What changed in this filing

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Item 1. Business

2023-02-27 compared with 2022-02-24 · 120 added, 118 removed, 634 unchanged (27% of the section changed)

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We offer testing services, products, and patient and digital solutions along the pre- and post-transplant patient journey, and we are a leading provider of genomics-based information for transplant patients.

Our headquarters are in South San Francisco, California.

Our headquarters are in Brisbane, California.

Our primary operations are in Brisbane, California;

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We also offer high-quality products that increase the chance of successful transplants by facilitating a better match between a donor and a recipient of stem cells and organs.

In 2019, we began providing digital solutions to transplant centers following the acquisitions of Ottr Complete Transplant Management, or Ottr, Inc.

and XynManagement, Inc., or XynManagement.

In 2019, we began providing digital solutions to transplant centers following the acquisitions of Ottr Complete Transplant Management, or Ottr, and XynManagement, Inc., or XynManagement.

We have since increased our offerings in patient and digital solutions with the 2021 acquisitions of TransChart LLC, or TransChart, MedActionPlan.com, LLC, or MedActionPlan, and The Transplant Pharmacy, or TTP.

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publications and abstracts have shown AlloSure Kidney’s value in the management of BK viremia, as well as numerous pathologies that cause molecular inflammation and injury such as DSAs and eGFR decline.

Most recently its utility in the assessment of T-cell mediated rejection (TCMR) 1A and borderline rejection was published in the American Journal of Transplant, or AJT, and the largest prospective cohort of over 1,000 patients with long term outcomes by Bu et al was published in Kidney International 2022.

Most recently, its utility in the assessment of T-cell mediated rejection (TCMR) 1A and borderline rejection was published in the American Journal of Transplant, or AJT, and the outcomes of 1,000 patients were published in Kidney International.

The prospective multicenter trial, the Kidney Allograft Outcomes AlloSure Kidney Registry study, or K-OAR study, has enrolled over 1,700 patients, with plans to survey patients with AlloSure Kidney for 3 years and provide further clinical utility of AlloSure Kidney in the surveillance of kidney transplant recipients.

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• AlloSure is not affected by Interstitial Fibrosis and Tubular Atrophy, or IFTA – higher grades of IF/TA were not associated with increased AlloSure scores.

• Fewer biopsies - fewer patients in the KOAR cohort required one or more allograft biopsy compared to the DART surveillance cohort.

• Fewer biopsies - fewer patients in the KOAR cohort required one or more allograft biopsies compared to the DART surveillance cohort.

• AlloSure-guided biopsies are higher yield – the number of for-cause (clinically indicated) biopsies performed was similar to that seen in DART, but AlloSure-guided biopsies demonstrated higher yield for actionable findings .

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OKRA is a prospective, multi-center, observational registry of patients receiving KidneyCare for surveillance.

Combined with K-OAR, 3,000 patients will be enrolled into the study.

Combined with K-OAR, more than 3,000 patients have been enrolled into the study.

AlloMap Heart is a gene expression test that helps clinicians monitor and identify heart transplant recipients with stable graft function who have a low probability of moderate-to-severe acute cellular rejection.

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private payers.

In October 2020, AlloSure Heart received a final Palmetto MolDx Medicare coverage decision for AlloSure Heart.

In October 2020, we received a final Palmetto MolDx Medicare coverage decision for AlloSure Heart.

In November 2020, Noridian Healthcare Solutions, our Medicare Administrative Contractor, issued a parallel coverage policy granting coverage when used in conjunction with AlloMap Heart, which became effective in December 2020.

The Medicare reimbursement rate for AlloSure Heart is currently $2,753.

AlloSure Heart has received positive coverage decisions from several commercial payers.

AlloSure Heart has received a positive coverage decision from Geisinger Health and is covered for use throughout Kaiser.

We have also successfully completed several landmark clinical trials in the transplant field demonstrating the clinical utility of AlloMap Heart for surveillance of heart transplant recipients.

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HeartCare provides robust information about distinct biological processes, such as immune quiescence, active injury, Acute Cellular Rejection, or ACR, and Antibody Mediated Rejection, or AMR.

In September 2018, we initiated the Surveillance HeartCare ™ Outcomes Registry, or SHORE study.

In September 2018, we initiated the Surveillance HeartCare ™ Outcomes Registry, or SHORE .

SHORE is a prospective, multi-center, observational, registry of patients receiving HeartCare for surveillance.

Patients enrolled in SHORE will be followed for 5 years with collection of clinical data and assessment of 5-year outcomes.

The most recent ISHLT guidelines published in 2022 reinforced their use of AlloMap Heart, and referenced the combined use of AlloSure Heart and AlloMap Heart for surveillance purposes.

In February 2019, AlloSure Lung became available for lung transplant patients through a compassionate use program while the test is undergoing further studies.

One of these studies ALARM, published in The Journal of Heart and Lung Transplantation in 2022, highlights the value of AlloSure Lung Allograft Remote Monitoring, in over 100 lung transplant recipients, where the impact of AlloSure Lung was combined with RemoTraC.

One of these studies, launched in April 2020, is the ALARM, or AlloSure Lung Allograft Remote Monitoring, study, with Johns Hopkins University, where the impact of AlloSure Lung combined with RemoTraC is being measured.

AlloSure Lung applies proprietary NGS technology to measure dd-cfDNA from the donor lung in the recipient bloodstream to monitor graft injury.

