Greetings. Welcome to CareDx, Inc. Third Quarter Financial Results Conference Call. At this time, all participants are in a listen only mode. A question and answer session will follow the formal presentation.
Please note this conference is being recorded. I will now turn the conference over to your host, Greg Hajducek with Gilmartin Group. Go ahead, please.
Thank you. Good afternoon, and thank you for joining us today. Earlier today, CareDx released financial results for quarter ended September 30, 2019. The release is currently available on the company's website at www.caredx.com. Peter Maag, Chief Executive Officer and Michael Bell, 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 the federal securities laws, which are made pursuant to the Safe Harbor provisions of the Private Securities Litigation Reform Act of 1990 5. 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 include, without limitation, our examination of historical operating trends, expectations estimates and various assumptions. These statements involve material risks and uncertainties that could cause actual results to differ materially For a list and descriptions of the risks and uncertainties associated with our business, please see our filings in the Securities and Exchange Commission. The information provided in this conference call speaks only to the live broadcast today, October 31, 2019.
CareDx 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 a financial measure that is not calculated in accordance with generally accepted accounting principles. Reconciliation to the most directly comparable GAAP financial measure may be found in today's earnings release filed with the SEC. I will now turn the call over to
Peter. Thanks, Greg, and good afternoon, everyone. We had another record quarter at TRDx delivering strong growth across our portfolio and expanding our leadership position in transplantation precision medicine. During the quarter, we continue to increase our mode in transplantation with the further expansion of our surveillance testing services, the global launch of AlloSeq cell free DNA, the acquisition of Xyn management and the addition of 2 new board members. For the Q3 of 2019, total revenues were $33,800,000 increasing 60% compared to the year ago quarter.
Growth in the quarter was primarily due to testing services revenues increasing 68% with digital revenue from our recent Otter and XYN management acquisitions contributing $1,400,000 to the top line. In testing services, CareDx provided 8,524 AlloSure kidney results to approximately 6,006 100 transplant patients in the Q3. Since launching AlloSure kidney in October 2017, we have provided results to almost 14,000 patients, which equates to approximately 7% of the total number of living kidney transplant patients in the U. S. During the quarter, we continue to expand our kidney transplant surveillance services by announcing the enrollment of the first patient in the OCCRA study, a multicenter prospective observational clinical trial.
This landmark registry study is designed to measure outcomes of transplant recipients using kidney care, our next generation solution for kidney transplant patient surveillance. The combination of AlloSure's donor derived cell free DNA test, AlloMap's gene expression profiling and iVox's graft survival artificial intelligent algorithms will provide physicians with the most comprehensive option to manage kidney allograft health. Turning to numbers on AlloSure Kidney. During the Q3, 124 provided AlloSure results to their kidney transplant patients. We estimate that these 124 centers account for approximately 65% of the transplant volume in the United States.
We finished the Q3 of 2019 with approximately 5,700 We define surveillance stations as patients that are managed by CareDx on a predefined transplant center testing protocol. These 5,700 surveillance patients help build the recurring revenue effect of AlloSure Kidney. The surveillance attrition rate in Q3 was consistent with previous quarters. As indicated on the last quarter call, we consider these dynamics as being in line with industry standards. Overall reimbursement in the Q3 was also consistent with previous quarters with 70% to 80% of our AlloSure kidney volume attributed to Medicare reimbursement for AlloSure kidney was granted 2 years ago through the MolDX program at Palmetto.
At that time, MolDX requested that we develop additional clinical data through the K OAR study with the understanding that the readout of the end of the study would determine the level of clinical utility of AlloSure and potentially lead to a review of reimbursement levels. This was known as coverage under data development. However, in August 2019, when MolDX issued the draft local coverage determination for AlloSure Heart, they also took data development requirement for AlloSure Kidney, which in fact confirms our belief that the currently available clinical data for AlloSure is sufficient for ongoing Medicare reimbursement coverage. This increases reimbursement certainty as the final local coverage determination will remove the need for reassessment at the end of the K OAR study. Although multicenter studies like K OAR and Okra will no longer be required by Medicare when the draft LCD is finalized, they continue to be critical for us as they generate incredibly important clinical data as well as providing additional touch points with the key innovation hubs and opinion leaders.
