And welcome to the CareDx Inc. 2nd Quarter Financial Results Conference Call. At this time, all participants are in a listen only mode. A question and answer session will Please note this conference is being recorded. I would now like to turn the conference over to your host, Mr.
David Clair, Investor Relations. Thank you, sir. You may begin.
Good afternoon, and thank you for joining us today. Earlier today, CareDx released financial results for the quarter ended June 30, 2019. The release is currently available on the company's website at www.caredx.com. Peter Maude, 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 federal securities laws, which are made pursuant to the Safe Harbor provisions of the Private Securities Litigation Reform Act 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, including 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, August 1, 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, David, and good afternoon, everyone. We had yet another exciting quarter at KiriS as we continue to enhance our leadership position in transplantation precision medicine, while delivering our 4th consecutive quarter of positive adjusted EBITDA. This quarter, we saw additional proof that our 20 year long dedication to the field is translating into success on multiple fronts. Firstly, we would like to applaud the efforts of the White House and Department of Health and Human Services Secretary, Alex Azar for bringing much needed reform to America's kidney health system. Proposals to improve organ procurement organizations remove disincentives to living kidney donation, ensure patients receive the best dialysis care available and increase the number of available organs for transplantation, all represent significant improvements to the current paradigm.
As a patient centric organization, CareDx is excited about the direction the field is moving in. The administration is clearly aligned with CareDx in its mission to improve the long term outcome of kidney transplant patients. At the recent American Transplant Congress or ATC, the presence of CareDx together with a body of evidence on AlloSure and the buzz created by patients, caregivers and our employees was a fantastic experience. We have become a leader in transplant care with some attendees referring to CareDx as the transplant company. At ATC, CareDx officially announced its next generation kidney transplant surveillance solution, KidneyCare.
This multimodality solution combines next generation sequencing and gene expression technologies with smart analytical tools to enable precision medicine in transplant clinic. The reception from ATC attendees to CareDx, AlloSure and Kidney Care was incredibly strong, and we saw a noticeable uptick in AlloSure volumes following the event. Before turning to our results for the quarter, I'd like to remind investors of some important metrics regarding AlloSure. Today, we will also provide some information that we are not intending to provide every quarter. Firstly, our AlloSure surveillance patient attrition rate has and continues to be in the 10% range.
This is a metric that we have provided in the past and we are pleased that it continues to track to our internal expectations. Secondly, the majority of our AlloSure patient results come from patients outside of registry studies. In the Q2 of 2019, patient results from K OAR accounted for less than 15% of CareDx's total revenue. Thirdly, AlloSure's adoption is based on its demonstrated clinical value. Our DART study showed a 95% negative predictive value for active kidney rejection with most of our AlloSure patient results averaging 0.21% cell free DNA level.
This strong clinical utility was further validated by data from individual center experience publications and presentations from Cedars Sinai and the University of Colorado. AlloSure is a tool for clinicians to use in kidney transplant patient surveillance. AlloSure's value proposition is resonating with our patients and clinicians and is becoming a standard, which is evident in the rapid adoption in many centers in the U. S. And with that, we now turn attention to our tremendous second quarter results.
We now report 3 revenue lines: testing services, products and digital. In testing services, this quarter's AlloSure patient result growth and unique patient tested represent demonstrable proof that we continue to widen our 1st mover advantage as we strengthen our platform every day. For the Q2 of 2019, total revenues were $31,500,000 increasing 76% compared to the year ago quarter. Growth in the quarter was broad based with testing services revenue up 83%, product revenue up 29% and digital revenue primarily coming from our recent Otter acquisition contributing $1,200,000 to the top line. Turning to numbers on AlloSure.
During the Q2, 117 centers provided AlloSure results to their transplant patients. We estimate these 117 centers account for approximately 65% of the transplant volume in the United States. CureDx provided 7,355 AlloSure results in the Q2 to approximately 5,500 and 84 48 kidney transplant patients. I repeat that number, 5,584 kidney transplant patients. Since launching AlloSure in October 2017, we have provided results to over 10,000 patients, which equates to approximately 5% of the total number of living kidney transplant patients in the U.
S. Demand for AlloSure remains broad and includes both patients who recently received a kidney transplant as well as patients that received their kidney allograft in previous years. We take great pride in providing the highest quality products and recognize the importance of quick turnaround time. This patient focus drives everything we do from the ordering process to the blood draw to providing the result. We recently set a new benchmark in turnaround time by providing a patient result in less than 20 hours from the time of the blood draw.
