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Maxine MoirKidney Transplant Recipient
June 2019
Corporate Presentation
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
2
OUR VISIONThe Leading Partner forTransplant Patients andThe Transplant Ecosystem
OUR MISSIONWe are committed toImproving transplant Patient outcomes throughInnovative, non-invasiveTesting solutions throughoutThe entire patient journey.
3
CareDx Highlights
4
Leader in Transplant Molecular Diagnostics
Revenue Growth Accelerates Path to Profitability
Transformational AlloSure Launch
Products across continuum of transplant diagnostics
AlloMap used in 90% of heart transplant centers
Leadership position in cell free DNA (“Liquid Bx”)
Established Medicare Price of $2,840 per test, coverage of 70-80% of kidney transplant patients
Used in +100 centers and on 4% of U.S. kidney transplant patients since launch
Leverage existing AlloMap presence to scale in a highly capital efficient manner
Genomic Information and Artificial Intelligence Drives Future Opportunity Product portfolio expansion with pre- and post-transplant solutions
Building platform for Artificial Intelligence in Transplant Care (AiTraC)
Outcome orientation along the transplant patient journey
85% revenue growth in Q1 2019, FY revenue guidance raised to $113m to $115m
Achieved third consecutive quarter of adjusted EBITDA profitability
Strong, debt free balance sheet
2019 Highlights
5
• AlloSure Launch Progress >4% TAM Kidney Tx
• KOAR > 1000 patients enrolled
• KidneyCare and HeartCare advanced
• OTTR acquisition, iBox addition
• AlloSeq cfDNA Early Access exUS started
Robert WoodwardVP, Research &
Development
XDx, Gladstone Institute,
UC San Francisco
Mike DonnellVP, Transplant
Software 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, Laboratory
Solutions Business
BioGraph 55, Novartis,
Celera
Ardelyx, AstraZeneca /
Medimmune, Organon
BioSciences, Boehringer
6
Better Matching + Better Surveillance=
Better Outcomes
7
CareDx – 20 Years of Focus on Transplantation
Evolution during last 5 years to deliver on Vision
2014 2019
AlloMap Business
Building dd-cfDNA technology platform (ImmuMetrix)
Acquired pre-transplant business (Allenex)
Acquired ex-Conexio / Illumina SBT
License NGS Tx- Portfolio (Illumina)
Launched AlloSure first dd-cfDNA
Leader Heart Tx
TODAY
Pre-TxBusiness
LeaderRenal Tx
Pipeline / Platform
Global Operations
TransplantLeader
Launched QTYPE (PCR HLA)
Launched Heartcare (via SHORE)
…
8
Ongoing Unmet Needs in Transplantation
9
Transplant Post TransplantEnd stage disease
Availability of Organs
Donor identification and qualification
Waitlist management
Lifelong Immunosuppression- Rejection- Infection- Function
Services & Products to ensure personalization and surveillance, partnering with centers and clinicians
Quality of Match
Quality of Care
Typing Products with right resolution and turnaround time in transplant centers
Organ Shortage Organ Matching Precision & Compliance
Longitudinal Data Management
CareDx Focuses on Long-Term Outcomes
10
10
Source: Team Analysis
Current Survival
Future Survival
Years
13
Complianceand
Adherence
Standardization and
Personalization
ImmunoModulation
Laying Foundation to Lead in Patient Care Management Evolution during next 12 months for longitudinal and long-term patient management
Launched HeartCare and AlloSure Lung
Launch Kidney Care (AlloSure, AlloMap, and i-BOX)
