NEW YORK (GenomeWeb) – CareDx's shares soared as high as 34 percent in morning trading on the Nasdaq after the company announced that Palmetto GBA's Molecular Diagnostics Services (MolDX) Program had set reimbursement for the firm's AlloSure cfDNA-based organ transplant test diagnostic at $2,840.75.
MolDX's coverage decision puts AlloSure at the same reimbursement rate as the 2017 reimbursement rate for CareDx's noninvasive heart transplant rejection test AlloMap. AlloSure will be reimbursed for kidney transplant patients covered by Medicare across the US starting Oct. 9. Payments will be made by Noridian, which has implemented the MolDX Program and is the Medicare administrator in CareDx's jurisdiction, the company said.
On an Aug. 10 conference call to discuss the company's second quarter earnings, CareDx CEO Peter Maag outlined some of CareDx's plans for the launch of AlloSure, including its near-term goal of securing Medicare coverage. Maag said CareDx had been participating in discussions with Palmetto to finalize a draft local coverage determination and begin pricing discussions with the Centers for Medicare & Medicaid Services. Once coverage with CMS was finalized, about 80 percent of potential AlloSure patients would be covered for the test, Maag said. Therefore, the company's primary focus at that time was on getting that reimbursement decision, rather than negotiating for reimbursement with private payors.
Many diagnostic tests never get to or go beyond an 80 percent coverage rate, so getting this coverage would put CareDx ahead of the curve, he further noted, adding that with a 10 percent larger market than AlloMap, AlloSure has the potential to bring in $200 million in revenues per year.
On Aug. 24, Palmetto issued its final LCD for AlloSure, covering the test 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 Medicare contractor added.
In its announcement today, CareDx said its evidence for MolDX coverage of AlloSure included a clinical trial in 14 transplant centers and 400 patients, with follow-up over 18 months. The company is also planning a prospective observational cohort study in early 2018 to provide additional data on longer term outcomes.
"We are pleased to see Medicare reimburse AlloSure at the same level as AlloMap, highlighting the value of advanced diagnostic tests to measure organ health for transplant recipients," CareDx Chief Commercial Officer Sasha King said in a statement. "AlloSure testing provides the precision medicine approach needed for individual transplant recipient clinical management."
In a note to investors, Piper Jaffray analyst William Quirk reiterated his Overweight rating for CareDx, and raised his price target on its shares to $7 from $3.
Quirk noted that MolDX's price for AlloSure at $2,840.75 is significantly above Piper Jaffray's estimate of $1,500. "AlloSure's price… helps jump-start the company's move to profitability," he added. "The story for CareDx has changed today, moving away from a company with great products but uncertainty, to a blocking and tackling story of a new product that solves an unmet need around kidney transplant rejection."
CareDx's shares were up 23 percent to $4.10 in midday trading on the Nasdaq.