corporate presentation - caredx · certain data in this presentation was obtained from various...
TRANSCRIPT
Margot Duane Stem Cell Transplant Recipient
Corporate Presentation
November 2019
27, 2019
These slides and the accompanying oral presentation contain forward-looking statements. All statements other than statements of historical fact contained in this presentation, including statements regarding future financial position of CareDx, Inc. (together with its subsidiaries, “CareDx” or the “Company”), including financial targets, business strategy, and plans and objectives for future operations, are forward-looking statements. CareDx has based these forward-looking statements on its estimates and assumptions and its current expectations and projections about future events. These forward-looking statements are subject to a number of risks, uncertainties and assumptions, including those contained in the “Risk Factors” section of the Company’s most recent Annual Report on Form 10-K and Quarterly Reports on Form 10-Q that the Company has filed or may subsequently file with the U.S. Securities and Exchange Commission (the “SEC”). In light of these risks, uncertainties and assumptions, the forward-looking events and circumstances discussed in this presentation are inherently uncertain and may not occur, and actual results could differ materially and adversely from those anticipated or implied in the forward-looking statements. Accordingly, you should not rely upon forward-looking statements as predictions of future events. CareDx undertakes no obligation to update publicly or revise any forward-looking statements for any reason after the date of this presentation or to conform these statements to actual results or to changes in CareDx’s expectations.
These slides and the accompanying oral presentation contain certain non-GAAP financial measures, which are provided to assist in an understanding of the business and performance of CareDx. These measures should always be considered only as a supplement to, and not as superior to, financial measures prepared in accordance with GAAP. Please refer to the Appendix included in these slides for a reconciliation of the non-GAAP financial measures included in these slides and the accompanying oral presentation to the most directly comparable financial measures prepared in accordance with GAAP.
Certain data in this presentation was obtained from various external sources, and neither the Company nor its affiliates, advisers or representatives has verified such data with independent sources. Accordingly, neither the Company nor any of its affiliates, advisers or representatives makes any representations as to the accuracy or completeness of that data or undertakes any obligation to update such data after the date of this presentation. Such data involves risks and uncertainties and is subject to change based on various factors.
The trademarks included herein are the property of the owners thereof and are used for reference purposes only. Such use should not be construed as an endorsement of the products or services of the Company.
Safe Harbor Statement
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OUR VISIONThe Leading Partner forTransplant Patients andThe Transplant Ecosystem
OUR MISSIONWe are committed to improving Transplant Patient Outcomes by providing Innovative and Intelligent Solutions throughoutthe entire Patient Journey
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CareDx Highlights
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Leader in Transplantation
Revenue Growth Accelerates Path to Profitability
Transformational AlloSure Launch in $2bn US Market
− Provider of leading solutions across continuum of transplantation
− Technology leadership position in Molecular Diagnostics with (“Liquid Biopsy”) and Gene Expression profiling
− Leader in continuum of care along the transplant patient journey
− Established Medicare Price of $2,840 per test, coverage of 70-80% of kidney transplant patients
− Used in 120+ centers and on 7% of U.S. kidney transplant patients since launch
− Leveraged existing AlloMap presence to scale in a highly capital efficient manner
Genomic Information and Artificial Intelligence Drives Future Opportunity− Expanding product portfolio with pre- and post-transplant patient management solutions
− Developing a platform for Artificial Intelligence in Transplant Care (AiTraC)