Partner for i-BOX Technology, first step towards Artificial Intelligence
Acquired OTTR with bioinformatics capabilities
Launch AlloSeq BMT- new technology for this field
Launch AlloSeq Tx17- next leap forward in NGS HLA Typing
Leader Heart
Today
LeaderRenal Tx
Leader HLA Typing
Pipeline / Platform
Global Operations
New platform partnerships
New pipeline programs- Tx specific
Expand ex-US offerings (e.g. AlloSeq cfDNA)
Launch new global offerings (e.g. AlloSeq BMT)
Leader in Kidney, Heart and Lung Tx
2019+
Leader in 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
11
MarketGlobal HLA Typing
ProductsUS Heart Transplant Surveillance Services
US Kidney Transplant Surveillance Services
Annual Volume3 million
HLA Typings2,600 Transplants20,000 Patients
18,000 Transplants200,000 Patients
Targets1000 Labs150 (US)
130 Centers(50 centers = 70%)
250 Centers(100 centers = 80%)
Testing5 typings
per transplantYear 1: 6-8 tests*Year >1: 2-4 tests
Year 1: 7 tests** Year >1: 4 tests**
TAM $500 million $150 million > $2 billion
12
*SHORE registry will be monthly testing; **ARTS protocol at time of launch and as part of KOAR registry. Source: Company estimates
Focused on Large Addressable Markets in Transplantation
KidneyCare
CareDx – Your Dedicated Partner in Transplant Care
Heart
Kidney
Lung
BMT
TestingService
Surveillance Products
TBD
Assign
Score6
TypingProducts
SoftwareSolutions
AlloSeq® Tx 17
AlloSeq® HLA
AlloMap Variability Score
2019 Plan
2019 New
2019 Coming
13
Strategic Advantage From Multi-Center Clinical Studies
Clinical Validity/Utility
Start Study Impact Centers Patients Samples
2018 SHORE Long-term Heart Transplant Outcomes >30 > 1000 > 8,000
2018 K-OAR Long-term Kidney Transplant Outcomes >50 > 1,000 > 8,000
2015 DART Validation AlloSure Kidney Transplant 14 400 2,100
2014 D-OAR Validation of HeartCare 28 >1,000 > 3,000
2005 CARGOII AlloMap validation in Heart (EU) 13 741 7,600
2004 LARGO AlloMap validation in Lung 14 >2000 >8500
2001 CARGO AlloMap validation in Heart (US) 8 >600 >4900
14
15
Near-Term Opportunities to Expand Addressable Market
• Offer surveillance solutions outside US• Launch in 2019
• Enter global Bone Marrow Transplantation• Launch in 2019
• Includes AlloSure, AlloMap, and iBox• Launch at ATC 2019
• Provide a best in class NGS HLA solution • Launch in 2019AlloSeq® Tx 17
AlloSeq® cfDNA
AlloSeq® BMT
KidneyCare
AlloSure Launch Metrics
16
Launch MetricsQ4
2017Q1
2018Q2
2018Q3
2018Q4
2018Q1
2019
Patient (Pt) Results (in qtr) 282 1,051 2,300 3,708 4,575 5,710
Unique Pts Tested (in qtr) 250 842 1,723 2,829 3,377 4,284
Ordering Centers cumulative (cum) 32 52 76 96 - -
Ordering Centers (in qtr) - - - - 100 101
KOAR Enrolled Centers (cum) 0 12 27 40 47 50
KOAR Enrolled Pts (cum) 0 63 237 480 748 1,006
Surveillance MetricsQ4
2017Q1
2018Q2
2018Q3
2018At
12/31/18At
3/31/19
New Standing Order Pts (in qtr) 115 568 793 1,260 - -
Current Surveillance Pts - - - - 3,190 3,644
* Surveillance Patient = KOAR patient or non-KOAR patient managed by CareDx on a predefined transplant center protocol
Our 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
17
Gene Expression Profiling (GEP)
Immune Activity
Donor-derived Cell-free DNA (dd-cfDNA)
Graft Injury
Multi-Modality Testing
18
Machine learning algorithm
Graft Survival Prognostic
iBox
Transforming Transplant Patient Care
OTTR
19
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
