Reginald Seeto, MBBS, CareDx President and CEO

It has been a busy few weeks for CareDx and its President and CEO Reginald Seeto, MBBS, as he begins his fourth month at the company’s helm.

Based in South San Francisco, CA, CareDx is a precision medicine company that specializes in testing services, products, and digital healthcare solutions for pre- and post-transplant patients. During January, CareDx closed a public offering that raised approximately $164 million in net proceeds. The company also announced ranges of record-high revenue for the fourth quarter and all of 2020, with full Q4 and full-year results to be released later this month.

Most notably, Seeto told GEN Edge, CareDx bolstered its focus on transplant diagnostics by partnering with IDbyDNA on metagenomic infectious disease tests for transplant patients, through a collaboration whose value has not been disclosed.

CareDx and IDbyDNA agreed to develop and commercialize AlloID, a tailored infectious disease testing solution designed to identify more than 100 pathogens as well as drug resistance in viruses and bacteria that are specific to organ transplant donors and recipients.

“We believe there’s value in doing multiple pathogens at one time,” Seeto said in a recent interview. “We would look at the usual suspects, which in the transplant space are always EBV [Epstein-Barr virus], CMV [cytomegalovirus], and BKV [BK virus]. These are the must haves across the space.”

“But what we would also do is add about 100 more pathogens that we would want to be identified as part of this custom panel specific to the transplant cohorts,” Seeto added. “So it wouldn’t just pick up the typical things, but would also allow us to pick up anything that may not be typical, but still common or still present within these patients.”

CareDx has yet to detail what 100+ pathogens the panel will aim to identify. Asked if AlloID could be used to detect SARS-CoV-2, Seeto replied: “With this test, we have the ability to look at all types of pathogens, and we would or could include COVID-19 as part of that panel as well.

“Today, there are obviously rapid tests that exist within the community which are well adopted. But we would see this [COVID-19] as something that could be added potentially to the panel as well,” Seeto said.

Multi-Modal Solution

CareDx envisions AlloID as part of a multi-modal holistic solution enabling clinicians to provide comprehensive, personalized care to their patients, along with two of the company’s other products.

One is AlloSure, a donor-derived cell-free DNA (dd-cfDNA) test for noninvasive transplant surveillance for which CareDx has developed versions for kidney and lung transplant patients. The other is AlloMap, a 20-gene panel derived diagnostic test intended to help identify heart transplant patients with stable allograft function who have a low probability of moderate to severe acute cellular rejection (ACR) at the time of testing, in conjunction with standard clinical assessment.

“It’s a strategic partnership to bring to market a test which can cover more than 100 infections in a single tube, and allow us to bring to the transplant community a multi-modality solution, which is where you bring complementary tests which then add additional value,” Seeto said. “In this case, that would be pairing AlloSure with the infectious disease test. This could be applied across all transplant organs just given, all these patients are on immunosuppression.”

A timeframe for the collaboration with IDbyDNA has yet to be set, according to Seeto.

“There would be a short period of intensive development with IDbyDNA, and then during the course of this year, we would look at initiating clinical studies as part of that process on our side,” Seeto said. “These studies would then enable us to then eventually go to commercial applications and commercial usage.”

IDbyDNA, based in Salt Lake City, markets the Explify® platform, a next-generation sequencing (NGS)-based metagenomics platform designed to simultaneously detect and analyze tens of thousands of microorganisms and pathogens in any sample.

50,000+ Microorganisms

Explify is designed to identify more than 50,000 microorganisms, and more than 6,000 known common and rare pathogens. The platform uses a proprietary database of curated DNA and RNA reference sequences to identify 35,000+ viruses, 13,000+ bacteria, 4,000+ fungi, and 150+ parasites.

A version of the platform, Explify Respiratory, was upgraded last year to enable it to detect SARS-CoV-2—part of an expansion of operations that the company undertook after completing a $20 million Series B financing.

“The other important piece of the technology by IDbyDNA is, they also have a bioinformatics platform, which I think will be a very powerful way of analyzing the data as it comes through,” Seeto said.

What sold CareDx on IDbyDNA as a partner?