− Outcome orientation along the transplant patient journey
− 60% revenue growth in Q3 2019, FY revenue guidance $124m to $125m
− Achieved fifth consecutive quarter of adjusted EBITDA profitability
− Strong, debt free balance sheet
YTD 2019 Highlights
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• AlloSure Launch Progress 7% US Kidney Tx Patients
• KOAR >1,000 patients, SHORE & OKRA initiated
• KidneyCare and HeartCare advanced
• OTTR & Xyn acquisition, iBox addition
• AlloSeq cfDNA and AlloSeq Tx 17 launched
✓
✓
✓
✓
✓
Robert WoodwardVP, Research &
Development
XDx, Gladstone Institute,
UC San Francisco
Mike DonnellVP, Transplant
Digital Business
United Resource Networks,
Baylor and Keck Hospital
Reg SeetoPresident, CBO
Paul CiccolellaSenior Vice President,
Operations
Pacific Biosciences, Affymetrix,
ProtoGene Labs
David SayerVP, Global Transplant
Laboratory Services
Experienced Management Team
Peter MaagChief Executive Officer
McKinsey, Novartis Pharma,
Novartis Diagnostics
Michael BellChief Financial Officer
Novartis Vaccines & Diagnostics,
Ernst & Young, Deloitte
Sham DholakiaSVP, Medical Affairs
& Clinical Operations
University of Oxford,
GE Healthcare
Amitabh ShuklaSVP Technology
Persistent Systems, Life
Technologies, Agilent, IBM
Sasha KingChief Commercial
Officer
Genentech, Ariosa Diagnostics,
Fletcher Spaght
CONFIDENTIAL
Marissa DixonVP, Human
Resources
Metabiota, DuPont Bioscience,
Genencor, WageWorks
Illumina,
Conexio Genomics
Alex JohnsonVP, Transplant
Products Business
BioGraph 55, Novartis,
Celera
Ardelyx, AstraZeneca /
Medimmune, Organon
BioSciences, Boehringer
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Better Matching + Better Surveillance =
Better Outcomes
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CareDx – 20 Years of Focus on Transplantation
Evolution during last 5 years to deliver on vision
2014 2018
AlloMap Business
Building dd-cfDNA technology platform (ImmuMetrix)
Acquired pre-transplant business (Allenex)
Acquired ex-Conexio / Illumina SBT
Licensed NGS Tx- Portfolio (Illumina)
Launched AlloSure first dd-cfDNA
Leader Heart Tx
2019
Pre-TxBusiness
LeaderRenal Tx
Pipeline / Platform
Global Operations
TransplantLeader
Launched QTYPE (PCR HLA)
Launched Heartcare (via SHORE)
…
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CareDx’s Solutions Target Long-Term Outcomes
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Conceptual
Current Survival
Future Survival
Years
13
Complianceand
Adherence
Standardization and
Personalization
ImmunoModulation
Building a Moat in Transplantation Evolution during next 12 months for longitudinal and long-term patient management
Launched HeartCare and AlloSure Lung
Partnered for iBox Technology (prognostic algorithm)
Launched KidneyCare (AlloSure, AlloMap, and iBox)
Acquired OTTR (Transplant EMR) & Xyn with AI capabilities
Launched AlloSeq cfDNA - expanded OUS offerings
Launched AlloSeq Tx17 - next leap forward in NGS HLA Typing
Leader Heart
Today
LeaderRenal Tx
Leader HLA Typing
Pipeline / Platform
Global Operations
Launch AlloSeq BMT - new technology for this field
New platform partnerships (e.g., HistoMap)
New pipeline programs - Tx specific
Launch new global offerings
Leader in Kidney, Heart and Lung Tx
2019+
Leader in Digital Solutions/ Artificial Intelligence
Leader in Disruptive Innovation
Leader Along the Transplant Patient Journey
Global Leader in the Field of Transplantation
Leader in Long-Term Patient Outcomes
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Business Lines Focused On +$4bn TAM Opportunity
Market US Transplant Global Transplant Global Transplant IT
Annual Volume300,000 Patients700,000 Waitlists
1.5 M Patients> 3 M Patients,
Donors, Caregivers
Targets250 Centers
>7,000 Caregivers1,000 Global Labs &
Centers1,000 Global Centers
Tx Population
OfferingSurveillance Protocol
>15 per patientHLA Typing,Surveillance
EMR,Patient Engagement
TAM +$2bn +$1bn +$1bn
ProductsOpportunity
DigitalOpportunity
Testing ServicesOpportunity
Source: company estimates
CareDx In Market Products
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• Capitalize on first mover with AlloSure
• Build on existing legacy of AlloMap
• Provide fastest turnaround typing with QType
• Deep sequencing information with NGS
• Build on existing relationship in Solid Organ
• Grow presence in Bone Marrow Transplant
SolutionApproach
Testing Services84%*
Digital4%
Products12%
Business
* % of Q3 2019 revenues