This is not only optimized for the needs of transplant patients, but we believe it is also best in class for sequencing based testing solutions. Combined with our phlebotomy network at transplant centers and mobile draw partners, this represents another example of our competitive mode. Time to result will ultimately be a CareDx competitive advantage. Our 20 year commitment to transplantation has given the company a better understanding of workflow in transplant centers than anyone in the industry. The CareDx team is committed to constantly push the boundaries, improve our products and services and make a difference in transplant patient life.
We finished the Q2 of 2019 with 4,618 surveillance patients. We define surveillance patients as patients that are managed by CareDx on a predefined transplant center testing protocol. These 4,618 surveillance patients help build the recurring revenue effect of AlloSure. Note that in the Q2, 1347 surveillance stations were added to the 3,000 644 surveillance stations that started the quarter. 373, sorry, the right number, 373 surveillance patients had standing orders that expired during the quarter and that had been not reviewed renewed by the end of the quarter.
We define this as attrition, which equates to 10% in the quarter. Overall reimbursement in the Q2 was also consistent with previous quarters, with 70% to 80% of our AlloSure volume attributed to Medicare patients. Medicare reimbursement has been granted through the Moltex program at Palmetto. We believe that AlloSure reimbursement will be discussed with this group once we report the clinical study outcomes of the initial 1,000 ksor patients. These 1,000 patients will be followed for 3 years.
Therefore, we expect this discussion will occur in approximately 2022. We continue to make progress enrolling centers and patients in K OAR, our kidney outcome AlloSure registry, having surpassed our initial 1,000 patient enrollment goal. As of the end of June as of the end of June 2019, 51 centers had been initiated as K OAR study sites and 1204 patients had been enrolled. Recall that in the K OAR study, we target 75% adherence to our AlloSure surveillance protocol. Multicenter studies like K OAR deepen our engagement with the transplant ecosystem as these studies provide us with additional touch points with transplant centers and keep us in direct dialogue with the key innovation hubs and opinion leaders.
These studies also drive compliance and adherence to standard protocols, which is a crucial element to our work in the transplant community. Now shifting to heart. Q2 2019 AlloMap testing volume increased 11% year over year, translating into 4,500 and 72 patient results. The uptick in the underlying heart transplant volume growth and the adoption of Heart Care through the SHORE registry study accelerated AlloMap volumes in the quarter. Heart care combining AlloMap and AlloSure Heart continues to see increased adoption in the transplant community.
Caregivers appreciate the comprehensive view of the health of the heart allograft enabled by heart care. Our Surveillance heart care outcomes registry or SHORE study continues to gain traction with transplant cardiologists and we have recruited 15 centers to date. Next, we turn attention to our transplant lab products. 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 2nd quarter product revenue growth was 29%, contributing $4,600,000 to our revenue in the quarter.
Growth was driven by continued traction of TruSight HLA and QTYPE. We remain on track to fortify our product offerings with the introduction of new AlloSeq next generation sequencing products in 2019. AlloSeq TX for HLA typing, AlloSeq cell free DNA kits for solid organ transplants and AlloSeq HCT for bone marrow transplantation. This quarter, we are reporting revenues for our digital business for the first time. With the closing of the Otter acquisition CareDx has broadened its footprint.
The transaction closed in early May. With the 8 weeks under the CareDx umbrella generating $1,100,000 in revenues for the quarter. Approximately 50% of our digital business is based on recurring revenues with the remainder being services and one time license fees. The non recurring revenue can be a little bit lumpy on a quarter by quarter basis, depending on the timing of implementations at transplant centers. A highlight in our digital business this quarter was the go live at Dana Farber Institute, which will now manage their bone marrow transplant program with our other patient management software.
A shout out to the team in Omaha doing a great job. The digital team will continue to focus on serving transplant centers with the Otter suite of software solutions. In addition, we will enhance the workflow solutions for AlloMap and AlloSure in centers with Otter software. The team will also spearhead our efforts to create a patient engagement platform. And finally, the team will bring our multi modality testing solutions and machine learning algorithm to the transplant clinic under the iDRAC umbrella.
