Q1 2022 CareDx Inc Earnings Call

[music].

Okay.

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 todays presentation, there will be an opportunity to ask questions to ask any 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 Coody, Vice President Investor Relations. Please.

Go ahead.

Good afternoon, and thank you for joining us today.

Earlier today <unk> released financial results for the quarter ended March 31 2022.

The release is currently available on the company's website at Www Dot <unk> Dot com.

Reg Sito, Chief Executive Officer, and <unk>, 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.

Revenue 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.

Our 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 five 2022, cardiac 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 maybe found in today's earnings release filed with the SEC.

I will now turn the call over to rich.

Thanks Ian.

Good afternoon, everyone and thank you for joining us for <unk> first quarter 2022 earnings call.

The first quarter was <unk> to contrast, where January was the lowest month in transplant volumes since April 2020.

Well 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 a slow start to the year for the testing services and the products business line.

Accelerating performance in patient and digital solutions, driven by our recent acquisitions.

Demonstrate extending our scientific leadership with real World Multicenter prospective and long term data generation.

Paul.

Ensure that the transplant community received accurate information at that Altice. After jury found in a terrorist superiority claims were false and awarded <unk> $44 $9 million in damages and five leading with innovation in artificial intelligence and Zeno transplantation and taking responsibly as the.

Transplant company to increase equity and transplant.

Now on to performance.

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 Amazon followed by a strong rebound in March.

With no sequential transplant volume growth for street straight quarters, we hope transplant volume decline I've had an idea and the Q2 will reverse this volume trend note. Our transplant volume numbers are based on the full month of United States.

This is weekly data, which a directional until the full month of data becomes available.

Now if the kidney testing services, we continue winning formula of that.

<unk> named protocols, adding new centers and expanding further intercommunion for allergy.

As the end of March we had more than 80, Alice Shaw kidney protocols in commercial use.

Offsetting the fewer transplants being done we had our second highest quarterly <unk> volume in community practices.

The peak Omicron wave had an acute impact on our kidney testing services, including staff shortages and transfer incentives. However, I'm pleased to report the March we set a record for testing services volume.

On the pipeline side, we're excited and progressing the next wave of innovation in the kidney space.

Allomap kidney another recent publication confirmed the clinical validation of Allomap kidney using data generated in the validated create workflow from samples in the Okra study.

The heart lung testing services, the hardcore attachment rate was over 95% continuing to highlight the value of multi modality to physicians.

We're also pleased to run over 900, Alex short lung test and its second quarter since launch.

At <unk>, the largest heart and lung transplant comfortably well the full force of Kgs was on display with the highest number of industry presentations.

And with my appointment as the corporate chair for the <unk> Foundation and without Board member Dr. Johanna Valentine being awarded the prestigious Lifetime Achievement Award.

Under 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 Med action plan and the transplant pharmacy.

Our Allocher App now has more than 17000 users and serves as the foundation of digitally connecting patients across the transplant journey.

We have expanded dysfunctionality by incorporating TX access into this <unk> app to now help pre transplant patients navigate the way this process as we digitally connect patients across the patient journey with.

We are thrilled to build 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 Hot with Shaw and lung with our multicenter lung study.

And kidney now the animal publication showed <unk> is the first and only done drive sulfate dated tests with demonstrated long term utility in both surveillance and full course testing Allo show also demonstrated a greater than 60% improvement.

And the accuracy of identifying rejection by contrast, our competitors have not been able to come close to showing this magnitude of improvement over standard of care.

In Hot Shaw, our multimodal registry without FDA, <unk>, Allomap, and our leading donor derived cell free <unk> has shown higher one year survival compared to unit statistics.

This is the largest heart transplant dataset, which is shown increased clinical utility showcased at this year's <unk>.

<unk> helps improve clinical decision, making and we're excited to hear that the new IOC <unk> draft guidelines are considering including donor drive surf Nate in addition to Allomap. As a reminder, we are the only covered multimodal transplant approach covered by Medicare.

In lung our multicenter <unk> lung clinical utility study was published in <unk>.

This real world experience in partnership with NIH was conducted during the Covid pandemic.

This hour show lung surveillance resulted in 83% reduction in invasive bronchoscopy.

To surveillance Bronchoscopy program.

Importantly, <unk> identified subclinical graft injury in patients, where there was no clinical suspicion.