These studies also help drive compliance and adherence to standard protocols, which is the crucial element to our work in the transplant community. We continue to make progress enrolling centers and had been enrolled. We expect to complete K OAR enrollment in early 2020. Now shifting to heart. Q3 2019, AlloMap heart testing volume increased 16% year over year, translating into 4,726 patient results.
Heart Care, the combination of AlloMap and AlloSure Heart continues to see increased adoption in the transplant community. Our surveillance heart care outcomes registry or SHORE study is gaining traction with transplant cardiologists and we have recruited already 31 centers into SHORE to date. As I mentioned earlier, AlloSure Heart received a positive draft local coverage determination from MolDX this quarter. Approximately 35% of heart transplant patients are covered by Medicare and the MolDX draft coverage underscores the value we bring to the transplant patient care. Towards the end of the quarter, we announced the strategic partnership with NanoString to develop histomap, a gene expression profiling solution to identify allograft rejection in transplant biopsy tissue.
This partnership with NanoString will further enhance the development of precision medicine tools in transplantation and help to improve transplant diagnostics. Now moving to our products business. This quarter, we expanded our market leading portfolio of transplantation products with the global launch of AlloSeq cell free DNA at the ESOD Conference in Copenhagen. We estimate this launch will enable access to our cell free DNA surveillance technology to an additional 800,000 patients outside the United States. We also introduced AlloSeq TX17 at the ASHIBANS conference in Pittsburgh.
AlloSeq TX17 is a first of its kind next generation sequencing HLA typing solution utilizing hybrid capture technology. This best in class technology enables the most comprehensive sequencing available, covering more of the HLA genes than current solutions and adding coverage of non HLA genes that may impact transplant patient matching and patient management. The initial feedback to AlloSeq cell free DNA and AlloSeq TX17 was very encouraging. Our HLA typing products are used in labs throughout the world to help determine which organs or bone marrow are a transplantation match between the donor and the recipient. Our 3rd quarter product revenue contributed $4,200,000 to top line and year to date product revenue growth is 19%, driven by continued traction of TruSight HLA and QTYPE.
Now focusing on our digital business. Our digital revenue was $1,400,000 this quarter. This is the 2nd quarter that we have reported digital revenue following recent acquisitions. In May, we acquired Otter and most recently in August, we strengthened our growing portfolio of transplant software solutions with the acquisition of Xlin Management, the leading provider of solutions who simplify transplant quality tracking and waitlist management. SYN Management provides 2 unique solutions, SYN Copy and waitlist management.
SYN Copy is currently used in 28 centers and simplifies transplant quality tracking and reporting, while waitlist management includes a team of care managers who maintain regular contact approximately 6,000 patients on the wait list to help them prepare for their transplant and maintain eligibility. Going forward, the CareDx team will strive to bring our multimodality testing solutions and machine learning algorithms to the transplant clinic under our eye track umbrella. A highlight in our digital business this quarter was the publication of a clinical validation study of KidneyCare's iBox technology in the British Medical Journal or BMJ. The BMJ study assessed the performance of the iBox risk prediction score in 7,500 kidney patient recipients, with a median follow-up time of 7 years across academic medical centers in the United States and Europe. The Ibox risk prediction score combines allograft function, histological and immunological parameters with HLA donor specific antibody profile to accurately predict the risk of long term kidney allograft failure, as well as to identify significant changes at the end of at the time of therapeutic intervention.
The Ibox risk prediction score may help guide patient monitoring and further improve the design and development of a valid and early surrogate endpoint for clinical trials. Last but not least, we were pleased to welcome 2 new members to the CareDx Board of Directors during the quarter, Grace Colon and Chris Kornoyer. Doctor. Colon joined the Board in July. Since 2013, she has served as President, Chief Executive Officer and Director of Encarta Therapeutics, a clinical stage company developing therapeutics for cardiovascular conditions.