Over the last 20 years, we have been a trailblazer in transplantation, developing proprietary clinical biomarkers and successfully navigating the reimbursement landscape. In this next phase of the company, we are setting the bar for multimodality testing, combining our know how of gene expression and next generation sequencing based technology. Our vision is to add smart analytics and machine learning to artificial intelligence in transplant care, which we call iTrak. ITrak will utilize the large clinical data sets collected through our registry studies to provide caregivers with point of care decision making support tools that allow them to stratify their patient population. With a licensing agreement with Civiltech and the relationship with Alex Lupi and his team, CareDx has made a first step into providing prognostic information based on artificial intelligence solutions.
The Ibox information pairs with our broad surveillance offering. It's a way to better stratify patients and the start of the development of care pathways and clinical decision making tool. Our vision to provide precision medicine tools alongside high value diagnostics to a complex and costly patient population is just in its beginning. I am extremely proud of the CareDx team and its accomplishments. Novel and innovative technologies like these widen our competitive mode and position CareDx to expand its leadership position going forward.
Consistent with our expectations, you will note that we have accelerated our operating expense levels this quarter. This was driven firstly by our dedication to clinical research and development to accelerate the experience of transplant centers with our solutions and to make our solutions available to more patients. On an adjusted annual run rate basis, we are now spending $25,000,000 on transplant research and development, which we consider a tremendous signal of commitment to the field of transplantation. We see very few companies in our space, if any, matching this commitment. Secondly, we have increased the number of our field based testing services personnel to 50.
This increase will enable us to support transplant centers better than ever and means we are well positioned versus potential competition. We are excited about expanding our mode. Mike, I'll hand the call over to you to discuss financials.
Thank you, Peter. Turning first to the income Our Q2 2019 testing services revenue increased 83% year over year to 25,700,000 dollars The significant growth in testing services revenue was primarily driven by the 7,355 AlloSure patient results we provided in quarter. Growth also came from the 4,572 AlloMap patient results we provided, which was an 11% increase compared to the prior year quarter. Our 2nd quarter product revenue increased 29% year over year to $4,600,000 With the recent addition of OTTA, our patient engagement model is expanding. Digital and other revenue for the quarter was 1,200,000 dollars and we continue to expect our digital business to deliver revenue of $4,000,000 to $5,000,000 in 20.19.
Total revenue for the Q2 of 2019 was $31,500,000 representing a 76% increase compared to the prior year's $17,800,000 Our gross margins continue to improve year over year. For the Q2 of 2019, the overall gross margin was 63% compared to a gross margin of 60% in the same period of 2018. The non GAAP gross margin for the quarter was 67% compared to 63% 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 June 30, 2019, has improved to 72% compared to 70% in the same period of 2018. For the Q2 of 2019, the net loss was CAD 7,800,000 compared to a net loss of $14,100,000 in the same period of 2018.
Our net loss per share was $0.19 for the quarter compared to a loss of $0.40 per share in the Q2 of 2018. Our Q2 2019 net loss included a $5,000,000 stock based compensation expense and a $1,400,000 loss from the change in estimated fair value of common stock warrant liabilities. For the Q2 2019, our non GAAP net loss was $100,000 compared to a non GAAP net loss of $1,300,000 in the same period of 2018. Our non GAAP net loss per share was $0.00 for the quarter compared to a non GAAP net loss per share of $0.04 in the Q2 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 Q2 of 2019, adjusted EBITDA was a gain of 100,000 dollars compared to a loss of $800,000 in the Q2 of 2018. This marks our 4th consecutive quarter where we had positive adjusted EBITDA. As Peter mentioned earlier and as we indicated on the last earnings call, we increased our operating expenditures in the Q2 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 ATC and EFI, our continued investment in clinical studies such as KOL and Shaw and our new focus on digital through the acquisition of OTTA. 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 June 30, 2019, were $43,500,000 compared to $57,400,000 at the start of the quarter. The movement in cash in the quarter included $16,000,000 for the Otter acquisition. Net operating cash flow was positive $3,600,000 in the Q2 of 2019. We continue to expect positive operating cash flow for the full year 2019. Turning to guidance.
We are updating our 2019 revenue expectations to reflect the continued growth of our business and anticipate 123 $1,000,000 to $125,000,000 for the year. As a reminder, this includes $4,000,000 to $5,000,000 from the Otter acquisition, which closed in May of this year. With that, I will open the call for questions.