Number four moving onto false advertising case against the Terror, we received a positive jury award in our favor $44 $9 million, including 20 to $21 $2 million in compensated with damages and $23 $7 million in punitive damages.

Well post trial motion practice is ongoing our counsel 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 positive profits had been aggressive with their approaches in parallel to our tests. We believe it's important to build and maintain trust by investing in science and proper studies as the leader in this space. It is our obligation to patients to callout companies. They intensely mislead the transplant community.

Onto the fifth topic.

As the transplant field evolves.

<unk> remains at the forefront of driving innovation, we believe the future is multi modality and artificial intelligence or AI is a core part of that innovation in kidney, we invested in algorithms, including <unk> box, where prognostic data published in a leading journal bmj.

In Hot we just announced last week at <unk>, our partnership with organics, developing AI algorithms, including identifying.

Correct Allograph basketball fee trajectories also known as CIB with prognostic data published in a leading journal circulation.

And the exciting world of Zeno transplantation, we were proud to be partners with the University of Maryland School of Medicine on the world's first successful peak to human heart transplant.

We're now providing our xenial and <unk>, Biomarkers and supporting Zeno transplantation research and development.

In cell therapy, and stem cell, we continued to make progress with full presentations of new data at the recent tender meetings of transplantation and cellular therapy meetings of Aes, TCT and CIB MTR, covering allo cell elohim and other sailor.

Finally, as the transplant company, we are focused on equity and transplant with national assets with a minority organ tissue transplant program also known as <unk> and regional initiatives. The most recent being the Peerless initiative, we partnered with UC Davis health to improve awareness and education about organ transplant in <unk>.

Serve communities throughout California.

I want to summarize that our core focus is testing services we.

We have a robust base business as we have now phase 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 March we saw our strongest testing services 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 Alice Shaw Hot to our show lung and our latest focus is allomap kidney, which is in late development.

We're also pleased with our expansion to convenient for allergy 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 up new launches with the <unk> franchise and now executing on the recent acquisitions for the patient digital solutions.

Beyond our current commercial business lines, we are building the long term future by investing in areas of disruptive innovation with the development of offerings.

In artificial intelligence as part of a multi modality stem cell and cell therapy, with <unk> and Zeno transplant field with Xena assurance <unk>.

We look forward to building this incredible company focused on the transplant patient and community.

With that I will turn the call over to anchor discuss our first quarter financials.

Thank you rich.

Hello, everyone.

We are pleased to deliver another strong business and financial performance. Despite the backdrop of continued difficult market conditions. During the first half of Q1 2022.

Let me provide you the details.

We recorded total revenues of $79 4 million up 18% compared to $67 4 million in the first quarter of 2021.

Testing services revenue increased 12% year over year to $66 4 million testing volumes grew by 29% to approximately 42600 tests.

Including approximately 900 lung tests.

We saw sequential declines in testing volumes in January and early parts of February before strongly rebounding in March.

March was our highest month ever for testing volumes for heart and kidney.

We continue to see strong adoption of our newly launched tests, our short lung and Alex showed heart with heart get at greater than 95% attachment rate and I'll assure lung approaching us and wanting to transplant centers in less than six months of launch.

Our testing services volume growth has and will continue to exceed our revenue growth as we are in the process of new launches with Alex showed heart and Alex short lung.

We are in the process of increasing the coverage to levels, we have achieved in allomap and <unk> kidney this.

This provides a significant opportunity for future revenue upside as we build out our commercial coverage in these new launches.

Today, I'll assure lung is only at less than 5% coverage and our short heart at approximately 25% coverage.

Although we look at it by test offering we understand some investors may look at revenues divided by total tests.

This aggregate average price declined by about four 9% versus last quarter of 2021. This decline came from three factors.

Higher growth in patients with commercial insurance across all organs, where we have lower coverage today.

Changing volume mix between Oregon's with strong success of Alisher heart, <unk> lung, where we have lower coverage today.

Continued increase in Medicare advantage patients in a kidney services.

Specific now to kidney, although the majority of patients are under Medicare we have seen an increase in number of patients outside Medicare, which is specifically impacting <unk> kidney realized prices.

This mix shift has come from two areas.

Execution of our strategic plan to focus on community nephrology over the last 12 months, which has increased the number of patients on commercial coverage.

<unk> is expected to continue as a core part of the growth strategy.

The second has been industry shift from Medicare to Medicare advantage plans driven by the 20 <unk> century Cures Act.