In June 2020, we submitted an application to the Palmetto MolDx Technology Assessment program seeking coverage and reimbursement for AlloSure Lung.

In June 2020, we submitted an application to the Palmetto MolDx Technology Assessment program seeking coverage and reimbursement for AlloSure Lung and since then we have been in active discussions with Palmetto.

In October 2021, we launched AlloSure Lung as part of the CHEST 2021 Annual Meeting.

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AlloCell is being commercialized through research agreements with biopharma companies developing cell therapies.

In 2021, we executed multiple additional agreements with biopharma therapeutics companies to use AlloCell in research and clinical studies.

We have executed multiple additional agreements with biopharma therapeutics companies to use AlloCell in research and clinical studies.

In July 2021, we launched the Assessing Chimerism and Relapse of Bone marrow/ HCT transplant using AlloHeme Testing, or ACROBAT, study.

The ACROBAT study is a prospective, multicenter, observational cohort study to evaluate the use of AlloHeme, a microchimerism NGS tool to predict post-transplant relapse in patients with allogeneic hematopoietic cell transplants, or HCT.

This study is currently enrolling patients.

We develop, manufacture, market and sell products that increase the chance of successful transplants by facilitating a better match between a solid organ or stem cell donor and a recipient, and help to provide post-transplant surveillance of these recipients.

Our historical product portfolio includes QTYPE and Olerup SSP.

QTYPE enables Human Leukocyte Antigen, or HLA, typing at a low to intermediate resolution for samples that require a fast turn-around-time and uses real-time polymerase chain reaction, or PCR, methodology.

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On June 1, 2018, we became the exclusive worldwide distributor of Illumina’s TruSight HLA product line.

TruSight HLA is a high-resolution solution that uses NGS methodology.

TruSight HLA was discontinued in December 2021 and we have progressively converted existing customers to AlloSeq.

In addition, we were granted the exclusive right to develop and commercialize other NGS product lines in the field of bone marrow and solid organ transplantation on diagnostic testing.

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This technology has the potential to provide better sensitivity and data analysis compared to current solutions on the market.

AlloSeq HCT received CE mark authorization in May 2022.

In March 2021, we acquired certain assets of BFS Molecular S.R.L., or BFS Molecular, a software company focused on NGS-based patient testing solutions.

BFS Molecular brings extensive software and algorithm development capabilities for NGS transplant surveillance products.

In May 2022, we commercially launched Tx9, a high throughput version of Tx17 for HLA typing in high volume laboratories.

Tx9 received CE mark authorization in August 2022.

Patient and Digital Solutions

In 2019, we began providing digital solutions to transplant centers following the acquisition of Ottr Complete Transplant Management, or Ottr, Inc., and the acquisition of XynManagement.

On May 7, 2019, we acquired 100% of the outstanding common stock of Ottr, Inc.

was formed in 1993 and is a leading provider of transplant patient management software, or the Ottr software, which provides comprehensive solutions for transplant patient management.

The Ottr software enables integration with electronic medical records, or EMR, systems, including Cerner Corporation, or Cerner, and Epic Systems Corporation, or Epic, providing patient surveillance management tools and outcomes data to transplant centers.

In 2019, we began providing digital solutions to transplant centers following the acquisitions of Ottr and XynManagement.

On May 7, 2019, we acquired 100% of the outstanding common stock of Ottr.

Ottr was formed in 1993 and is a leading provider of transplant patient management software, or the Ottr software, which provides comprehensive solutions for transplant patient management.

The Ottr software enables integration with electronic medical records, or EMR, systems, including Cerner and Epic, providing patient surveillance management tools and outcomes data to transplant centers.

On August 26, 2019, we acquired 100% of the outstanding common stock of XynManagement.

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TransChart provides EMR software to hospitals throughout the United States to care for patients who have or may need an organ transplant.

As part of this acquisition of TransChart in January 2021, we acquired Tx Access, a cloud-based service that allows nephrologists and dialysis centers to electronically submit referrals to transplant programs, closely follow and assist patients through the transplant waitlist process, and ultimately, through transplantation.

As part of our acquisition of TransChart in January 2021, we acquired

Tx Access, a cloud-based service that allows nephrologists and dialysis centers to electronically submit referrals to transplant programs, closely follow and assist patients through the transplant waitlist process, and ultimately, through transplantation.

In June 2021, we acquired the Transplant Hero patient application.

The application helps patients manage their medications through alarms and interactive logging of medication events.

Also in June 2021, we entered into a strategic agreement with OrganX to develop clinical decision support tools across the transplant patient journey.

Together, we and OrganX will develop advanced analytics that integrate AlloSure, the first transplant

specific dd-cfDNA assay, with large transplant databases to provide clinical data solutions.

In June 2021, we entered into a strategic agreement, which was amended in April 2022, with OrganX to develop clinical decision support tools across the transplant patient journey.

Together, we and OrganX will develop advanced analytics that integrate AlloSure, the first transplant specific dd-cfDNA assay, with large transplant databases to provide clinical data solutions.

This partnership delivers the next level of innovation beyond multi-modality by incorporating a variety of clinical inputs to create a universal composite scoring system.

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TTP provides individualized transplant pharmacy services for patients at multiple transplant centers located throughout the U.S.

COVID-19 Pandemic

The full impact of the continued COVID-19 pandemic, including the impact associated with preventative and precautionary measures that we, other businesses and governments have taken and continue to take, continues to evolve as of the date of this report.

