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Palmetto GBA Finalizes LCD for CareDx Transplant Dx AlloSure

NEW YORK (GenomeWeb) – Medicare contractor Palmetto GBA today issued its final local coverage determination for CareDx's cfDNA-based organ transplant test AlloSure.

The final LCD, which is nearly identical to the draft LCD Palmetto released in May, covers AlloSure for renal allograft recipients older than 18 who are at least two weeks post-transplant and who have a probability of active renal allograft rejection as determined by their physicians.

Further, Palmetto noted in its final LCD that the evidence of clinical utility for the use of AlloSure in its intended use population is currently limited, but that forthcoming prospective clinical studies "will demonstrate improved patient outcomes." Continued coverage for AlloSure testing is dependent on an annual review of such data and publications by Palmetto, the contractor added.

"This is the moment we have all been preparing for, CareDx is ready to begin offering AlloSure to transplant centers across the US, ahead of our original timeline," CareDx CEO Peter Maag said in a statement today. "We see the coverage decision by the MolDX team as a great signal for the support of kidney transplant patients and an acknowledgement of the unmet medical need. About 80 percent of kidney transplant patients are covered by Medicare, so many patients will have access to AlloSure, a new milestone in precision medicine in transplantation."

CareDx noted in its second quarter earnings conference call earlier this month that it had been expecting Palmetto to finalize its draft LCD for AlloSure. The final LCD is effective Oct. 2, and CareDx said AlloSure will qualify for Medicare coverage effective Oct. 9.

In a note to investors today, Piper Jaffray analyst William Quirk said he remains positive on CareDx following this decision, and is maintaining his Overweight rating on the company.

Quirk did sound one note of caution, however, saying that CareDx will also need Medicare contractor Noridian to also finalize its LCD before it can bill Medicare. "Noridian typically follows Palmetto's lead relatively quickly (but can take months in some cases)," Quirk said. "We believe the final LCD was the key event for shareholders and, once Noridian also finalizes its LCD, our focus will begin to shift to sales execution."

CareDx's shares rose 15 percent to $2.46 in afternoon trading on the Nasdaq in afternoon trading today.