Thank you. At this time, we will be conducting a question and answer session. Our first question comes from the line of Bill Quirk with Piper Jaffray. Please proceed with your question.
Great. Thank you and good afternoon everyone.
Good afternoon, Bill. How are you doing?
Good, good. So a couple of questions. I guess first, can we start off on guidance, Mike? Peter made the comment that you're seeing some increased volumes coming out of ATC and certainly moving your guidance up above the beat as well as the addition of Otter certainly would suggest that you've seen a nice follow through on that strength here early in 3rd. Is that kind of the right read through here?
Yes, Bill. Yes, we've seen a nice follow through. And with the results of second quarter, yes, we've increased our revenue guidance by $10,000,000 compared with the previous guidance. So we're still guiding for continued growth sequentially through the rest of the year.
Perfect. And then I guess a question for Peter. Peter, how should we think about timing on the kidney care data? Certainly, there was a lot of excitement at the recent conference, but I think some of the physicians admitted that they want to see the data follow through. And so when should we be expecting that?
Thank you very much. Excellent question, Bill. Obviously, KidneyCare comprises AlloSure on the one hand, our Cell Free DNA test, then our AlloMap kidney, which is a gene expression profiling technology. And then the third is this prognostic element of IVOX. As the company has always done, we are launching this through a clinical registry study on observational drive, making sure that our customers and our clinicians that are working with the solution have a framework to engage patients and understand how to provide that information.
While AlloSure is a validated clear lab test, then AlloMap kidney and iBox are still in a phase of rapid development as we gain more and more information. So we will really bring that up make that available probably in the second half of this year. We're shooting for the Q3 and making that available through an Okra study, which will be another landmark trial that the company is engaging in.
Okay, got it. And then last question for me. As it relates to the recent activities by the administration to increase both access to kidney transplant, improved dialysis, etcetera, how should we be thinking about kind of the practical implications and or the timing? I mean, it certainly strikes us that any and all efforts to try to get additional kidneys into the donation pool are obviously going to find recipients given the wait list. But how close are you to some of those activities?
And how quickly do you think those could start to have a meaningful impact on the number of kidney transplants each year? Thank you.
Well, thanks for the question. If 7 years when I joined CareDx and we built this focus on transplantation, if one would have said that the President and the Head of Health and Human Services would be on the podium and announcing a strengthening of transplantation, nobody would have expected that. So this focus transplantation is completely in line what we've been seeing and the opportunity that we've been seeing. We see that this is an absolute confirmation about the medical need. And then also the market potential that we see, which we have been estimating at $2,000,000,000 and beyond.
So in that sense, this will be a mid to long term increase in transplantation. But we do hope that even next year, we already see an acceleration of available organs by making sure that the for example, the organ procurement organizations are being more effective in making sure to make organs available. If we were to apply the rules that are happening, for example, in France, onto the American organ population, we would be seeing an increase of about 3,000 organs, which would be a 15% increase on our current organ availability. So yes, there's very tangible things that we see happening. And currently, we're growing about mid single digit on our kidneys organ.
I think that could be doubling by next year. So a 15% organ growth for next year is more than possible.
Very good. Thanks, guys.
Our next question comes from the line of Brandon Couillard with Jefferies. Please proceed with your question.
Thanks. Good afternoon. Peter, appreciate all the detail around the attrition rate figures in the period. I think that pretty much pushed that question to bed. I want to focus on the number of ordering AlloSure centers in the period.
You've kind of been flatlining the last few quarters at around 100, spiked up to 117 this period. Can you sort of speak to the drivers of that?
Brandon, thank you very much. And this follows exactly our strategy where we had said for this year, it's all about going deep into the individual center, making sure that we are part of the workflow. We do place the protocols and we are very strong in converting K OAR centers into regular ordering centers. So our goal was not to increase the 100 centers in the beginning of the year. Our goal was to go deep in these 100 centers.
So 117, I think is testimony to the great reception we had at ATC. We see that as a nice increase, but really the success that you see in our launch strategy is that we're going deep and have more patients per center where we are existingly present and going deep in these centers is very positive. So this number 117 is a great number because it's the number of ordering centers in a quarter that might notch up a little bit. But really what I'm focused on is how can we grow the high volume target centers that are within that 117.