As such, it is uncertain as to the full magnitude that the pandemic will have on us, but the pandemic may materially affect our financial condition, liquidity and future results of operations.

COVID-19 Impact

In the final weeks of March and during April 2020, with hospitals increasingly caring for COVID-19 patients, hospital administrators chose to limit or even defer, non-emergency procedures.

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As a response to the COVID-19 pandemic, and to enable immune-compromised transplant patients to continue to have their blood drawn, in late March 2020, we launched RemoTraC, a remote home-based blood draw solution using mobile phlebotomy for AlloSure and AlloMap surveillance tests, as well as for other standard monitoring tests.

To date, more than 200 transplant centers can offer RemoTraC to their patients and over 11,000 kidney, heart and lung transplant patients have enrolled.

Based on existing and new relationships with partners, we have established a nationwide network of more than 10,000 mobile phlebotomists.

Following the introduction of RemoTraC and with the easing of stay-at-home restrictions and the opening up of many hospitals to non-COVID-19 patients, our testing services volumes returned to levels consistent with those experienced immediately prior to the COVID-19 pandemic.

In spite of the resurgence of COVID-19 infection rates, which resulted in increased stay-at-home and renewed travel restrictions, we did not experience a decrease in testing services volumes.

There continues to be uncertainty around the COVID-19 pandemic as the Omicron variant, including its sub-variants, has periodically caused increases in COVID-19 cases globally, which in turn impacted the availability of medical personnel in transplant centers and the volume of transplant procedures.

A sustained reduction in transplant volume can negatively impact our testing volumes, as we saw in the early part of the first quarter of 2022.

Our product business experienced a reduction in forecasted sales volume throughout the second and third quarters of 2020, as we were unable to undertake onsite discussions and demonstrations of our recently launched NGS products, including AlloSeq Tx 17, which was awarded CE mark authorization in May 2020.

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We are maintaining our testing, manufacturing, and distribution facilities while implementing specific protocols to reduce contact among our employees.

In areas where COVID-19 impacts healthcare operations, our field-based sales and clinical support teams are supporting providers through virtual platforms.

Although the executive orders that placed certain restrictions on operations in San Mateo County and the State of California, where our laboratory and headquarters are located, were lifted effective June 15, 2021, new orders or restrictions may be adopted in the future depending upon the COVID-19 transmission rates in our county and state, as well as other factors.

In addition, we have created a COVID-19 task force that is responsible for crisis decision making, employee communications, enforcing pre-arrival temperature checking, daily health check-ins and enhanced safety training/protocols in our offices for employees that do not work from home.

Due to COVID-19, quarantines, shelter-in-place and similar government orders, or the perception that such orders, shutdowns or other restrictions on the conduct of business operations could occur or could impact personnel at third-party suppliers in the United States and other countries, or the availability or cost of materials, there may be disruptions in our supply chain.

In areas where COVID-19 continues to impact healthcare operations, our field-based sales and clinical support teams are supporting providers through virtual platforms.

In addition, we created, and continue to have, a COVID-19 task force that is responsible for crisis decision making, employee communications, and enforcing all safety, monitoring and testing protocols in line with local regulations.

Any manufacturing supply interruption of materials could adversely affect our ability to conduct ongoing and future research and testing activities.

In addition, our clinical studies may be affected by the COVID-19 pandemic.

Clinical site initiation and patient enrollment may be delayed due to prioritization of hospital resources toward the COVID-19 pandemic.

Clinical site initiation and patient enrollment may be delayed due to prioritization of hospital resources toward the COVID-19 pandemic or reduced staffing due to staff members contracting COVID-19.

Some patients may not be able to comply with clinical study protocols if quarantines impede patient movement or interrupt healthcare services.

Similarly, the ability to recruit and retain patients and principal investigators and site staff who, as healthcare providers, may have heightened exposure to COVID-19, may adversely impact our clinical trial operations.

Similarly, the ability to recruit and retain patients and principal investigators and site staff who, as healthcare providers, may have heightened exposure to, or become infected with, COVID-19, may adversely impact our clinical trial operations.

We were originally incorporated in Delaware in December 1998 under the name Hippocratic Engineering, Inc.

In April 1999, we changed our name to BioCardia, Inc., and in June 2002, we changed our name to Expression Diagnostics, Inc.

In July 2007,

we changed our name to XDx, Inc.

In July 2007, we changed our name to XDx, Inc.

and in March 2014, we changed our name to CareDx, Inc.

Our principal executive offices are located at 1 Tower Place, South San Francisco, California and our telephone number is (415) 287-2300.

Our principal executive offices are located at 8000 Marina Boulevard, Brisbane, California and our telephone number is (415) 287-2300.

For a further timeline of our history, please refer to our Annual Report on Form 10-K for the fiscal year ended December 31, 2019, filed with the SEC on February 28, 2020.

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The estimated U.S.

average 2020 charges for a heart transplant are $1.66 million and for a kidney transplant are $0.44 million for the period 30 days before the transplant and 180 days after the transplant.

average 2020 charges for a heart transplant were $1.66 million and for a kidney transplant were $0.44 million for the period 30 days before the transplant and 180 days after the transplant.

The lifetime cost for transplant recipients varies significantly depending on each individual patient's circumstances.

