NEW YORK (GenomeWeb) – Transplant diagnostics company CareDx — which has spent the last several quarters publicizing the value of its AlloSure blood-based donor-derived cell-free DNA (dd-cfDNA) test for the assessment of transplant organ health — is seeking to expand the assay from kidney to lung transplant patients.
AlloSure measures the levels of dd-cfDNA in a transplant recipient's blood as a way of measuring allograft injury — the higher the fraction of dd-cfDNA in the recipient's blood, the higher the likelihood of damage to the transplant. The diagnostic has already added significantly to the company's value: from the launch of AlloSure in October 2017 for kidney transplant monitoring to now, CareDx's stock gained nearly 380 percent, going from a closing price of $5.85 on Oct. 31, 2017 to a closing price of $29.60 on Feb. 22.
Analysts have taken note. Investment bank Jefferies initiated coverage of CareDx's stock on Feb. 15 with a Buy rating and a price target of $35. In his note to investors, Jefferies analyst Brandon Couillard said that the company is well positioned as a leader in the transplant diagnostics market — which he estimated at more than $2 billion — with two tests that serve an unmet need for noninvasive detection of heart and kidney post-transplant rejection.
Couillard also noted that the market is underappreciating the potential for continued growth of AlloSure, which has a strong first-mover advantage in the market. "By most measures, the initial launch has been one of the best we've seen, with about 100 of the top US centers that perform 60 to 70 percent of transplants already using it," he wrote. "Yet adoption remains in the early innings (only 3 percent penetrated)."
Over time, Couillard said, AlloSure can match the penetration of CareDx's heart transplant diagnostic test AlloMap, which has about 30 percent market share — this would translate to about $600 million in annual revenue.
In fact, it seems as though CareDx is now working to prove that the technology is, more or less, organ-agnostic. Last April, the company launched HeartCare, a comprehensive rejection surveillance diagnostic for heart transplant recipients that combined AlloMap with AlloSure for the heart. It said the combined product would provide a holistic view into the health of heart transplant recipients and give clinicians a clearer picture of patients' immune system activity and graft health.
Now, the firm wants to further expand indications for the test, making AlloSure available to lung transplant patients under a compassionate use program while it conducts clinical studies to make AlloSure Lung an official part of its transplant diagnostic product portfolio.
"It's a cell-free DNA assay which is analytically validated, and which measures the donor-derived cell-free DNA as a percentage of the cell-free DNA from the recipient," said CareDx President and CEO Peter Maag, adding that the test could really be called a "pan-organ assay" because it detects the ratio of foreign cell-free DNA to own-body DNA, which is applicable in all solid organ transplantation settings.
"We focused initially, for clinical validation, on kidney transplant. We then moved on to the heart transplant, for which we have ample evidence, and we just launched that with HeartCare in combination with AlloMap. And now, we're moving into lung transplantation, which is an exciting field because of the unmet medical need" in that area, he further noted.
Indeed, in a study published in the journal EBioMedicine in January, a team led by National Heart, Lung, and Blood Institute researcher Hannah Valantine noted that lung transplant patients in particular have a very high incidence of chronic rejection, which leads to the shortest survival rate among solid organ transplantations. In addition, therapies have largely been ineffective, likely because the rejection is discovered too late.
In the study, the NHLBI team described a liquid biopsy-based test it developed to solve that problem, which looks for donor-derived cell-free DNA in order to measure possible damage to the transplanted lung.
Although it was too early at that point to say how the test might be commercialized, CareDx was certainly a contender to license the technology by dint of its place as a market leader in transplant diagnostics.
Robert Woodward, CareDx's senior VP of R&D, said at the time that the company had been following the NHLBI group's work, adding that when AlloSure was developed, the clinical validation studies evaluated the use of the test for acute T cell-mediated rejection, acute antibody-mediated rejection, and chronic active antibody-mediated rejection.
"So, chronic rejection is something that we would expect AlloSure to pick up, especially in the early post-transplant period that was defined in the study," and for as many years post-transplant as necessary, Woodward noted in January.
Now, it looks like a licensing deal will not take place. "In a way, it's the same technology and the same approach, using cell-free DNA to identify rejection in patients," Maag said. "So, there is no need from our perspective to license [the NHLBI test] because we already have relevant IP."
Eventually, Maag added, AlloSure's technology will underlie several more diagnostics for CareDx. For example, AlloSure's underlying technology is miles ahead of AlloMap's. AlloMap measures the expression levels of 20 genes in a patient's blood which have been identified as playing a role in heart transplant rejection. The levels of these genes are converted into an AlloMap test score with both positive and negative predictive test values. AlloSure's dd-cfDNA testing methodology, however, results in a signal that points to rejection more quickly than AlloMap's methodology.
"HeartCare will replace AlloMap because it's a combination of measuring the immune system with AlloMap and then measuring the health of the graft with AlloSure," Maag said. "We really see that as a yin and yang, and it should be together."
There are several other settings in which the company is exploring the utility of dd-cfDNA testing, he added, including pancreatic transplantation and bone marrow transplantation to detect graft-versus-host disease.
In a note to investors last week, in response to CareDx's announcement of moving into lung transplantation, Piper Jaffray analyst William Quirk speculated that the company could come out with an AlloSure Liver test, as well.
"CareDx's announcement is further validation that its dd-cfDNA technology can be used in all solid organ transplants, and we expect an announcement on liver in the coming years," he wrote. "The market opportunity is much smaller in lung than kidney, but this is another example of CareDx's commitment to the community and we reiterate our Overweight rating and $42 price target."
For now, lung transplant patients who wish to use the AlloSure Lung test can access it through the compassionate use program. Because CareDx's tests are used in about 130 transplant centers in the US, doctors in those centers can order the test for their patients, Maag said.
In the meantime, the firm is continuing to conduct clinical studies and is aiming for CLIA validation of the lung test.
"We see kidney as really the key commercial opportunity" for the short term, Maag said, adding that the company is working on getting reimbursement for the lung test, which he said he could envision happening in two years. "We'll do the work in order to get that done."