As a reminder, it takes longer to collect from Medicare advantage plans and requires additional administrative steps, including prior authorizations.

All of these represent upside opportunities for us.

Overall, our golf our go forward plan is first increasing payer coverage in current offerings, including the new launches to positively impact our revenues.

Notably for <unk> heart cell free DNA is under consideration for inclusion in <unk> guidelines.

We are excited by this potential inclusion in guidelines, reflecting the excellent data the team has generated.

We're also excited about our upcoming okra data readout at ADC next month.

Second investing in infrastructure and capabilities to improve collections, especially from Medicare advantage plans.

Moving onto product, our first quarter product revenue increased 17% year over year to $6 $8 million driven by continued strength of our <unk> portfolio was partially offset by headwinds from Amit Amit <unk> in the earlier part of the quarter.

Our digital and patient solutions revenue was $6 2 million up 164% year over year.

So very strong performance from our newly acquired medication adherence businesses.

Our action plan and the transplant pharmacy.

We're excited about this early success as we scale, our digital business through organic and M&A investments.

The non-GAAP gross margins for the quarter were 67, 9% compared to 72% in the first quarter of last year non-GAAP gross margins declined primarily in our patient and digital solutions business with the addition of newly acquired businesses.

<unk> pharmacy business has a different business model with lower gross margins, but has positive EBITA, hence accretive to both the topline and bottom line.

non-GAAP operating expenses for the first quarter were $60 5 million up approximately $4 million sequentially from Q4 of 'twenty one.

This increase in expenses was driven by investments in R&D and commercial where we added resources in our clinical and research teams as well as commercial resources with dedicated cardiothoracic and abdominal teams.

Legal expenses increased tied to the false advertising trial, where we received a positive Judy award in our favor of over $44 million.

As mentioned in our last earnings call, we expect legal expenses to remain elevated this year.

Yes.

For the first quarter of 2022, we recorded negative adjusted EBITDA of $5 6 billion.

Compared to adjusted EBITDA of $7 6 million in the first quarter of 2021.

Adjusted for the elevated legal expenses I mentioned, our business generates near breakeven to positive EBITDA.

Turning to cash flows our net cash outflows for the quarter were $29 million.

Ending the quarter with cash cash equivalents and marketable securities.

$319 million.

In Q1, we typically pay out our annual cash bonus to employees, which results into net operating cash outflows.

In addition, we are nearing completion of expansion of our CLIA lab in Brisbane, which provides additional capacity for current tests as well as those in the pipeline like Allomap kidney.

Regarding the information request from the government, we do not have any material updates to report.

Our cooperating and moving expeditiously and responding to their request.

Turning to guidance, we are reiterating our full year guidance of $330 million to $350 million of revenue.

As you recall the lower end of the guidance reflects continued disruptions in transplant volumes as we saw in early part of this quarter. This low end also reflects potential increase in the pace of shift of patients to Medicare advantage plans.

The high end reflects continued market penetration model built on increased adoption and protocols and a strong rebound in transplant procedure volumes after three quarters of sequential declines.

Overall I am pleased by our performance despite the COVID-19 induced weaknesses in the early part of the quarter and three consecutive quarters of declines in transplant volumes.

Our tests are on a strong adoption curve. In addition, we have a very strong business model margin profile and balance sheet position, excluding elevated legal spend the business generates positive EBITDA.

We also have a large opportunity for commercial coverage and are excited about discussions related to inclusion of CF DNA in guidelines and our new acquisitions are making strong contributions really excited about our future with that I will open the call for questions.

We will now begin the question and answer session.

Ask any question you May Press Star then one on your telephone keypad.

If youre using a speakerphone please pick up your handset before pressing the keys.

But any time your question has been addressed and you would like to withdraw your question. Please press Star then two.

At this time, we will pause momentarily to assemble our roster.

The first question comes from Brandon <unk> with.

With Jefferies. Please go ahead.

Hey, guys. This is Matt on for Brandon. Thanks for taking the question I guess first one appreciate the comments in the prepared remarks, but that's been a little over a month. Since you won the false advertising lawsuit against one of your key competitors, but curious if you could just expand a little bit on any shift in dialogue. Since then what's kind of been the response there in the market and if you are seeing.

And any shifts from a commercial perspective thanks.

Yes, I think for us.

<unk> built an excellent reputation with the transplant community.

Over the last two decades.