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• highly accurate and quantitative results differentiating rejection from non-rejection status;

• non-invasive procedure that do not create risks to the recipient;

• non-invasive procedures that do not create risks to the recipient;

• ease of implementation;

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OKRA is a prospective, multi-center, observational, registry of patients receiving KidneyCare for surveillance.

KidneyCare combines the dd-cfDNA analysis of AlloSure Kidney with the gene expression profiling technology of AlloMap Kidney and the predictive

artificial intelligence technology of iBox for a multimodality surveillance solution.

KidneyCare combines the dd-cfDNA analysis of AlloSure Kidney with the gene expression profiling technology of AlloMap Kidney and the predictive artificial intelligence technology of iBox for a multimodality surveillance solution.

We have not yet made any applications to private payers for reimbursement coverage of AlloMap Kidney or KidneyCare.

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We have also published two reports of retrospective analyses from IMAGE and CARGO II trials that demonstrate that the variability in AlloMap Heart scores over time in an individual patient may be useful in predicting the risk for the patient of a future event of rejection and graft dysfunction.

In September 2018, we initiated the SHORE study.

In September 2018, we initiated SHORE.

SHORE is a prospective, multi-center, observational registry of patients receiving HeartCare for surveillance.

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Our ot her HLA typing products include:

TruSight HLA, a NGS-based high resolution typing solution;

Olerup SSP, based on the “SSP” technology;

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QTYPE enables HLA typing at a low to intermediate resolution for samples that require a fast turn-around-time and uses real-time PCR methodology.

QTYPE primarily focuses on low to intermediate resolution typing where high-resolution typing is not a requirement but even more rapid typing results are

required, such as for deceased donor typing.

QTYPE primarily focuses on low to intermediate resolution typing where high-resolution typing is not a requirement but even more rapid typing results are required, such as for deceased donor typing.

Typing with QTYPE requires approximately one hour compared to the up to 2-3 hours that it takes to do traditional SSP typing and the 5-7 hours that it takes with sequence-specific oligonucleotides, or SSO.

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We offer one of the most up-to-date and comprehensive libraries of HLA typing kits based on SSP technology.

TruSight HLA is high-resolution solution that uses NGS methodology.

TruSight HLA is a NGS-based high-resolution typing solution that provides NGS-level resolution to HLA typing.

We licensed the exclusive world-wide distribution rights to this product from Illumina in May 2018.

In addition, we were granted the exclusive right to develop and commercialize other NGS product lines.

TruSight HLA was discontinued in December 2021 and we have progressively converted existing customers to AlloSeq.

In addition, we were granted the exclusive right to develop and commercialize other NGS product lines in the field of bone marrow and solid organ transplantation on diagnostic testing.

These products include:

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Clinical operations dedicated to the design and implementation of high quality studies and registries for data collection to develop evidence to address unmet clinical needs of transplant recipients are included in research and development.

One area of focus for research and development activities has been to integrate acquired technology from the acquisitions of Ottr, Inc., XynManagement, TransChart and MedActionPlan and pursuant to our license and collaboration agreement with Cibiltech SAS.

One area of focus for research and development activities has been to integrate acquired technology from the acquisitions of Ottr, XynManagement, TransChart and MedActionPlan and pursuant to our license and collaboration agreement with Cibiltech SAS.

Integration of such technology with our current service offerings aligns a rich data set with augmented intelligence tools to better assess risk and help physicians better manage their daily patient care.

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Our ongoing efforts include:

• increasing understanding of biological processes of transplant rejection through analysis of genes/metagenes in ongoing clinical trials such as K-OAR and OKRA, and commercial laboratory testing to further improve clinical utility of AlloSure Kidney and KidneyCare;

• increasing understanding of biological processes of transplant rejection through analysis of genes/metagenes and dd-cfDNA in ongoing clinical trials such as K-OAR and OKRA, and commercial laboratory testing to further improve clinical utility of AlloSure Kidney and KidneyCare;

• validation and clinical utility studies of AlloSure for other organs such as lung, pancreas and liver;

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Thus, persistently low dd-cfDNA levels may accurately identify allograft quiescence or absence of injury, paving the way for personalization of immunosuppression trials.

AlloMap Kidney Gene Expression Tool

The AlloMap Kidney test is a gene expression profile utilizing the RNA-seq platform to measure immune quiescence in kidney transplant patients.

AlloMap Kidney has exhibited robust performance characteristics with an accuracy correlation coefficient of 0.997 and a precision coefficient of variation of 0.049 across testing.

Clinical validation using samples from prospective, multi-center studies demonstrated a sensitivity of 70% and specificity of 66% for allograft rejection, while the negative predictive value to AlloSure Kidney was 95% to discriminate rejection from quiescence at 10% prevalence of rejection.

dd-cfDNA for Heart Transplants

We believe that the AlloSure Kidney dd-cfDNA-based solution could provide additional value to AlloMap.

We believe that the AlloSure Heart dd-cfDNA-based solution provides additional value to AlloMap Heart.

Studies have reported that a higher percentage of dd-cfDNA in the bloodstream of patients is found with moderate or severe heart rejection compared to patients without rejection.

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An approach to surveillance using HeartCare provides information from the two complementary measures:

(i) AlloMap Heart – a measure of immune activation, and (ii) AlloSure

Heart – measures graft injury.

(i) AlloMap Heart – a measure of immune activation, and (ii) AlloSure Heart – which measures graft injury.

HeartCare provides complementary information about distinct biological processes, such as immune quiescence, active injury, ACR and AMR in heart transplant recipients.