CareDx Transplant Solutions Pipeline
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• Increase menu by multi-modality testing
• Provide AlloSure for other organs
• Anchor with best in class typing products
• Grow globally with cfDNA technology
• Expand transplant EMR with Cerner & EPIC
• Revolutionize Engagement & Decision Making
SolutionApproachBusiness
Testing Services
Digital
Products
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Strategic Advantage From Large Multi-Center Clinical Studies
Impact
Long-term Heart Transplant Outcomes
Long-term Kidney Transplant Outcomes
Validation AlloSure Kidney Transplant
Validation of HeartCare
Clinical Utility of AlloMap – NEJM publication
AlloMap validation in Heart (EU)
AlloSure validation in Lung*
AlloMap validation in Heart (US)
Start
2018
2018
2015
2014
2005
2005
2004
2001
Study
SHORE
K-OAR
DART
D-OAR
IMAGE
CARGOII
LARGO
CARGO
Centers
>40
>50
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28
12
13
14
8
Patients
> 1000
> 1000
400
>1,000
629
741
>2000
>600
Samples
> 8,000
> 8,000
2,100
> 3,000
2292
7,600
>8500
>4900
* Based on previously existing CareDx sample repository
Long-Term Kidney Outcomes2019 OKRA >50 > 4000 > 10,000
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* Surveillance Patient = KOAR patient or non-KOAR patient managed by CareDx on a predefined transplant center protocol
AlloSure Metrics - Continued Momentum
Launch Metrics Q3 2018 Q4 2018 Q1 2019 Q2 2019 Q3 2019
Patient Results (in qtr) 3,708 4,575 5,710 7,355
Unique Patients Tested (in qtr) 2,829 3,377 4,284 5,548
Ordering Centers (in qtr) 86 100 101 117
KOAR Enrolled Centers (cum) 40 47 50 51
KOAR Enrolled Patients (cum) 480 748 1,006 1,204
3,644 4,618 5,738Current Surveillance Patients
At 3/31/19
At6/30/19
At 9/30/19
8,524
124
53
1,390
6,597
CareDx’s Approach to Precision Medicine in Transplantation
AlloMapAlloSure- High Value - Proprietary
HeartCareKidneyCare- Multimodality- Protocolized Surveillance- Prognostic
GenomicBiomarkers
TransplantCare
ArtificialIntelligenceTransplant
Care
• Surveillance Standard• Multi-Center Trials
• Decision Support• Individualized Care
AiTraC- Comprehensive
- Actionable Care Pathways
- Integrated into EMR
• Clinical Validation• Reimbursement
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Gene Expression Profiling (GEP)
Donor-derived Cell-free DNA (dd-cfDNA)
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Machine learning transplant data analytics
Graft Injury Immune Activity Graft Prognosis
The Latest Innovation in Transplant Surveillance
Digital Transformation in Transplant Care
Chronic Condition Wait List
SurgeryEvaluation Post Op Lab Visit Office Visit
End State Disease Life-Long Immunosuppression
Adherence▪ Interventions
▪ Rx personalization
Organ Matching▪ Donor identification
▪ Timely organ
qualification
▪ Wait list management
✓
Care PathwaysData aggregation to allow for decision support
Surveillance▪ Observations
▪ Biomarkers
EMR LISRegistry Studies
Strategy
▪ Patient Dedication
▪ Clinical & Premium Positioning
▪ Pre-Post Transplant Continuum
▪ Multi-Product Offerings
Assets
▪ Strong Reputation & Brands
▪ Broad Channel Access
▪ Latest Technology and Innovation
▪ Passionate and Dedicated People
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Growing Global Presence Across Transplantation Labs
RegionTransplant HLA Labs
CareDx Penetration
Europe 300 80%
North America 200 79%
Rest of World 475 10%
TOTAL 975 46%
Building a Moat in Transplant Care
AlloSure/AlloMap Customers
Product Customers
Digital Customers
Total US Transplant Centers
K-OARCenters
Source: OPTN database, internal analyses
Strategy
▪ Transplant Center Focused
▪ Multiple Touch Points (Village Concept)
▪ Pan-Organ Offerings
Approach
▪ Based on Clinical Evidence
▪ Tailored to Center Workflow
▪ Improving Patient Care
▪ Advancing Science
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60% Revenue Growth in Q3 2019
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16.8
4.2
21.228.2
4.2
33.8
Total
1.4
Testing Services Products Digital & Other
+68%
-1%
+60%2018A 2019A
Test 2018A 2019A YoY%
Heart 4,080 4,726 16%
Kidney 3,708 8,524 130%
Q3 Patient Results
Q3 Revenue ($ millions)
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Non-GAAP* Q3 2018 Q4 2018 Q1 2019 Q2 2019 Q3 2019
* See Appendix for non-GAAP reconciliation
($ millions)
Fifth Consecutive Profitable Quarter in Q3 2019
Total Revenue 21.2 23.5 26.0 31.5