Which is built on really excellent scientific data and how we work with different centers and I think when there's some jewelry Verde came out I think it was really a reaffirmation of what we represent as an organization to the transplant community.

I think the.

The damages themselves speak too.

I think the implications and so I think it was pretty pretty clear cut it from that perspective.

Great and then you commented on the March trends being the highest for both heart and kidney.

Any comments you can give as we moved through April here.

Guess, what kind of gets transplant volumes back to normal after three straight quarters hereof.

Flat to down growth now that hopefully.

Covid waves are behind us.

I think it has been a top three sequential quarters and I think we were it was good to see some.

Some improvements and we hope it's the nadir of what we've seen in the transplant space and I think for the <unk>.

Four weeks is still relatively early but I think clearly given how low January was if you compare to January it's much better than January .

Look at the month of April , but we continue to monitor this trend, but what we can say as at March 30 was our strongest month on record for both heart and kidney.

Okay.

Great and then last one a smaller piece of the business, but the digital solutions $6 million or so in here and once you if I kind of annualize that to get to $25 million. What's the right number we should be penciling in for that business for 2022 with some of the newer acquisitions being layered in thank you.

Yes, we're excited that over the last three years, we built a de novo business pretty much from scratch and it scene, one where it's been it's very strategic for that and we've seen progressive traction I think we've had some good numbers this quarter by the patient digital solutions I think we will continue to see how that progresses during the course of.

The year I don't know if theres any comments that you want to make on <unk>, yes.

We were super pleased about the performance here.

And we're just trying to see sustained over a period of time before they can give you color on on what the guidance.

Okay. Appreciate it thank you.

The next question comes from Alex Nowak with Craig Hallum Capital. Please go ahead.

Alright, great good afternoon, everyone.

It wasn't a big deterioration in price this quarter. We know there are still going to be some Medicare advantage. Those changes had a fluster, but I would say, there's a pretty big change quarter over quarter. So, we're particularly new happened in Q1 to reduce that accruals for test and I guess when do we reach it.

Point, where the ASP declines are going to stabilize and starting to see that reverse.

Yes, I'll make some comments Alex I'll pass it on and I think as we look at this shift in payer mix. I mean, there are a couple of areas that we see versus the highest increasing number now of commercial patients across all organs has been a change for us.

The second is obviously, the new launches, particularly now with <unk> coming on board as well and the third we've talked a bit about DMA shift, which ankle go a bit more in details, but these have been the <unk>.

Three primary drivers with an exchange I'll hand over to <unk>.

Yes so.

To summarize the three main drivers day rate as we've seen in the latter part of last year.

And also in this part now.

The thinking.

<unk> Alex there is as we had said during Oh.

Previous earnings call at the end of the year is that we are anticipating.

This decline to continue through this year.

Specialty specifically more acute in the first half.

As more and more patients continue to shift.

There are secular changes are happening both in the market as well as.

<unk>.

Our business, where more and more patients are shifting towards either commercial or MA plans in terms of our go forward plan there to tangents to it right.

<unk> continued to work with the private payers on commercial coverage.

Very pleased with some of the upcoming discussions have potential with Iresearch L team and then we continue to build infrastructure of improving the collection rates with our with the Medicare advantage plans.

Our thinking is what will take us this year to work through this and infrastructure and.

And when see some results until then.

Part of the year, specifically for the Medicare advantage plans you may have also noticed that more recent public news around the Medicare advantage plans and the challenges that the industry is facing.

So we're working through that and putting out a piece of infrastructure there.

And just wanted to make it clear when you are getting paid you are still getting paid a similar rate as you would have last year or the year before the volume and I guess would the company ever provide.

Volume number of tests that are currently being paid just so we can have a more apples to apples comparison.

Yes, when we signed agreements with our when we sign up contracts, we do sign those contracts in and receive payments for.

At or above what our agreement is higher so just to the spirit of the question, we don't discount our pricing.

You always signed contracts that are about the Medicare rates.

In terms of second part of your question, Yes, we have considered the some information we had shared during the during our Investor day.

And we'll give more color.

The mix of how the mix of our commercial volume has been increasing over the last few years.

But to give you more color on that.

That's helpful. And then the company has always had a very strong earnings leverage potential.

Given the focus on the 250 transplant centers or so and then plus the community piece, but we haven't necessarily seen a turn to a profit we get close but never quite got there. So I'm curious when do we get to that point, where return the switch and start to let some of those let some of the volume churn its profit and why I guess why wont the legal spend actually roll down.