Source: Company estimates
20
Growing Global Presence Across Transplant HLA 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
HLA Typing Customers
OTTR 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
21
85% Revenue Growth in Q1 2019
22
3.3
10.614.1
4.4
21.5
26.0
Testing Services TotalProducts
+34%
+103%
+85%
20192018
Test Q1 2018 Q1 2019 YoY%
AlloMap 3,847 4,280 11%
AlloSure 1,051 5,710 NM
Q1 Test Volume
Q1 Revenue ($ millions)
Third Consecutive Profitable Quarter in Q1 2019
23
Non-GAAP*Q1
2018 Q2
2018Q3
2018Q4
2018Q1
2019
Total Revenue 14.1 17.8 21.2 23.5 26.0
Gross Margin 60% 63% 61% 59% 67%
Adjusted EBITDA (3.2) (0.8) 0.2 0.8 1.8
Adjusted EBITDA Margin -23% -4% 1% 3% 7%
$ millions
* See Appendix for non-GAAP reconciliation
Significant Operating Leverage Potential at Scale
24
$ millions
Non-GAAP Targets*Q1 2019
Annualized Run Rate
Target “At Scale”
Total Revenue 104 200
Gross Margin 67% 70%
Adjusted EBITDA 7 50
Adjusted EBITDA Margin 7% 25%
* See Appendix for non-GAAP reconciliation
Strong, Debt-Free Balance Sheet
25
Cash & Debt$ millions
At 3/31/19*
Cash & Cash Equivalents 57.4
Debt -
Common Stock at 3/31/19# millions
Outstanding Common Stock 41.9
Stock Options / RSUs 3.6
Warrants 0.5
Fully Diluted Common Stock 46.0
*Excludes ~$16m cash paid for OTTR acquisition on 5/7/19
Revised 2019 Revenue Guidance
26
2018
$113m-$115m
>100%
Mid-singledigit
>20%
• 50 Center Penetration• KOAR Registry
• HeartCare Protocol• SHORE Registry
• NGS Launches• QTYPE adoption
2019
$77m AlloSure
AlloMap
Products
Growth Drivers
Software $4m - $6m • OTTR Acquisition
Revenue
OUR VISIONThe Leading Partner forTransplant Patients andThe Transplant Ecosystem
OUR MISSIONWe are committed toImproving transplant Patient outcomes throughInnovative, non-invasiveTesting solutions throughoutThe entire patient journey.
27
Appendix
28
Use of Non-GAAP Financial Measures
29
$ millionCareDx has presented in this presentation certain financial information in accordance with U.S. Generally Accepted Accounting Principles (GAAP) and also on a non-GAAP basis, including adjusted EBITDA and adjusted EBITDA margin. 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 define adjusted EBITDA margin as adjusted EBITDA as a percentage of total revenue. 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’soperating 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 this slide.
Reconciliation of Non-GAAP Financial Measures
30
Q1 2018
Q2 2018
Q32018
Q42018
Q12019
GAAP Net Loss (9.0) (4.1) (20.0) (3.8) (7.5)
Stock-based compensation expenseAcquisition-related amortization of purchased intangiblesChange in estimated fair value of contingent considerationAmortization of debt discountDebt financing related fees and expensesLoss on conversion from debt to equityChange in estimated fair value of warrant & derivative liabilitiesTax effect related to amortization of purchased intangiblesAcquisition-related amortization of inventory valuation adjustment
0.70.80.11.9-
2.8(1.3)(0.2)0.2
2.50.70.90.1
--
8.8-
0.0
1.90.7-
0.1--
17.1(0.4)0.0
2.10.7
-0.03.0
-(1.6)(0.2)0.0
6.10.7
----
3.0(0.1)(0.0)
Non–GAAP Net Income (Loss) (4.0) (1.1) (0.6) 0.3 2.2
Interest (income) expenseIncome tax (benefit) expenseDepreciation expenseOther expenseNet loss attributable to noncontrolling interest
0.8(0.2)0.30.0
-0.0
0.4(0.4)0.30.0-
0.30.10.30.1
-
0.1(0.1)0.40.1
-
(0.3)(0.5)0.40.1
-
Adjusted EBITDA (3.2) (0.8) 0.2 0.8 1.8
$ million