CareDx CEO Says Pandemic Proves Value Of Remote Transplant Monitoring System

One outcome from the coronavirus pandemic could be the adoption of CareDx Inc CDNA’s management platform for organ transplant patients. 

“This is a moment where it’s very obvious that monitoring these patients remotely with a blood draw is better than going in for biopsies,” CEO Peter Maag told Benzinga.

“Transplant patients are now worried. After getting a transplant, your immune system is subdued and more prone to infections. They don’t want to go back to transplant centers, because they also care for coronavirus patients.”

In Maag’s view, social distancing has made clear the value of at-home diagnostics. He’s led CareDx to launch a mobile phlebotomy service and remote monitoring solution for patients isolated by the coronavirus.

CareDx's Product Portfolio

CareDx guides precision management of transplant procedures with its suite of remote match-testing, diagnostic monitoring and electronic medical record technologies. Its products are used in more than 1,000 transplant centers around the world, including 84 of the U.S.’s 250 centers.

The post-kidney transplant diagnostic monitoring system, AlloSure, boasts the strongest demand. It detects the health of each transplanted organ by analyzing biomarkers in the bloodstream.

“AlloSure is executing against a $2-billion opportunity, which is driving the company and all the excitement in the financial markets,” Maag said.

CareDx's Financial Health

CareDx may have to wait to capitalize on that opportunity. The company recently withdrew its 2020 guidance to account for macro uncertainty, unpredictable transplant volume and the unknown capacity of transplant centers to ramp up remote solutions amid the coronavirus outbreak.

In the interim, Maag said he's confident in CareDx’s solvency.

“We’ve been managing this very carefully,” the CEO said of his in-office response.

After six quarters of positive adjusted EBITDA and cash-breakeven operations, he considers the company to be in a relatively sustainable position.

“The crisis doesn’t hit us that hard. There could always be a little bit more [cash], but no worries here.”

CareRx company has “all financing options available to us at any time,” he said. 

Once the crisis is over, Maag expects transplant services — and CareDx’s sales growth — to return to previous levels.

“The need for transplantation is huge because of the long list of patients to get transplants,” Maag said.

“For everyone that gets it, five more need it ... volumes will come up right away. The growth rates will continue.”

The Regulatory Landscape

Maag said he feels “extremely good” about the regulatory environment, particularly since the U.S. has affirmed the value of diagnostics technology. “Many transplant patients are Medicare patients, and Medicare has been at the forefront [of adoption],” he said, citing strong reimbursement for CareDx’s products.

The law has also come down on the side of CareDx. A U.S. court recently upheld the company’s intellectual property rights in a lawsuit alleging patent infringement by Natera Inc NTRA. Maag said the outcome helps affirm the relevance of IP in diagnostics.

Natera has since countersued CareDx, alleging false advertising.

Maag said the company is in a “very good position.”

“We smiled a little bit, because when that happens you know the other side is trying to scramble,” he said of the lawsuit. 

CareDx’s IP has active litigation against Viracor Eurofins, and Maag said he expects news on that front in 2021.

CareDx's Upcoming Catalysts

In the near term, CareDx plans to focus on its global expansion and pipeline development — including a venture into CAR-T.

“The big catalyst is the next step into cellular therapy,” Maag said. “[It’s] where I think the field of medicine will go. We see this as a transplantation phenomenon.”

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