Gross Margin % 61% 59% 67% 67%
Operating Expense 13.0 13.5 16.1 21.3
Adjusted EBITDA 0.2 0.8 1.8 0.1
Operating Cash Flow 0.4 2.0 (5.9) 3.6
33.8
69%
23.2
0.8
0.6
Strong, Debt-Free Balance Sheet
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Cash & Debt at 9/30/19$ millions
Cash & Cash Equivalents 40.9
Debt -
Common Stock at 9/30/19# millions
Outstanding Common Stock 42.4
Stock Options / RSUs 4.2
Warrants 0.4
Fully Diluted Common Stock 47.0
FY 2019 Revenue Guidance
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2018
$124m-$125m
>100%
>10%
~20%
• 50 Center Penetration• KOAR Registry• OKRA Registry
• HeartCare Protocol• SHORE Registry
• NGS Launches• QTYPE adoption
2019
$77m AlloSureKidney
AlloMapHeart
Products
Growth Drivers
Digital $4m - $5m• OTTR Acquisition• Xyn Acquisition
Revenue
OUR VISIONThe Leading Partner forTransplant Patients andThe Transplant Ecosystem
OUR MISSIONWe are committed to improving Transplant Patient Outcomes by providing Innovative and Intelligent Solutions throughoutthe entire Patient Journey
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Appendix
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Use of Non-GAAP Financial Measures
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$ millionCareDx has presented in this release certain financial information in accordance with U.S. Generally Accepted Accounting Principles (GAAP) and also on a non-GAAP basis, including non-GAAP net income, non-GAAP net loss, non-GAAP basic and diluted net income and net loss per share and adjusted EBITDA. We define non-GAAP net income and non-GAAP net loss and per share results as the GAAP net income or loss and per share results excluding the impacts of stock-based compensation; changes in estimated fair value of warrants, derivative liabilities and contingent consideration; acquisition related impairment charges and amortization of intangible assets, purchase accounting adjustments and related tax effects; costs involved with completing an acquisition; amortization of debt discount; and certain other financing charges. We define adjusted EBITDA as non-GAAP net income/(loss) before net interest expense, income tax expense, depreciation and amortization, other expense, and net loss attributable to noncontrolling interest. We are presenting these non-GAAP financial measures to assist investors in assessing our operating results through the eyes of management and because we believe that these measures provide an additional tool for investors to use in comparing our core business operating results over multiple periods. Management believes this non-GAAP information is useful for investors, when considered in conjunction with CareDx's GAAP financial statements, because management uses such information internally for its operating, budgeting and financial planning purposes. Non-GAAP information is not prepared under a comprehensive set of accounting rules and should only be used to supplement an understanding of CareDx's operating results as reported under GAAP. These non-GAAP financial measures should not be considered in isolation from, or as a substitute for, financial information prepared in accordance with GAAP. These non-GAAP financial measures are not necessarily comparable to similarly-titled measures presented by other companies. A reconciliation between GAAP and non-GAAP financial information is provided immediately following the financial tables.
Reconciliation of Non-GAAP Financial Measures
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Q32018
Q42018
Q12019
Q22019
Q32019
GAAP Net Loss (20.0) (3.8) (7.5) (7.8) (1.8)
Stock-based compensation expense 1.9 2.1 6.1 5.0 6.0Acquisition-related amortization of purchased intangibles 0.8 0.7 0.7 0.8 0.9Acquisition related fees and expenses - - - 0.6 0.1Change in estimated fair value of contingent consideration - - - - -Amortization of debt discount 0.1 0.0 - - -Debt financing related fees and expenses - 3.0 - - -Change in estimated fair value of warrant & derivative liabilities 17.1 (1.6) 3.0 1.4 (4.3)Other financing charges - - - - 0.2Tax effect related to amortization of purchased intangibles (0.4) (0.2) (0.1) (0.1) (0.1)Impairment - - - 0.2 -
Non–GAAP Net Income (Loss) (0.6) 0.3 2.2 (0.1) 0.9
Interest (income) expenseIncome tax (benefit) expenseDepreciation expenseOther expense
0.30.10.30.0
0.1(0.1)0.40.1
(0.3)(0.5)0.40.1
(0.3)(0.1)0.40.2
(0.0)(0.8)0.40.4
Adjusted EBITDA 0.2 0.8 1.8 0.1 0.8
$ million