We have established our proprietary strategy for quantification of donor specific dd-cfDNA and published a validation study of AlloSure Heart in 2019.

We now offer AlloSure Heart as a laboratory developed test as part of our SHORE study of dd-cfDNA in association with gene-expression profiling (AlloMap Heart) in heart transplant recipients.

We have established a strategic research partnership with NanoString Technologies, Inc., or NanoString, to develop HistoMap, a gene expression profiling, or GEP, solution to identify allograft rejection in transplant biopsy tissue.

NanoString is a leading provider of life science tools for translational research and molecular diagnostic products.

The partnership will combine our clinical expertise and extensive transplant registries with NanoString’s technological capabilities and development expertise to provide solutions that bring precision medicine to histopathology.

We offer AlloSure Heart as a laboratory developed test for management of heart transplant recipients and HeartCare is included as part of our SHORE registry of dd-cfDNA in association with gene-expression profiling (AlloMap Heart) in heart transplant recipients.

The 2021 ISHLT guidelines published in 2022 note the growing adoption of dd-cfDNA testing among heart transplant recipients.

These guidelines advocate for lifelong surveillance of the transplanted heart for rejection and acknowledge the utility and evidence underlying the use of dd-cfDNA in surveillance for rejection in a framework of clinical surveillance.

The guidelines also speak to the use of multimodality testing using GEP and dd-cfDNA in the surveilling the transplanted heart for rejection.

We established a strategic research partnership with NanoString Technologies, Inc., or NanoString, dedicated to the development of HistoMap, a gene expression profiling, or GEP, solution to identify allograft rejection types in transplant biopsy tissue.

The partnership will combine our clinical expertise and extensive transplant registries with NanoString’s technological capabilities to provide solutions that bring precision medicine to histopathology.

We will utilize NanoString’s nCounter® technology in conjunction with the newly introduced Human Organ Transplant panel, a 770-gene panel designed to evaluate the human immune response in biopsy tissue from a transplanted organ.

In May 2020, we established a partnership with Veracyte, Inc., pursuant to which we have certain exclusive worldwide field rights to develop and commercialize products, such as HistoMap using the nCounter technology.

In 2021, we entered into a collaboration with Arkana Laboratories, a leading kidney pathology laboratory, to develop HistoMap Kidney.

Product Advancement and Development

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Patient and Digital Solutions Business Development

We acquired Ottr, Inc.

and XynManagement in 2019.

These acquisitions have strengthened our growing portfolio of transplant software solutions such as Ottr and XynQAPI.

In 2021, we acquired TransChart, MedActionPlan and TTP.

We are committed to continue upgrading these software programs, including medication adherence management, and further integrating them into our current testing service offerings to provide a unified user experience.

We plan to develop, deploy and promote a rational set of software tools and data-driven services that provide clinical utility with respect to medication adherence and overall patient health.

We develop, deploy and promote a rational set of software tools and data-driven services that provide clinical utility with respect to medication adherence and overall patient health.

Our vision is to add smart analytics and machine learning to artificial intelligence in transplant.

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AiTraC will utilize the large clinical data that are collected through our registry studies to provide caregivers with point of care decision-making support tools that allow them to stratify the patient population.

We are actively working on partnerships and patient-focused service offerings.

We acquired Ottr and XynManagement in 2019.

These acquisitions have strengthened our growing portfolio of transplant software solutions such as Ottr and XynQAPI.

In 2021, we acquired TransChart, MedActionPlan and TTP.

We are actively working on additional partnerships and patient-focused service offerings.

Reimbursement

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private payers.

In October 2020, AlloSure Heart received a final Palmetto MolDx Medicare coverage decision for AlloSure Heart.

In October 2020, we received a final Palmetto MolDx Medicare coverage decision for AlloSure Heart.

The Medicare reimbursement rate for AlloSure Heart is currently $2,753.

AlloSure Heart has received positive coverage decisions from several commercial payers.

AlloSure Heart has received a positive coverage decision from Geisinger Health and is covered for use throughout Kaiser.

Private Payers and Medicaid Payers

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Our laboratory holds a certificate of accreditation under the Clinical Laboratory Improvement Amendments of 1988, or CLIA, and is accredited by the College of American Pathologists, or CAP.

that our laboratory capacity will be adequate to meet demand for AlloSure Kidney, AlloSure Lung, AlloMap Heart, AlloSure Heart and other tests in the development pipeline for the next few years.

We believe that our laboratory capacity will be adequate to meet demand for AlloSure Kidney, AlloSure Lung, AlloMap Heart, AlloSure Heart and other tests in the development pipeline for the next few years.

When a clinician orders AlloMap Heart, a blood sample is drawn and processed to isolate the white blood cells, which are subsequently broken down, frozen and sent via overnight courier to our laboratory.

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The remaining 9 genes are used as part of the rigorous quality control testing performed to assess every phase of the test process.

The test results are reported to the ordering clinician by fax or electronically via WebPortal within two business days of receipt of the sample.

The test results are typically reported to the ordering clinician by fax or electronically via EMR or WebPortal within two business days of receipt of the sample.

Test samples that fail to meet quality control criteria are immediately re-tested and the ordering clinician is notified of the need to re-test if turnaround time will be affected.

When AlloSure Kidney is ordered by a clinician, a blood sample is drawn and sent overnight at ambient temperature to our laboratory.