Now the jury trial is finished.

Yes.

I might just make a quick comment on the profit piece I think as we've.

If we stages with Alice Shaw kidney or with Allomap I think we have really strong margins greater than 75% operating margins in the 2000, Hi, Hi, Hi range, there as well as we'd previously talked about when we're at scale I think the difference here is now we've moved into other organs, where we have lower coverages and also.

That's part of investing in growing I mean, I think we are not just focused on one area, we need to be a company that expands and has future scale moving into lung moving to deliver and then also as we think of the future pipeline, particularly in the areas of disruptive innovations such as <unk> or looking into.

Cell therapy, but I will move out on Kodak and theoretically, yes, I think thats somewhat from a business model perspective.

The main thing that the tests that have scale.

That business model is nicely profitable, we continue to build on our strong market position to keep expanding into the other organs and youll see that in our increased R&D spending increase that and continued investment in the commercial side.

<unk>.

Certainly commercial coverage will drive very strong operating leverage and we will certainly have that in terms of second part of your question around the legal spend.

We do have several matters, even though the trial has completed several matters operators gain that will continue to remain open for the year I would say at least for the current year.

We don't guide for future years yet.

But for 'twenty, two I'm anticipating that this will remain at elevated level.

Okay and then just lastly, what was the acquisition benefit for revenue in the quarter.

As we mentioned if you look at our patient.

Digital business, which was up 164% a big part of that contribution came from the acquisitions.

Okay. Thanks for the update I appreciate it.

The next question comes from Andrew Cooper with Raymond James. Please go ahead.

Sorry left myself on mute there for a second I appreciate the questions.

Maybe first just one on the P&L, we talk about the pricing dynamics, we talk about not necessarily having scale in some of these oregon's yet when we look at the testing services gross margin it actually ticked up.

About 100 bps sequentially. So just maybe give me a sense for what you're doing there to help offset some of these things, especially in a market where it feels like everybody else is talking about labor headwinds and cost of goods headwinds.

What's working for you on the gross margin front.

Yes, thanks for noticing that Andrew even though the headline gross margin number the other way that testing services improved because we have two things that are going on there.

On one side, we are adding into capacity wherein we have a new facility will go lives potentially here in Q2.

But we have strong operating effectiveness programs in place for a laboratory ware.

We've been working on automating our laboratory production and movement of our test services, which has been driving very good operating leverage within the lab.

Both in terms of our current volumes and also in preparation for the newer tests like lung as well as potentially allomap kidney we've been investing in some of the automation procedures there.

It has helped us at least counter some of the inflationary pressures and be able to maintain the healthy margin profile of that business.

Okay.

Okay, Great and then.

Just on the.

The current business can you give a sense for you.

When we think about omicron, what the impacts were obviously to the transplant volumes, we can see that but also to kind of more recent transplant recipients coming in versus maybe folks who were further removed from their transplant was there any discrepancies you could see on kind of who were showing up to clinics and how we think about that recovery hopefully as it.

Overall volumes of transplants are coming back as well.

Yes, it probably I think it's.

Three areas firstly to the omicron impacted searches on the on the transplant volumes that I think has been quite evidenced with the lowest in January since its out of code was at peak the second is <unk>.

Actually the labor shortage across.

Centers actually is almost to a T. We've spoken to.

As in the United States, and they all had sort of issues with <unk>.

Starting with sort of impacted some of the areas, where they can support us as well and in terms of patient access we have always been around this reached a steady state at 40% for the mobile phlebotomy. So I think we've had good axis.

There as well.

During this time of Emricasan.

In its peak so I think as we see this recovery.

Probably the biggest disproportionate piece will be living donors on the kidney side. So as you know 25% to 30% of the kidney volume is living donors and adding during the peak and when we've had these ebbs and flows thats. The group that gets impacted the most particularly with them having to doing donor changed et cetera. So.

Being deemed more of an electric procedures. So there I think you can see more of an uptick.

As staff I think we mentioned previously his staff come back then there'll be a replica of what was done in the past where people may work on the weekends to do some of these procedures, but currently that hasnt been the case, because you'll still make up from the staffing shortages, which have existed.

Great. Okay helpful. And then maybe just to sneak one one last one and even though it's not exactly.

Small question, but.

What's the latest we saw the validation data you announced earlier. This morning. So what's the latest timeline you can give us for allomap kidney potentially getting to demo the accident for consideration for coverage.