In addition to her role at Encarta, she is Executive Chairperson of Proterix Bio and is a member of the Board of Cocoon Biotech. Chris Kornoyer joined the Board in August and was previously the Chairperson and Chief Executive Officer of n of 1, which is a leader in cancer precision medicine. Chris brings deep experience in technology and her multiple experiences with digital health solutions will be invaluable to CareDx as we build out our digital offerings. In summary, our 20 year commitment to transplantation has given CareDx an unparalleled understanding of workflows at transplant centers and the unique needs of these patients. The CareDx team is committed to constantly expanding technological boundaries to improve our services and products and make a difference in the lives of transplant patients.
Before I hand over to Mike to discuss the financials, I would like to remind everyone that we will be hosting our annual investor lunch meeting at our South San Francisco office on the last day of the JPMorgan conference on Thursday, January 16. Many make the CareDx office the last stop on the way to the airport. Invitations will be sent out in the near future by Greg from the Gilmartin Group, our new IR firm. Please let us know if you're able to attend. Now, Mike, over to you.
Thank you, Peter. Turning first to the income statement. Our Q3 2019 testing services revenue increased 68% year over year to $28,200,000 The significant growth in testing services revenue was primarily driven by the 8,524 AlloSure patient results we provided in the 3rd quarter. Growth also came from the 4,726 AlloMap patient results we provided, which was a 16% increase compared to the prior year quarter. Our Q3 product revenue was $4,200,000 and year to date product revenue growth of 19% continues to track to our expectations.
Digital and other revenue for the quarter was $1,400,000 and includes revenue from our acquisition of OTTA as well as from the ZYN Management acquisition, which closed in late August. Total revenue in the Q3 of 2019 was $33,800,000 representing a 60% increase compared to the prior year's $21,200,000 Our gross margins continued to improve year over year. For the Q3 of 2019, the overall gross margin was 66% compared to a gross margin of 58% in the same period of 2018. The non GAAP gross margin for the quarter was 69% compared to 61% in the prior year quarter. It's worth highlighting that the non GAAP gross margin for the Testing Services business for the 3 months ended September 30, 2019 has improved to 75% compared to 67% in the same period of 2018.
For the Q3 of 2019, the net loss was $1,800,000 compared to a net loss of $20,000,000 in the same period of 2018. Our net loss per share was $0.04 for the quarter compared to a loss of $0.54 per share in the Q3 of 2018. Our Q3 2019 net loss included a $6,000,000 stock based compensation expense and a CHF 4,300,000 gain from the change in estimated fair value of common stock warrant liabilities. For the Q3 2019, our non GAAP net income was €900,000 compared to a non GAAP net loss of €600,000 in the same period of 2018. Our non GAAP net income per share was $0.02 for the quarter compared to a non GAAP net loss per share of $0.01 in the Q3 of 2018.
As a reminder, we define adjusted EBITDA as non GAAP net income before interest, income tax, depreciation, amortization and other expense. For the Q3 of 2019, adjusted EBITDA was a gain of 800,000 compared to a gain of €200,000 in the Q3 of 2018. This marks our 5th consecutive quarter of positive adjusted EBITDA. As we indicated on the last earnings call, we increased our operating expenditures in the Q3 of 2019 to further enhance our leadership position in transplantation. Operating expenses in the quarter reflect our fully expanded testing services field based team, our significant presence at major trade conferences such as ASHI and ESOT, our continued investment in clinical studies such as K OAR, SHORE and OCCRA, as well as our burgeoning focus on digital.
We expect our operating expenses will modestly increase in future quarters as we continue to build a platform for future growth. Cash and cash equivalents at September 30, 2019, was CAD 40,900,000 dollars compared to $44,500,000 in the Q3 2019, with the movement in cash in the quarter primarily reflecting our investments in ZYN Management and Civiltech. Turning to guidance. We are increasing the lower end of our 2019 revenue expectations to reflect our performance in the 3rd quarter and now anticipate $124,000,000 to $125,000,000 for the year. With that, I will open the call for questions.
