{ "docId": "019dd923-622c-750b-8b98-0c85e40ec39b", "docSlug": "9b248b07037e", "documentTitle": "CareDx, Inc. (CDNA)", "authorId": "53_Kerrisdale_Capital", "authorName": "Kerrisdale Capital", "documentKindSlug": "research-note", "documentKindLabel": "Research note", "sourceTypeSlug": "short_seller", "sourceTypeLabel": "Short seller", "presentationDate": "2019-07-01 00:00:00", "orientation": "portrait", "aspectRatio": 0.77272725, "pageNumber": 24, "pageCount": 29, "prevPage": 23, "nextPage": 25, "slideType": "research-note", "function": "analyze_data", "density": "dense", "nDataPoints": 4, "notes": "The slide discusses the impact of PAMA rules on Medicare reimbursement and the potential for price competition between Natera and CareDx.", "elementsJson": [ "paragraph", "footnote" ], "metadataConfidence": 0.9, "imagePath": null, "slideHref": "/slides/019dd923-622c-750b-8b98-0c85e40ec39b/24", "deckHref": "/decks/019dd923-622c-750b-8b98-0c85e40ec39b", "deckJsonHref": "/decks/019dd923-622c-750b-8b98-0c85e40ec39b.json", "deckAnchorHref": "/decks/019dd923-622c-750b-8b98-0c85e40ec39b#slide-24", "components": [ { "bbox": null, "kind": "callout", "text": "Natera also has a much lower cost structure for Prospera than CareDx has for AlloSure.", "attrs": null, "subkind": null, "toolName": "Visual emphasis", "toolSlug": "visual-emphasis", "confidence": null, "componentId": "019dd953-203e-77ad-a69e-6174b89f01c9", "frameworkName": null, "frameworkSlug": null }, { "bbox": { "h": 0.065, "w": 0.763, "x": 0.118, "y": 0.554 }, "kind": "paragraph", "text": "Because of PAMA rules, Medicare diagnostic reimbursement rates are tethered to commercial reinsurance rates, and any price competition motivated by commercial coverage considerations will, by definition, translate into large declines in Medicare reimbursement for both AlloSure and Prospera.", "attrs": null, "subkind": "paragraph", "toolName": null, "toolSlug": null, "confidence": null, "componentId": "30663a51-a616-4164-b54e-4d071aa3e9b1", "frameworkName": null, "frameworkSlug": null }, { "bbox": { "h": 0.075, "w": 0.763, "x": 0.118, "y": 0.351 }, "kind": "paragraph", "text": "Natera also has a much lower cost structure for Prospera than CareDx has for AlloSure. We estimate that the unit-level cost of an AlloSure test is in the range of $500-600, while Natera expects to leverage its expertise in fetal cfDNA to reach a Prospera “COGS below $200 per [blood] sample”.", "attrs": null, "subkind": "paragraph", "toolName": null, "toolSlug": null, "confidence": null, "componentId": "528b2050-ae82-43f1-828c-ead3892eaf28", "frameworkName": null, "frameworkSlug": null }, { "bbox": { "h": 0.065, "w": 0.763, "x": 0.118, "y": 0.716 }, "kind": "paragraph", "text": "Even then, though, the utility of dd-cfDNA is likely to be short-lived. After all, a dd-cfDNA measurement simply detects the existence of donor-derived DNA fragments in a patient's blood stream, on the theory that abnormally large quantities are indicative of transplant injury.", "attrs": null, "subkind": "paragraph", "toolName": null, "toolSlug": null, "confidence": null, "componentId": "5f753c74-6357-4fb4-92f2-17a80753b57c", "frameworkName": null, "frameworkSlug": null }, { "bbox": { "h": 0.085, "w": 0.763, "x": 0.118, "y": 0.148 }, "kind": "paragraph", "text": "We expect the proposed LCD will be approved by the end of the summer and take effect by the end of the third quarter, at which point Prospera will be covered and reimbursed by Medicare. Natera has deftly prepared for that milestone by partnering with Thermo Fisher's One Lambda to co-distribute Prospera.", "attrs": null, "subkind": "paragraph", "toolName": null, "toolSlug": null, "confidence": null, "componentId": "beb78988-c377-4e9f-a1dd-c76b216c1b24", "frameworkName": null, "frameworkSlug": null }, { "bbox": { "h": 0.025, "w": 0.763, "x": 0.118, "y": 0.095 }, "kind": "paragraph", "text": "as it sounds, it's possible that Prospera will turn out to be more accurate than AlloSure in measuring dd-cfDNA.", "attrs": null, "subkind": "paragraph", "toolName": null, "toolSlug": null, "confidence": null, "componentId": "fcdcdf08-f55a-476c-8652-c72afa1478b3", "frameworkName": null, "frameworkSlug": null }, { "bbox": { "h": 0.085, "w": 0.763, "x": 0.118, "y": 0.819 }, "kind": "source-note", "text": "27 SNPs are Single Nucleotide Polymorphisms... 28 Natera commentary on the 6/27/2018 Investor Call... 29 “Effective January 1, 2018, the payment amount for most tests equals the weighted median of private payor rates.”", "attrs": null, "subkind": null, "toolName": null, "toolSlug": null, "confidence": null, "componentId": "db3d53e8-cd91-482d-8fb8-d9705bd5e2fd", "frameworkName": null, "frameworkSlug": null } ], "metrics": [], "tools": [], "frameworks": [], "arcBeats": [], "loops": [ { "to": 26, "from": 4, "name": "Cost Of Inaction", "slug": "27-cost-of-inaction", "bestFor": "Urgent budget requests, compliance, risk mitigation", "matchId": "6ece1bb9-6dc2-4b36-a983-1e6b3a2a754d", "evidence": "The document emphasizes the risks of not acting on AlloSure's ineffectiveness", "position": 0, "objective": "Highlight the cost of inaction for investors", "structure": "The Status Quo -> The Hidden Costs Accumulating -> The Future State of Inaction -> The Tipping Point", "confidence": 0.7, "description": "Quantify what happens if the audience does nothing" }, { "to": 25, "from": 20, "name": "Quick Win Big Bet", "slug": "47-quick-win-big-bet", "bestFor": "Transformation planning, 100-day plans, resource allocation", "matchId": "53f4304d-8473-4710-ba17-ffce7b46b188", "evidence": "The document presents a big bet on AlloSure's vulnerability to competition and Medicare risk", "position": 1, "objective": "Present a big bet on AlloSure's vulnerability", "structure": "The Full List -> Quick Wins (Low effort, High impact) -> Big Bets (High effort, High impact) -> Sequenced Roadmap", "confidence": 0.6, "description": "Separate initiatives into immediate wins and longer-term strategic bets" } ], "imagePathAlt": null, "thumbSrc": null, "thumbSrcAlt": null, "locked": true }