Yeah, I'll make some comments I'll seize uncle Wednesday, So I mean, we're really thrilled with.

With element I'll, let Kenny we as you know we've established this multimodal approach associated with hot and we're the only company with multimodal approval and Thats through demonstrating increased clinical utility.

And I think that we still have done the hard side as we look at kidney that's being not just adding elements skinny, but also looking at <unk>, what we call this combination multi modality, which.

Which is like we're excited about and so with Allomap kidney I think it's.

Being generating what we call. These clinical validation papers have been important part of that.

Process, So I think we're making good.

Headway to in late development I don't know if uncle wants to weigh in anything additional.

No thats good color, so well covered there right.

Great I'll stop there thanks again.

The next question comes from Matt <unk> of Goldman Sachs. Please go ahead.

Hi, This is Nick on for Matt.

Maybe just kind of a follow up to the last question any commentary on payer feedback or receptivity to some of the recent data some of the data set for you guys just published.

Yes, I think that when you're talking about the.

Recent data Youre talking I don't think.

The <unk> that.

That will come at ATC, we've published on the <unk>.

Kidney side, the Admiral data and the and we've talked about the cable data, which is our long term data.

Data on the kidney side in onshore.

What we just recently talked about was the.

Long term data for sure in both these long term studies showed the increased outcome survival versus those using units statistics. So.

So I think youre, referring to those those two sets of data right versus versus okra.

Yes. Thank you.

Yes, so I think for US I think particularly if we take firstly the hot side.

We have seen is.

I think <unk> alluded to it north of myself is.

We have.

Allomap on the international guidelines.

We were just <unk> last week and I think with the data, we are generating and reducing working with obviously extensive centers and kols there's consideration now.

Alice Shaw for example, <unk> incorporated into the guidelines and again this is still consideration so for us it could be another important milestone as we look at.

<unk> coverage in this space and certainly that the team has made progress we've seen that.

Out of the gates there are a couple of key accounts at sign up on the on the hot side like Geisinger, etcetera, but I think with the potential guidelines for auto show is really exciting on the kidney side.

Our team is being built out under anchor and I think what we've seen here is the utility of the <unk> is being is being well received and.

And also <unk>, which is long term data. So these are the types of data, which I think the peds requests, which is long term utility and also how it how it influences our decision, making so we're really excited by.

By the data that's being generated and I think the team and really pleased to be the one.

Any company that has this sort of data to go out towards payers as well.

As long term piece.

Got it. Thank you and then you guys have talked about some of the investments you're making whether it's.

NII or <unk>.

Other related fields could you just maybe comment a little bit more on.

The SG&A ramp that we're seeing what are the impacts that you guys are having from that investment.

Yes, I might make some comments and I'll hand over to <unk> I mean, I think as we as we scale and build as an organization you need to have an innovation hub, which is the R&D piece and as you look at the commercial execution as the SG&A piece, so investment as a core part of what we need to do as an organization. We can always decide not to do it.

I think I'd be remiss in this type of environment not to continue to grow as a company dedicating transplant. So in terms of the SG&A side, what we've been doing particularly commercial side is we've actually split out.

Our field team to be in a dedicated.

Above the diaphragm blood diaphragm, so <unk> teams and on the R&D side, we've continued to invest.

In developing this pipeline and some of the areas you mentioned such as NII, but.

Is critical visa being licensed in but there are other areas such as Allomap kidney.

The organs, such as our show lung.

And <unk>. So we have a pretty extensive pipeline. This is really building for the future I think it's easy to just focus on one successful offering two successor offering three successful offerings, but.

Unless you're in any specific event that'd be should keep an eye out for and the second question is on Alison and I love him any specific plans for this year along with your digital solutions offerings. Thank you.

Yeah, I Gotcha, I think if I understood I think you said uhm any upcoming Callaspo juice I didn't catch the second question. It was.

Digital.

Particularly on on <unk> as well as your digital solutions any any short term long term plans that we should keep an eye out for.

Gotcha, all right, Yeah, I mean, I'll take the latter first I mean certainly with.

Building disruptive innovation, whether it's looking at <unk>. We are encouraged to look at the full presentation. We just limited.

Tanner meetings, representing aspca and.

MTR and there we had both animal realisation said I will sell as well as.

Hello, Elohim in these areas, which were investing for the future and so I think we've also actively.