Thank you. At this time, we will be conducting a question and answer session. Your first question comes from Bill Quirk, Piper Jaffray. Go ahead please.
Great. Thank you. Good afternoon and once again a very nice quarter gentlemen.
Thank you very much, Bill.
So first question I had Peter was the comment about attrition and obviously good to see that that is consistent from quarter to quarter. I have a question for you though. Given that we have a number of patients that are currently undergoing AlloSure testing, but yet are not in year 1 where the protocol suggests that they may get 4 or fewer tests. And you've had some previous comments that suggest that the K OAR patients are going to have about 75% adherence and maybe about 50% or so adherence for surveillance patients. Is another term for attrition simply the testing interval by chance?
In other words, if you had a patient who got tested in the Q1, they may not necessarily be even up for a second test in the Q2, for example?
Yes. I think this attrition discussion has been lingering around. We see the dynamic as completely standard and industry straightforward. So Mike might be able to shed more light on
that. Yes, Bill. The way we define attrition is basically we have standing order patient where we have orders for a number of tests over a 12 month period. We define attrition where that standing order has ended in the quarter not been renewed by the end of the quarter. So it's not quite the interval in testing exactly as you're describing it, but that could be an influencing factor.
Okay, very good. Thank you. And then 2 additional ones for me. First is on AlloSeq or AlloSure rather outside of the U. S.
Can you help us think about, I guess, the early stages of the launch? I seem to recall this is very much a country by country focus, realizing that you don't want to give 2020 guidance, but maybe help us think a little bit about what we should be expecting in the 1st year there? And then secondly, just thinking about AlloMap, it continues to be a nice outperformer here several quarters into the heart care launch. How important would you say that the addition of AlloSure is to convincing physicians either to stick with the product for a longer period of time or for that matter, bringing on some new physicians who had previously not been interested in using the single product, but rather interested in using the combined product? Thanks, guys.
No. Well, thank you very much. And today you heard us the first time to talk about 800,000 patients as additional potential users of an AlloSeq opportunity outside of the United States. So this cell free DNA technology has received tremendous, tremendous interest from transplant centers all over the world. Now our beta sites where we are currently conducting our first initial user testing are very excited about getting cell free DNA in their hands.
I think you mentioned that probably reimbursement in molecular diagnostics in ex U. S. Market is really the key to success. I think we navigated this extremely well in the United States with our AlloSure, but that will be also the key to success in the ex U. S.
Market. Now we haven't guided on the product revenue for next year and probably by March next year we'll be in a position to give you a better answer, but really reimbursement is going to be key. I think in broad strokes, it will be revenue relevant year, but really the 2022 and 2021 and 2022 will then be you will see the full kick in of that product business. So we always said it's not relevant in 2019, maybe it becomes a bit revenue relevant in 2020, but then really the kicking off of additional revenues will come in the 2021 phase. And then on the heart care, we are very excited about heart care as the community has embraced this combination of AlloMap and AlloSure and you see 16% growth on the AlloMap franchise as very, very strong growth from our perspective.
The number of centers now embracing heart care, quite frankly, I think it's very surprising to me that we've been so successful with everything that's ongoing in the company to actually engage so many transplant centers in the U. S. To start on the short trial. And that really speaks volume to the power of the combination of AlloMap and AlloSure. We are probably attributing roughly half of the growth of the heart care franchise with the SHORE trial excitement or the other way to say is that half of the AlloMap growth is probably associated with the heart care concept.
So I think this is a strong growth driver for us in 2019 on the heart franchise.
Got it. Thank you very much guys.
Thank you. Your next question comes from Brandon Couillard, Jefferies. Go ahead please.
Hey guys, this is Matt on for Brandon today. Thanks for taking my questions. First one, if we look at the implied 4Q guidance, it suggests around $33,000,000 to $34,000,000 of revenue, which would essentially be flat sequentially. Given the underlying momentum you're seeing on the kidney front and the strength on the heart side of the business, can you walk through some of the puts and takes that are informing your implied 4Q guidance? Thanks.