Thanks. And then more broadly, could you sort of speak to some of the initiatives you're working on managers,
where
we are now managers, where we are now engaging and supporting transplant centers in managing these patients longitudinally. Initially, we help these centers, by just making sure that patients get their blood draw scheduled and are coming back to the center in their regular surveillance interval. And we have seen that this compliance and adherence is a key challenge in the center because tertiary care centers in the U. S. Are not well equipped to have this longitudinal patient care management.
And CareDx can really make a significant contribution in that because this better surveillance will lead to better outcomes. So having patient care managers that directly interacting with these patients is very, very valuable and we believe that we can impact adherence and compliance. Today, in a way, this is low hanging fruit because compliance and adherence, we talked about it is probably 70% to 80% on our K OAR patient population and only about 60% in the 60% range in our surveillance patient population outside of K OAR. So this could be a significant value driver also long term as we continue to increase patient penetration.
And 2 part question for Mike. First on the guidance for the year. You've put up double digit growth for AlloMap through the first half of the year. Are you still thinking that's mid single digits for the full year? And secondly, could you speak to the account receivable jump in the Q2?
Thanks.
Yes. Firstly, Brendan, on AlloMap, yes. I think over the last two quarters now, we've seen the AlloMap growth be in the sort of 10%, 11% range. And some of that increase is coming from the driver of offshore being rolled out. So I think we're looking at the remainder of the year to probably continue around this 10% low double digit growth for 2019.
With respect to the AR, the biggest impact on that was that we added the OTTA acquisition. So that added something like about GBP 2,500,000 in accounts receivable. The rest of it is just coming from the growth on the testing services business as we ramp up the revenue. It's obviously increasing the AR. Very good.
Thank you.
Our next question comes from the line of Per Ostlund with Craig Hallum Capital Group. Please proceed with your question.
Thanks. Good afternoon, guys. I wanted to follow-up, Peter, on your answer to one of Bill's questions about kidney care and the upcoming rollout and launch. And as you're thinking about building your registry, can you give us a little bit of a handle on what you're thinking in terms of size and scope of an OCRA study versus K OAR? Are you thinking of a similar sized patient cohort, center count, etcetera?
And how much can you piggyback seamlessly on the infrastructure of the K OAR study in terms of IRBs and that sort of thing to really smooth the start of the trial?
Well, thank you very much for the question. I think in terms of the details of the ORCA study, we'll be shortly announcing the details of the Orkra study. I think we as a company tend to speak about these trials when we have a first patient, first visit enrolled. That has been common practice at CareDx. We always want to talk about things once we have them ready and launched.
In the sense of how to think about it in broad strokes, it's think about it as an extension of K OAR, think about it as a K OAR-two in a way of the same type of magnitude of trials. So that should give you some kind of an data point. It will be 1,000 or more patients and it will be 3 year follow-up and it will be accompanied with all the tool sets that we have in the company to make sure that we have a data repository that allows us to do not only Ibox and AlloMap and AlloSure, but also build a basis for iTrak, where we are trying to go towards the next step of having smart analytical solution on based on machine learning and artificial intelligence.
Okay. Very good. And since you mentioned Otter as well, if we come back to that, it sounds like in terms of the revenue contribution that's very much tracking against expectations. From the electronic medical record standpoint, how are you seeing that rollout? And what should we be thinking of in terms of timelines for you being integrated with Otter centers?
The team is doing a fabulous job on this, but it's also a few weeks into the acquisition. So I think we have launched now the initiatives. The teams are working, I would say, night and day. And so I think we are on the next earnings call, we'll be able to update on how good we are on seeing not only the ability to integrate this into the Otter system, but also provide solutions at those centers where Otter has been used even that are using the Epic platform. So I think we'll be able to probably in 3 months' time to be able to talk about our electronic medical records.
In general, being part of the electronic medical record will widen our mode and we see that as a possible opportunity for us to accelerate our mode building in transplantation.
Okay, very good. Thank you, Peter.
Our next question comes from from the line of John Hughes with Raymond James. Please proceed with your question.
Good afternoon.
Hey, John. How are you doing?
Doing well. Thanks, Peter. If we could just go back to the guidance for a second, I just want to be clear, I believe the last time you provided guidance, the $4,000,000 to $5,000,000 for Otter Software was already included. So net net, the improvement is roughly $10,000,000 So can just help us think about maybe the different pieces that are driving that between AlloSure as well as transplant products and then also AlloMap?