When AlloSure Kidney, AlloSure Heart or AlloSure Lung is ordered by a clinician, a blood sample is drawn and sent overnight at ambient temperature to our laboratory.

Cell-free DNA is purified from the plasma and the fraction of the total cell-free DNA derived from the transplanted organ, the dd-cfDNA, is quantified and reported as a percentage.

Tests that fail to meet quality control criteria are immediately re-tested and the ordering clinician is notified of the need to re-test if turnaround time will be affected.

Results are reported to the ordering clinician by fax or electronically via WebPortal within two business days of receipt of the sample.

Results are typically reported to the ordering clinician by fax or electronically via EMR or WebPortal within two business days of receipt of the sample.

Test samples that fail to meet quality control criteria are immediately re-tested and the ordering clinician is notified of the need to re-test if turnaround time will be affected.

We rely solely on certain suppliers to provide some of the laboratory instruments and key reagents that we use to perform AlloSure Kidney, AlloSure Lung, AlloMap Heart, and AlloSure Heart testing.

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Illumina, which supplies us with instruments, laboratory reagents and consumables;

Avantor, which supplies us with kitting services, laboratory reagents and consumables;

Becton, Dickinson and Company, and Streck, which supply us with cell preparation tubes;

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Our strategy includes educating clinicians and care teams at transplant centers through software demos.

Our marketing team supporting the product marketing for Ottr, XynQAPI, AlloCare and other digital offerings is based in South San Francisco.

Our marketing team supporting the product marketing for Ottr, XynQAPI, AlloCare and other digital offerings is based in Brisbane, California.

Our pharmacy sales support team is located in Flowood, Mississippi.

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Competition for our digital solutions include various companies that develop application software and operate in the healthcare field.

Our primary competitor in this field is Epic.

Our primary competitor for our patient management EMR solution is Phoenix, Epic's transplant application.

In addition, other established and emerging healthcare, information technology and service companies may commercialize competitive products including informatics, analysis, integrated genetic tools and services for health and wellness.

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patents related to transplant rejection and autoimmunity.

We have four issued U.S.

patents covering methods of diagnosing transplant rejection that use all 11 informative genes measured in AlloMap Heart.

Among those, we have two issued U.S.

patents covering methods of diagnosing transplant rejection using all 11 informative genes measured in AlloMap Heart.

The expiration dates of these patents range from 2023 to 2024.

We have five additional patents covering additional genes or gene variants for diagnosing transplant rejection.

In connection with our June 2014 acquisition of ImmuMetrix, Inc., we obtained an exclusive license from the Board of Trustees of the Leland Stanford Junior University, or Stanford, to a patent relating to the diagnosis of rejection in organ transplant recipients using dd-cfDNA.

This patent has an expiration date of November 5, 2030.

A second patent included in the license from Stanford was issued in December 2017 and further covers the use of dd-cfDNA to diagnose and predict transplant status or outcome.

Five additional patents were issued from this Stanford set between 2019 and 2021, covering the use of dd-cfDNA to diagnose and predict transplant status or outcome.

All of these patents have the same 2030 expiration date as the original Stanford patent.

We have four additional patents covering additional genes or gene variants for diagnosing transplant rejection or autoimmune disease.

In connection with our June 2014 acquisition of ImmuMetrix, Inc., we obtained an exclusive license from Stanford to one U.S.

patent issued in April 2014 relating to the diagnosis of rejection in organ transplant recipients using dd-cfDNA.

Additional patents from Stanford included in the exclusive license were issued, including one in 2017, two in 2019, four in 2021 and two in 2022, that further cover the use of dd-cfDNA to diagnose and predict transplant status or outcome.

These patents are expiring between 2030 and 2032.

We have developed trade secrets and know-how since our inception.

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In April 2020, we entered into a license agreement with Cornell University pursuant to which we were granted exclusive rights to three patents and two patent applications covering methods and technology for measurement of gene expression in urine to diagnose kidney transplant rejection.

In June 2021, we entered into a strategic agreement with OrganX to develop clinical decision support tools across the transplant patient journey.

In June 2021, we entered into a strategic agreement, which was amended in April 2022, with OrganX to develop clinical decision support tools across the transplant patient journey.

Together, we and OrganX will develop advanced analytics that integrate AlloSure, the first transplant specific dd-cfDNA assay, with large transplant databases to provide clinical data solutions.

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To renew our CLIA certificate, we are subject to survey and inspection every two years to assess compliance with program standards.

We were inspected as part of the customary College of American Pathologists audit in 2020 and recertified under the CLIA as a result of passing that inspection.

We were inspected as part of the customary College of American Pathologists audit and recertified in March 2022 as a result of passing that inspection.

We expect the next regular inspection under the CLIA to occur in 2024.

California Laboratory Licensing

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These regulations apply to all of our products sold in the United States, as well as our facilities in Stockholm, Sweden used to produce some of our products.

The FDA has also asserted that it has the authority to regulate laboratory developed tests, or LDTs, as medical devices under the

The FDA has also asserted that it has the authority to regulate laboratory developed tests, or LDTs, as medical devices under the FFDCA.

An LDT is a test developed by a single laboratory for use only in that laboratory, such as AlloMap Heart or AlloSure Kidney.

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Finally, other states have self-referral restrictions with which we have to comply that differ from those imposed by federal and California law.

Federal and State Fraud and Abuse Laws

Federal and State Fraud and Abuse and Privacy Laws

Because of the significant federal funding involved in Medicare and Medicaid, Congress and the states have enacted, and actively enforce, a number of laws to eliminate fraud and abuse in federal health care programs and across the healthcare system.