Yes. No, and thank you so much. And we as previously in previous year have always talked about the Q4 being probably a less surveillance quarter for transplantation. So we just see less transplantation surveillance visits. Patients do not want to come in into the transplant center during the holidays or even during Thanksgiving.
So Q4 has always been a little bit of a seasonal effect for us. Overall, I think we are going into the Q4 with 5,700 and 38 surveillance patients, which is a very strong momentum build for us into the quarter. And we saw in the Q3, a volume growth on the kidney side, but also want to make sure that you realize that the Q4 is always a bit of a 4th quarter dimension.
3rd quarter. I think that's enabled us to raise the lower end of the guidance from 123 to 124. So we're now at 124 to 125. So I think we sit here feeling confident with that guidance and still expecting, yes, some sequential growth coming from AlloSure.
Thanks. And then if we look at the net surveillance patient adds in the quarter, another nice quarter there, especially excluding those outside of the K OAR study. Peter, can you just talk a little bit about what is underpinning the momentum you're seeing there in terms of the kind of acceleration there in the net adds?
No, if you look at our numbers, they're all, I think, pretty strong numbers. When you see a total patient results, you look at also the dynamic of ordering centers have moved up from 117 to 124 in the quarter. And now these additional 1,000 patients on the surveillance ad, I think that's all pointing in the right direction. I would say that these new centers, they are embracing the ARDS schedule, which is the 7 plus 4 plus 4 schedule. And I think that is now established through more than 50 centers through the K OAR study have embraced this ARDS schedule and the protocol.
And if you're asked as a new center coming on stream, how should I use this product, it's very obvious how to use AlloSure. It's 7+4+4. And so, I think this is really very successful in the context of 5,000 more than 5,700 patients now on a surveillance schedule. So I think we're very pleased with that.
Super. Thank you.
Thank you. Your next question comes from John Hu, Raymond James. Go ahead please.
Great. Thank you. Peter or Mike, actually, if we could start going back on the guidance. I appreciate that there is typically some seasonality and seasonal decline in testing in the 4Q. But just to be clear, are you expecting any specific impact from competition or competitors enrolling in competing research studies in the 4Q?
John, that's an excellent question. And I think we actually hadn't anticipated a 4th quarter impact of competition and sitting here right now at we're in November and haven't had news on reimbursement of any other significant test, other than the TruCraft offering. I think that speaks to us probably not having a lot of expectations on the Q4 in terms of impact on competitive testing.
Okay, great. Regarding the center penetration, it ticked up again here in the 3Q. You've been making tremendous progress there on the kidney side. Maybe you could talk, Peter, a little bit about the progress and maybe where you are in terms of the centers that are going deeper. You have a written protocol.
I would argue you probably have a deeper moat there. And then the second part of the question is the penetration of the remaining high volume centers, clearly you've talked about 100 centers having 80% of the volume. So, I guess the holdouts at this point, what's the data that they need to be convinced? Is it is the 1 year primary outcome data? And if so, when can we expect that?
No. And 2 excellent questions. The first one is, yeah, I mean, 124 centers in the United States, that's almost half of all transplant centers in the U. S. Are now exposed to AlloSure.
And that's very exciting. But the really important component that you honed in on is, are they using, have they embraced beyond K OAR a protocol? And is there an AlloSure protocol established in these centers? And we started the year with about 10 centers having a protocol. And now we have passed more than 20 senders have embraced an AlloSure protocol as a standard for their standard, which is very strong for us and which is probably driving some of the surveillance patients increases that we see here.
So, no, we're very pleased with going deep and you'll see the numbers speak for themselves. We're being quite successful in penetrating there.
Great. And sorry, just on the remaining high volume centers, some of the holdouts, if we had to think about maybe the 15% gap, if you will, of the remaining high volume centers based on the way you've kind of dissected the market. Is there any, I guess, one thing that they're waiting for in terms of data that can maybe drive some greater adoption in, I guess, the remaining holdouts?
