Allomap and our leading donor-derived sulfonate test, Alloshore, has shown higher one-year survival compared to UNOS statistics. This is the largest heart transplant data set, which has shown increased clinical utility, showcased at this year's ISHLT. Heart care helps improve clinical decision-making And we're excited to hear that the new ISHLT draft guidelines are considering including donor-derived sulfonamide in addition to Alimab. As a reminder, we are the only covered multimodal transplant approach covered by Medicare. In lung, our multicenter Alloshore Lung Clinical Utility Study was published in JHLT. This real-world experience in partnership with NIH was conducted during the COVID pandemic. This Alloshore lung surveillance resulted in an 83% reduction in invasive bronchoscopies compared to a surveillance bronchoscopy program. Importantly, Alloshore identified subclinical graft injury in patients where there was no clinical suspicion. Number four, moving on to false advertising case against Natera, where we received a positive jury award in our favor of $44.9 million, including $21.2 million in compensatory damages, and $23.7 million in punitive damages. While post-trial motion practice is ongoing, our council believes this to be one of the largest damages awards in a false advertising case in our space. We believe this speaks for itself. While new opportunity entrants focused on short-term path to profits have been aggressive with their approaches and comparisons to our tests, we believe it's important to build and maintain trust by investing in science and proper studies. As a leader in the space, it is our obligation to patients to call out companies that intentionally mislead the transplant community. On to the fifth topic. As the transplant field evolves, CareDx remains at the forefront of driving innovation. We believe the future is multimodality, and artificial intelligence, or AI, is a core part of that innovation. In kidney, we've invested in algorithms, including iVox. with prognostic data published in the leading journal, BMJ. In heart, we just announced last week at ISHLT our partnership with Organ-X developing AI algorithms, including in identifying cardiac allograft vasculography trajectories, also known as CAV, with prognostic data published in the leading journal Circulation. In the exciting world of xenotransplantation, we were proud to be partners with the University of Maryland School of Medicine on the world's first successful pig-to-human heart transplant. We're now providing our Xenashore and Xenomap biomarkers in supporting xenotransplantation research and development. In cell therapy and stem cell, we continue to make progress with four presentations of new data at the recent tandem meetings of transplantation and cell therapy meetings of ASTCT and CIBMTR, covering Allocell, Alloheem, and Otocela. Finally, as a transplant company, we are focused on equity in transplant. We have national efforts with the Minority Organ Tissue Transplant Program, also known as MOTEP, and regional initiatives, the most recent being the Pluralist Initiative, where we partnered with UC Davis Health to improve awareness and education about organ transplant in underserved communities throughout California. I want to summarize that our core focus is testing services. We have a robust-based business, as we have now faced three consecutive quarters of negative to flat transplant volume growth. We hope we've hit the nadir with transplant volume declines. As transplant volumes improved in February and March, we saw our strongest testing service results for heart and kidney in the month of March. We have a focused strategy, and over the last 18 months, we've been pleased with the continued introduction of new catalysts from AlloShore Heart to AlloShore Lung, and our latest focus is Allomat Kidney, which is in late development. We're also pleased with our expansion of community nephrology and the creation of dedicated abdominal and cardiothoracic teams. Now, outside testing services, we continue to scale in both the products and digital businesses and see growth built off new launches with the AlloSeq franchise and now executing on the recent acquisitions for the patient digital solutions. Beyond our current commercial business lines, we're building the long-term future by investing in areas of disruptive innovation with the development of offerings in artificial intelligence as part of multimodality, stem cell and cell therapy with AlloHeem and AlloCell, and Xeno Transplant Field with XenoSure and Xenomap. We look forward to building this incredible company focused on the transplant patient and community. With that, I'll turn the call over to Ankur to discuss our first quarter financials.