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Anti-Kickback Statutes

The federal health care programs’ Anti-Kickback Statute prohibits persons from knowingly and willfully soliciting, offering, receiving or paying any remuneration, directly or indirectly, overtly or covertly, in cash or in kind in return for referring an individual for the furnishing of or arranging for the furnishing of any good or service, for which payment may be made under a federal health care program, such as Medicare or Medicaid, or the purchasing, leasing, ordering or arranging for or recommending purchasing, leasing, or order any good, facility, services, or item payable under such programs.

The federal health care programs’ Anti-Kickback Statute prohibits persons from knowingly and willfully soliciting, offering, receiving or paying any remuneration, directly or indirectly, overtly or covertly, in cash or in kind in return for referring an individual for the furnishing of or arranging for the furnishing of any good or service, for which payment may be made under a federal health care program, such as Medicare or Medicaid, or the purchasing, leasing, ordering or arranging for or recommending purchasing, leasing, or ordering any good, facility, services, or item payable under such programs.

The definition of “remuneration” has been broadly interpreted to include anything of value, including, for example, gifts, certain discounts, the furnishing of free supplies, equipment or services, credit arrangements, payment of cash and waivers of payments.

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Department of Health and Human Services has created several regulatory "safe harbors." Arrangements that meet all of the conditions of an applicable exception or safe harbor are protected from liability under the Anti-Kickback Statute.

However, the failure to fit an arrangement within an exception or a safe harbor does not necessarily

mean that the statute has been violated or that the arrangement will be prosecuted.

However, the failure to fit an arrangement within an exception or a safe harbor does not necessarily mean that the statute has been violated or that the arrangement will be prosecuted.

Penalties for violations include criminal penalties and civil sanctions such as fines, imprisonment and possible exclusion from Medicare, Medicaid and other federal health care programs.

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Our future activities relating to billing, compliance with certain regulations and Medicare reimbursement requirements, physician and other healthcare provider financial relationships and the sale and marketing of our products may be subject to scrutiny under these laws.

The California Consumer Privacy Act, or the CCPA, was enacted in 2018 and took effect on January 1, 2020.

This piece of legislation secures new privacy rights for California consumers.

The CCPA grants consumers the right to:

• know the types of personal information that are collected, used, shared or sold, both as to the categories and specific pieces of personal information;

• have personal information held by businesses and, by extension, a business’s service provider deleted;

• opt-out of the sale of personal information.

Consumers are able to direct a business that sells personal information to stop selling that information.

Children under the age of 16 must provide opt in consent, with a parent or guardian consenting for children under 13;

• non-discrimination in terms of price or service when a consumer exercises a privacy right under the CCPA.

The CCPA applies to certain businesses and such businesses must create procedures to respond to requests from consumers to opt-out, know and delete.

For requests to opt-out, businesses must provide a “Do Not Sell My Info” link on their website or mobile app.

Under the CCPA, applicable businesses are required to:

• respond to requests from consumers to know, delete and opt-out within specific time frames;

• verify the identity of consumers who make requests to know and to delete, whether or not the consumer maintains a password-protected account;

• maintain records of requests and response for 24 months in order to demonstrate our compliance;

• treat user-enabled privacy settings that signal a consumer’s choice to opt-out as a validly submitted opt-out request;

• disclose financial incentives offered in exchange for the retention or sale of a consumer’s personal information and explain how the value of the personal information is calculated;

• explain how these incentives are permitted under the CCPA.

State Privacy Laws

state privacy laws, such as the California Consumer Privacy Act, or the CCPA, which took effect in January 2020, and was amended by the California Privacy Rights Act effective January 2023, secure new privacy rights for consumers and impose new obligations on us.

Other states have similarly adopted privacy laws, which take effect in 2023, including Virginia, Colorado, Utah and Connecticut.

Our business or financial results may be adversely impacted by adhering to these regulatory requirements and the related costs of ensuring and maintaining compliance.

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We currently produce products, which are CE labeled and subject to the In Vitro Diagnostic Medical Devices Directive (98/79/EC), or IVDD, a European Union, or EU, Directive.

Some of our products are currently labeled by self-declaration based on their intended use or certified by a Notified Body for Compliance to the IVDD requirements.

Some of our products are currently labeled by self-declaration based on

their intended use or certified by a Notified Body for Compliance to the IVDD requirements.

A product that is not CE marked is automatically considered to be non-compliant.

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The European Commission recently confirmed adoption of a proposal for a progressive roll-out of the IVDR to prevent disruption in the supply of In-Vitro Diagnostic products to the market.

The proposal does not change any requirements of the IVDR or changes the implementation date but changes the transitional provisions to allow a progressive rollout based on the risk level of the device.

The proposal does not change any requirements of the IVDR or change the implementation date but changes the transitional provisions to allow a progressive rollout based on the risk level of the device.

In accordance with these timelines, our current CE marked products will remain available to customers throughout the transition period.

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CMDCAS came into effect January 1, 2003.

GDPR and UK GDPR

The General Data Protection Regulation (EU) 2016/679, or the GDPR, is a regulation on data protection and privacy in the EU, and the European Economic Area, or the EEA, that went into effect in May 2018.

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The regulation contains provisions and requirements related to the processing of personal data of individuals, or data subjects, who reside in the EEA, and applies to any enterprise—regardless of its location and the data subjects' citizenship or residence—that is processing the personal information of data subjects inside the EEA.