I think the one data that we are probably pretty excited about to generate relatively soon. Now we have such big patient data pool. And being clear, we call this about being comfortable with living in the gray, because it's relatively clear. If you have a very low AlloSure score, what it means, there is no active rejection. But if you have a very high AlloSure score, it's also clear, it's pretty clear that there is a rejection.
I think what the data that we need and that experience will bring, what do you do with those patients that are in this 0.5% to 0.9 percent range and generating more experience and more data. Is this really a TCMR1a rejection or is it actually a misread of a biopsy, for example. I think that type of data will be very convincing to many opinion leaders and we're in the midst of generating very exciting data on that and releasing that probably somewhere between ASN, ASTS and ADC next year.
Okay, great. Thank you for that. And then the last one for me. We've got an update here recently as far as there's some movement relating to the Kidney Care Executive Order, specifically regarding the organ procurement organizations and living donor rules. There's some movement towards getting those finalized.
Also Fresenius recently announced the universal living donor registry. So I guess the question is, clearly the rate of kidney transplants have been growing pretty nicely here over time. I think something around on the order of 5% per year over the last 30 years. But I guess looking into next year, Peter, do you have a sense of any of these catalysts as potentially accelerating the pace above the normal rate for adoption in transplant?
No, and thank you so much for that question, because I think that's one of the outlook in 2000 in September, CMS removed the outcome requirement for transplant centers pre approval. And I think that has a very, very strong impact for the transplant community because this 1 year graft survival number has been now removed. That does really do 2 things. One, it will increase the need the ability for transplant centers to also transplant marginal organ. And then secondly, it will also increase the need for transplant centers having better quality systems because they're now measured on long term outcome qualities versus just this 1 year graft survival.
So that plays exactly to what we are playing towards the kidney care initiative, which is very exciting for us. So you'll see an increase in kidney transplants next year based on this initiative. And secondly, you'll see an increase of need of transplant centers to have increased quality measures, which we with our XIN copy offering will be able to address.
Excellent. And maybe if I could sneak in one more just because you mentioned the need for better quality systems. You obviously did the Otter and then ZYN acquisitions. You have iBox on board now and starting to collect data. Can you just give us an update broadly speaking on your software strategy and how you see that trending?
I think it's relatively short term. The software strategy is explained relatively simple. We want to drive adherence and compliance to our AlloSure, our schedule. I think longer term, we want to be really sticky with transplant centers and offering them unique solutions that are along the patient journey, pre transplant with the waitlist management, HLA typing and then the post transplant surveillance options. In order to aggregate all that information and that data, you need to have a backbone, which we have with Otter and XIN management now in place, but really only on at the very early beginning.
You see for this quarter recording $1,400,000 in revenue, that's only an early start. But what we're really building is a huge capability within the organization of being able to provide and interact with transplant centers on the long term. But on the short term, it's really the 75% adherence to the KOR protocol or 65% adherence that we see outside of KOR. How can we increase AlloSure adoption by better software tools, compliance and adherence management with our patient care managers, both pre transplant and then post transplant.
Your next question
This is Alex Nowak here. Just
actually a follow-up
to that last question there, just with the Otter and the other digital solutions that you've acquired now. I mean, as a hospital becomes Otter enabled, and again, this might be too early to see this just yet. Do you see that AlloSure and that AlloMap demand or the compliance change once a hospital goes from not OTTR enabled to OTTR enabled?
Alex, this is super early and we are not even a full quarter into some of these acquisitions and combinations. I think what I can tell you is that I almost daily now get exciting pictures of CareDx employees that are visiting jointly different pockets of transplant centers and have additional insights because being part of that workflow in a transplant centers is so important and understanding how these transplant centers interact and who's making which decision is very critical for us in our business model. But no, I think it is very early. I think we do have the first centers that where we have the we call it the AlloSure order button as part of the electronic medical record, which we always thought would be important. But I'll report in the future about the success of what that incrementally does to our revenue line.