Enrolling in the study, which is also shed at that presentation.

Called the Acrobat study next elohim, So I think as you look at.

<unk> progress here, it's about partnerships, where we can publicly disclosed in addition to discontinue enrollment on acrobat and we will provide additional.

Commentary on that because enrollments going extremely well.

Looking at some other catalysts, we've talked about I think once we've talked about is it having.

Your map element opinion, the Kinney side as being areas to watch during the course of this year as we provide updates if you think of specific scientific milestones, we just completed Shaw presence.

Presentation <unk> in in terms of.

ATC, which comes up in June will be talking about the Oprah we got as well. So these again the long term studies looking at Multimodality. This really is the way of the future I think generating long term study data, which is from a multicenter prospective.

<unk>, what we do and that allows us to continue to drive innovation, but stay ahead of others because about clinical boss being raised as well. So I think these are a couple of areas that you want to keep on island will also share a bit more now.

Artificial intelligence I think this is really in some ways the future of what the industry's moving towards not necessary I've seen on the diagnostic side, but certainly as we look at the macro space right I-i, such a such a core part of what can make a difference in may.

Many different industries and sectors, So I think our investment in.

Artificial intelligence is core and so will provide more of an update and that we may we IMAX sheet potential.

Potential innovation day, as well as part of that tip.

Typically we talk about disruptive innovations such as we did the Zeno transplantation day earlier on this quarter. So maybe more to watch out for on the on the AI side as well.

Exciting future.

Excellent. Thank you the next one.

The next question comes from Mason Circle with Stephens, Inc. Please go ahead.

Hey, guys, maybe just two quick ones for me here I know allomap kidney is a ways off but in terms of thinking about the initial attachment rate for that test.

Some key differences that should be taken into account and for may be why it would be different than where al assure hearts attachment right currently sits.

I think that's about clinical utility so I think when you look at the touch rates. We we we believe that as long as you demonstrate clinical utility then there'll be I'll take I don't think you'll find any other proxy or any other benchmark, which is shown what hard care is done and.

Given given what we saw in hot care, what we've done in kidney carries actually pretty similar right in terms of the technology in terms of designs in terms of trying to understand what really matters to the compositions and on top of that we've also included Ibox, which is a prognostic algorithm as part of that so I think the end of the day, what's really important.

Being a physician myself is demonstrating utility.

If it's if it's not useful then you really won't get that type of attachment. So I think that sort of speaks for itself and that's why we moved.

Moved onto other organs, as well and developed lung <unk> as part of that sort of development process as well.

This is one final point Mason I mean, we developed this approach without knowing if there would be a reimbursement pathway because we believe at the end of the day. The way you help conditions is adding clinical utility and helping them in the decision making.

Got it and then any updated thoughts on potential commercial payer wins for for Alisher kidney, maybe this year and in 2023 do you have the studies and evidence that you need to begin pushing on these players.

Specifically for Alisher kidney.

Yeah, I'll I'll I'll make a comment they'll kind of <unk> I think some of that one of the questions is came up earlier and what's the impact of some of these studies. We're doing I think first these long term studies are important because it goes beyond some of the short term studies are done with a company that has that long term day generation with him hard on the kidney side.

And I think particularly the Admiral study was really helpful. As we look at demonstration of benefit with both for causing all surface violence as well.

So if I think of what we think is critical generating the ride datasets is important.

On the hot side as we saw having for example, guideline changes can also be scientists incrementally benefit beneficial as well I will hand over to <unk> to make any additional comments.

Having very good discussions with a lot of peers around especially with the Admiral data.

Which provides a first longterm data.

A kidney.

We have a plan with a with a large list appears that we are meeting with.

The remainder of the year as well as going into early 2023 shortly.

Certainly certainly are upfront and central focus that.

Got it thanks guys.

Okay.

This concludes our question and answer session I would like to turn the conference back over to bridge SEATO for any closing remarks.

Yeah. Thanks, very much I mean, it <unk> building, a really special company, 100% focus on the transplant patient way of doing it for more than two decades and for US. It's really this unique ability to really be frightened.

Front and center in this space and that support us attention not only of the transplant community, but I think in patients and what we do for them day in day out so again for all the investors and the line. Thank you for your interest in this space. It really makes a difference to the transplant community knowing that this narrow focus for them. Thank you and have a great day.

The confidence has now concluded. Thank you for attending today's presentation you may now disconnect.

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