Following the United Kingdom’s exit from the EU, the United Kingdom adopted the Data Protection Act 2018, which is the United Kingdom’s implementation of the GDPR, or the UK GDPR.

The UK GDPR imposes similar requirements for personal data about United Kingdom data subjects.

Controllers and processors of personal data must put in place appropriate technical and organizational measures to implement the data protection principles.

Business processes that handle personal data must be designed and built with consideration of the GDPR principles and provide safeguards to protect data.

Business processes that handle personal data must be designed and built with consideration of the GDPR and UK GDPR principles and provide safeguards to protect data.

Data controllers and processors must design information systems with privacy in mind.

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When the processing is based on consent the data subject has the right to revoke it at any time.

Data controllers and processors must clearly disclose any data collection, declare the lawful basis and purpose for data processing, and state how long data is being retained and if it is being shared with any third parties or outside of the EEA.

Data subjects have the right to request a portable copy of the data collected by a data controller or processor in a common format, and, under certain circumstances, the right to have their data erased.

Businesses must report data breaches to national supervisory authorities within 72 hours after becoming aware of the breach if they have an adverse effect on user privacy.

In some cases, violators of the GDPR may be fined up to €20 million or up to 4% of the annual worldwide turnover of the preceding financial year in case of an enterprise, whichever is greater.

In some cases, violators of the GDPR or UK GDPR may be fined up to €20 million or up to 4% of the annual worldwide turnover of the preceding financial year in case of an enterprise, whichever is greater.

Our business or financial results may be adversely impacted by adhering to these regulatory requirements and the related costs of ensuring and maintaining compliance .

Employees and Human Capital Resources

At December 31, 2021, we had 645 employees, of which 633 were full-time employees.

We had 154 employees in manufacturing operations and support, 162 in research and development;

248 in sales and marketing and 81 in general and administrative positions.

On December 31, 2022, we had 738 employees, of which 727 were full-time employees.

We had 185 employees in manufacturing operations and support, 192 in research and development, 239 in sales and marketing and 122 in general and administrative positions.

As of December 31, 2022, 648 employees were located in the United States and 90 were located outside of the United States.

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Our recruitment and retention strategies include partnerships with external agencies to help hire top talent, onboarding processes, a leadership development program and a professional work environment that promotes innovation and rewards performance.

We believe employee career development is an investment in our employees’ skills and our future.

We offer our employees various training opportunities free of charge and during working hours.

For example, in 2022, we launched LinkedIn Learning platform, a learning library and repository for self-guided personal and professional learning opportunities.

In addition, we dedicated time on a quarterly basis for all employees to explore learning and development topics.

We call this Care4U Time.

In addition, we believe it is important to have regular engagement with our employees to understand their needs.

Apart from regular weekly meetings with managers, monthly town hall meetings and quarterly earnings reports and calls, we also conduct annual anonymous employee surveys to understand current employee sentiment, areas we are excelling in as well as areas for improvement.

Our total compensation for employees includes a variety of components that support sustainable employment and the ability to build a strong financial future, including competitive market-based pay and comprehensive benefits.

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We are maintaining our testing, manufacturing, and distribution facilities while implementing specific protocols to reduce contact among our employees.

In areas where COVID-19 impacts healthcare operations, our field-based sales and clinical support teams are supporting providers through telephone and online platforms.

We have also created a COVID-19 task force that is responsible for crisis decision making, employee communications, enforcing pre-arrival temperature checking, daily health check-ins and enhanced safety training/protocols in our offices for employees who do not work from home.

In areas where COVID-19 continues to impact healthcare operations, our field-based sales and clinical support teams are supporting providers through telephone and online platforms.

We also created, and continue to have, a COVID-19 task force that is responsible for crisis decision making, employee communications, and ensuring all safety, monitoring and testing protocols in line with local regulations.

From time to time, we also employ independent contractors, consultants and temporary employees to support our operations.

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We have never experienced a work stoppage and believe that our relations with our employees are good.

We have zero-tolerance policy for discrimination.

In 2021, we established a Diversity, Equity, and Inclusion committee to engage, retain and develop talent from diverse backgrounds by facilitating diversity, equity and inclusion advocacy through event sponsorship, leaning and client engagement.

We have increased the diversity of our Board and leadership teams and continue to focus on maintaining a diverse organization.

Our senior leadership team includes leaders with diverse skills, experience, racial background and genders.

Our employees come from numerous countries and various backgrounds and we strive to provide a diverse and inclusive environment.

Environmental Matters

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We could be held liable for damages and fines as a result of our, or others, business operations should contamination of the environment or individual exposure to hazardous substances occur.

In addition, we could be subject to significant fines for failure to comply with applicable environmental, health and safety requirements.

In addition, we could be subject to significant fines for failure to comply with applicable environmental, health and safety

requirements.

We cannot predict how changes in laws or new regulations will affect our business, operations or the cost of compliance.

In addition, we look for ways to minimize our impact on the environment.

Our main buildings headquartered in California are energy efficiency certified and meet stringent San Francisco Bay Area requirements for environmental impact, and several of our offices are in new energy efficient buildings.

Our offices also provide recycling and use low flow fixtures to conserve water, and we take additional measures to conserve energy through LED fixtures, light timers/sensors, and thermostat regulation.

Available Information

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Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 1. Business