But I'm very excited about a tremendous capability and quite frankly, also wonderful people that have joined the CareDx Village. So at this stage, it's very exciting what we're building.
Okay, understood. And nope, understood. That makes sense. And then we saw the potential decision here by CMS to once again change that date of service policy for molecular tests and kind of going back to the old status quo from a couple of years ago. I know this old policy was a hindrance just to AlloMap, but if the policy is reverted here back to the 2015, 2016 original policy, would there be any impact to AlloSure testing?
I think that's excellent. I think we have seen a little bit of an impact of AlloMap, but I think we've been extremely capable of navigating that rule with our AlloMap franchise. So I don't anticipate that that have significant impact, but it is always something that we'll be working on. Just given the value that we are bringing to these transplant patients at this stage, I can't see how we would be submitted under these tremendous changes. These transplant centers are caring for patients on a basis.
And so I think that's important that we remain within that framework.
Nope, understood. Completely agree. And then just Michael, just a quick question kind of going back to a previous one. You've been able to show some very nice sequential growth over the past 7 quarters. Just looking out to 20 20, do you think the business can still show sequential growth in all the quarters next year?
Do you think seasonality and more of these one time things will come more into play next year?
Alex, yes. I mean, I think since AlloSure was launched 2 years ago, we've had sequential growth, and we continue to see traction, and we're continuing adding surveillance patients. So I think our expectation is that could should continue throughout 2020.
Okay, understood. Congrats on the great results.
Your next question comes from Yi Chen, H. C. Wainwright and Co. Go ahead please.
Hi, thanks for taking the question. My first question is, could you clarify those for those transplant centers who have already adopted the AlloSure test, can they participate in other competing tests, the study or they can only participate in study using HealthShore?
No, these are very large academic medical centers and many of them have multiple researchers on staff and multiple clinicians that are doing research and development. And no, I don't think there is any exclusivity to any of our tests. I think it's actually in a way we are embracing that diversity and the ability to compete with these tests also on a clinical level. We actually pride ourselves in a way of bringing these novel biomarkers to the market and have a 1st mover advantage. It has opened a bit of an avenue for many of these other tests to now embracing these very large registry studies.
I don't think that anybody 5 years ago would have talked about a 3000, 4000 patient registry study in post transplant. So CareDx is really a first mover on this and we continue to move along in this field with the ARPRA study, which will be a new landmark study in post transplant surveillance in kidney patients. SHORE is a landmark study for heart transplant patients. So I think we're really moving the needle
here. Thanks. My second question is when you said that you expect the AlloSure test revenue to have sequential growth in 2020, is there a factor that that growth is also driven by the AlloSure Heart test or it's only going to be primarily be driven by the AlloSure for kidney test?
Yes. When I mentioned that, I was talking specifically on AlloSure Kidney. So probably I should have just been very clear that, yes, AlloSure Kidney, we're expecting continued sequential growth. And when we talk about AlloSure Heart, yes, separate test and of course,
that's not reimbursed at the moment.
And do you expect reimbursed at the moment.
Do you expect AlloSure Heart to be reimbursed and provide meaningful contribution to the top in 2020?
Well, I think in 2020, we'll be guiding towards the 2020 number. But I think the way that we have been interpreting the draft local coverage decision for AlloSure Heart, I think there if a clinician chooses to use AlloMap and AlloSure Heart combined, one could interpret the way that this is now written that there probably will be an increase in reimbursement. I've been on the records that I think we do want to make sure that we are being responsible in the context. But first, we need to get through the final local coverage decision. And then there will be a pricing discussion on the product that we foresee to come maybe mid next year to have then an AlloSure hard reimbursement and we will update the market as soon as we get these news.
Thank you. We have reached the end of the question and answer session. And I will now turn the call back over to Peter for closing remarks.
Well, thank you so much for joining the call today. I'm very much looking forward to talk to you soon. Thank you.
Thank you. This concludes today's conference, and you may