Yes, John, it's Mike here. Yes, in the previous guidance, which was $113,000,000 to $115,000,000 that included the $4,000,000 to 5,000,000 dollars for OTTA. So that stays consistent in the revised guidance. Again, in the previous guidance, we've been talking about product growth for the full year being around the 20% mark, and that stays same. So the difference in guidance is, yes, coming from AlloMap.
And again, we've said the growth now we're seeing is this 10% to 11%, and that's probably going to continue for the rest of the year. And then the remainder of the growth obviously then coming from AlloSure and the continued traction there.
Okay, great. Thank you for that. And then just looking at a couple of metrics that you provided, it looks like surveillance patients seem to actually accelerate quarter on quarter and yet the number of K OAR patients actually decelerated. So it would seem that even outside of K OAR that you're actually driving acceleration in kidney. So can you just speak to just some of the trends that you're seeing there in terms of surveillance patients being added?
Yes. And Sean, I think you're really picking up on the most important number when we look at our metrics. The one number that we focus on is the surveillance patients. And you're mentioning it's slowing. There's still 200 K OAR patients added, which is nice.
But really the 1,000 patients, and so that would be 800 additional patients outside of care or being added onto the quarter. That's really the excitement in the organization because that is supporting our flywheel concept of patients that we care for longitudinally and we are able to potentially improve long term testimony to that we have moved way beyond I think it speaks testimony to that we have moved way beyond KO already in patient adoption and clinician acceptance of the test. Besides the 117 centers, which I think is strong, the 4,618 surveillance patients is really the very exciting number on our metrics.
Okay, great. And then last one for me. Just thinking about you obviously have a lot of irons in the fire and great momentum in the current business. But if we had to think about, maybe timing on reimbursement pathways for maybe a couple of products and I'll just throw them out there for heart care, if there is some potential incremental reimbursement down the line or for AlloSure in lung. If you could just provide us any update as far as your thoughts on how those might be progressing?
Thank you.
No, I think we've been always talking about that we're progressing those on reimbursement. I think we have very strong validation data. We have publications, for example, on heart care that will drive the clinical validation of the combination of gene expression profiling and cell free DNA. I think in the past when talking about additional upsides, we always said we are actually happy if continue to stay at the current AlloMap reimbursement rate. But we do see an opportunity for potentially increasing the reimbursement side there as well.
So we have not had in-depth discussion with MolDX that we would go through that route as well on these products. So I think as this will unfold, we will update you on the progression. But I think in terms of guidance, I would keep to the current reimbursement levels of these two products and we spit out the 2022 for AlloSure. So I think it puts some marker on how to think about our continuous reimbursement level.
Okay, fair enough. Thank you so much.
Thank you,
Tom. Our next question comes from the line of Yi Chen with H. C. Wainwright. Please proceed with your question.
Thank you for taking my question. Looking at the test volume of AlloSure divided by the kidney transplant patient, the test per patient remains at 1.3 for 1st and second quarter. Is there any chance that this number can go up during the remainder of 2019? Or this number will remain relatively static?
Hi, Yi. This is Mike here. I think at the moment with the trends we're seeing with respect to the patients that are on a surveillance protocol and the adherence rates for K OAR and for the non K OAR surveillance patients, then probably this rate, 1.2, 1.3 is probably going to stay consistent for the remainder of the year, unless that mix of surveillance patients to non surveillance patients was to change.
Okay. And also, I noticed that for the Q2, there is increase in R and D and then as in sales marketing expenses. Do you think the increase in the test volume or the top line revenue is in proportion to the increase in these operating expenses?
I think we did have an acceleration of operating expense this quarter. I talked about it earlier being related to expanding the field and now we have 50 people, the studies that we're doing. We had expense related to the trade conferences and and our sort of large presence at those conferences this quarter. And then of course, there was the addition of OTTA. And so we did see a bump up.
I think we'll I mentioned we'll continue to increase the operating expense, but it probably won't see a bump up like that for the remainder of the year. And so I think the operating expense growth will slow down for the remainder of 2019.
Thank you. There are no further questions left in the queue. I would like to turn the call back over to management for any closing remarks.
Well, thank you very much for joining the call as we are building an exciting transplantation business. Thank you very much for your interest. Goodbye.
This concludes today's teleconference. You may now disconnect your lines at this time. Thank you for your participation and have a wonderful day.