“There were three areas as part of our diligence and evaluation which were important,” Seeto said. “The first was the technology itself, which we think is best in class, and we’re very familiar with in terms of the high rate of capture, NGS technology, as well as their infectious disease expertise.

“The second thing is, they have a world class bioinformatics approach. And that’s always critical when you have bioinformatics that works well for NGS metagenomics. You have large amounts of data and analysis that has to be sorted through, so that bioinformatics platform is really important,” Seeto continued.

“The third area is the team itself. We felt that as we worked with the team that we could develop a mutually strong, long-term partnership as partners who could problem solve and also only be focused on patients and develop something which would be meaningful for transplant centers, but more important for patients.”

Collaborating with IDbyDNA, Seeto said, addressed one of three priorities identified by its advisory board about a year ago; the other two priorities were urine and tissue biomarkers.

The alliance with IDbyDNA is the first partnership announced since Seeto becoming CEO of CareDx. A month earlier he announced the company’s first acquisition during his tenure, the planned purchase of TransChart, an Ohio-based provider of electronic health record software supporting U.S. transplant centers, for an undisclosed price.

Seeto has been President since 2018, when he joined CareDx from Ardelyx, where he served as Chief Operating Officer. At CareDx, Seeto was promoted from Chief Business Officer to CEO effective November 1, succeeding Peter Maag, PhD, who was named Chairman last year and is now Executive Chairman. During his eight years as CEO, Maag oversaw CareDx’s initial public offering (IPO) and years of growth, internally and through acquisitions.

Before Ardelyx, Seeto held corporate development positions at MedImmune and its acquirer AstraZeneca, rising there to Vice President, Head of Partnering and Strategy.

Record-High Revenues

CareDx said January 11 it expects to report record-high fourth-quarter and full-year 2020 results later this month. The company offered a Q4 revenue range of between $58.4 million and $58.6 million, up approximately 63% from $35.8 million in the fourth quarter of 2019.

CareDx offered no forecast of its net losses, which shrunk during the first three quarters of 2020 to $15.199 million from a net loss of $17.191 million in Q1-Q3 2019.

During 2020, CareDx said, most of its revenue will have come from testing—between $50 and $50.2 million, up from $29.1 million in Q4 2019—while product revenue is expected to be $5.9 million, vs. $5.1 million a year ago. Digital and other revenue in the fourth quarter of 2020 has been estimated at $2.4 million, vs. $1.6 million in October-December 2019.

For all of 2020, CareDx has estimated a preliminary revenue range of $191.9 million and $192.1 million, an approximately 51% increase from $127.068 million in 2019. Testing revenue is expected to range from $163.3 million to $163.5 million, compared with $104.55 million in 2019. Product revenue is expected to be $19.3 million, vs. $18.279 million a year earlier, while digital and other revenue is expected to be $9.3 million, more than double the $4.239 million reported in 2019.

CareDx reported preliminary cash, cash equivalents, and marketable securities of approximately $224.7 million as of December 31, 2020—nearly six times the $38.2 million in cash and cash equivalents a year earlier (2019 results did not include a figure for marketable securities).

The company will have nearly doubled its cash through the approximately $164 million in net proceeds raised through its public offering that closed January 25. CareDx sold 1,923,077 shares of common stock at $91 per share—an 8.5% premium above its closing price that day of $83.86. Since then shares have dipped, closing Thursday at $77.63.

Net proceeds could climb to $188.7 million if underwriters exercise in full a 30-day option to purchase up to 288,461 additional shares of its common stock at the public offering price.

“As we move into 2021, we have a core business that we would continue to grow and that’s focused on five areas,” Seeto explained. “One is driving our direct-to-center strategy through multimodality innovation, it’s driving the operational flow through the transplant centers to make ordering easier.

In the kidney space, he added, CareDx is focused on expanding into community nephrology, while for tests that are done across transplants, the company will rely on patient care managers to increase adherence to treatment through patient interaction.

“And then lastly we have a direct to patient strategy that we’ve started to implement during the course of end of last year with AlloCare and another offering we call RemoTraC, a solution enabling remote home-based monitoring of transplant patients,” Seeto added. “So, 2021 growth would be driven by the core business as well as with additional offerings which would come in the future, including AlloID.”

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