CareDx, Inc. (CDNA) Earnings Call Transcript & Summary

Ladies and gentlemen, thank you for standing by, and welcome to the 2020 CareDx Inc. Annual Stockholder Meeting. [Operator Instructions] I would now like to hand the conference over to your speaker today, Mr. Peter Maag, Chairman and CEO. Thank you. Please go ahead, sir.

Good morning, ladies and gentlemen. A special shout out to Chris Cournoyer from our Board of Directors who is on the call this morning as well. Welcome to the 2020 Annual Meeting of Stockholders of CareDx. I'm Peter Maag, Chairman and CEO of CareDx. I'm pleased to conduct our annual meeting virtually via the Internet. At this time, I call the meeting to order. The company's Board of Directors has appointed me to act as Chairman of this Meeting. Jeff Hartlin of Paul Hastings, the company's outside counsel, will act as secretary of this meeting. I would like to introduce Mrs. Valerie Vasquez, a partner with Deloitte, our independent registered public accounting firm. During the question-and-answer period at the end of today's session, Mr. Vasquez will be available to answer any appropriate questions you may have concerning the independent audit. The Board of Directors has appointed Kristina Veaco as the act -- to act as inspector of elections for the meeting. Mrs. Veaco has previously taken an oath as inspector of election. We will file the executed oath with the records of this meeting. Many stockholders have already submitted their proxies. All proxies will be voted as marked by the stockholders signing them. If you have voted by proxy, you do not need to take any further action. If you wish to vote during this meeting, please log into the web portal as a stockholder by entering the 16-digit control number you received with your proxy materials and clicking on the Cast Your Vote button on your screen. The secretary will now review the agenda, rules of conduct and procedures for today's meeting, and present the affidavit of mailing of the notice of availability of proxy materials and the proxy materials and annual report. Over to you.

Thank you, Peter. Upon logging into the meeting, you are presented with an agenda and the rules of conduct and procedures for the Annual Meeting. To conduct an orderly meeting, we ask that participants abide by these rules. As stated in the rules of conduct, only validated stockholders may ask questions in the designated field on the web portal. Should you desire to ask a question, please submit your question in the designated field on the web portal. We will try to answer appropriate questions on any matters in the agenda to be voted on by stockholders during the meeting before voting is closed. After the formal meeting has been adjourned, we will attempt to answer as many questions as time allows, but only questions that are relevant to the meeting or the business of the company will be addressed. As stated in the rules of conduct, we ask that you restrict your questions to the agenda items that are before us. Thank you for your cooperation with these rules. There are 5 items of business on today's agenda: the election of directors; the vote on the ratification of the appointment of the company's independent registered public accounting firm; the advisory vote on the compensation of the company's named executive officers as presented in the company's proxy statement for this meeting; the advisory vote on the frequency of future advisory votes to approve the compensation of the company's named executive officers; and finally, the vote on the approval of an amendment to the company's 2014 Equity Incentive Plan. Each of these items is described in the proxy statement filed with the Securities and Exchange Commission on April 29, 2020. The Board of Directors set April 21, 2020, as the record date for the stockholders' meeting. We have at this meeting a record of stockholders as of that date. A duplicate record has been on file at the principal place of business of the company for the last 10 days and has been available for inspection by any stockholder during normal business hours during that period. Mr. Chairman, I present the affidavit of mailing of Joanne Vogel of Broadridge Financial Solutions, which states that the notice of availability of proxy materials for this meeting was mailed on May 6, 2020, to stockholders of record as of the close of business on April 21, 2020, the record date for stockholders entitled to notice of this meeting, which is in accordance with the bylaws of the company. Over to you.

Thank you, Jeff. I direct that the affidavit of mailing be made part of the minutes of the meeting. Our first order of business at this meeting is to determine whether the shares represented at the meeting are sufficient to constitute a quorum for the purpose of transacting business. Jeff, do you have a report?

Yes, I have been advised by the inspector of election that approximately 87.96% of the company's issued and outstanding shares entitled to vote is represented at today's meeting, which is sufficient to constitute a quorum for the purpose of transacting business at this meeting.

Thank you, Jeff. The report of the secretary of the existence of a quorum is accepted. Since the majority of the company's shares are represented here today, I declare that a quorum is present, and the meeting is duly constituted. It is now 10:05 a.m. and the polls are now open for voting. [Voting]

We may now proceed to transact the business of which this meeting has been called. The next order of business is a description of matters properly brought before this meeting. Proposal 1, the election of directors. The first proposal is for the reelection of directors. The Board of Directors has nominated and recommends a vote for Michael Goldberg and Peter Maag, each a current Director of the company to serve as a Class III Director until 2023 Annual Meeting of Stockholders or until his respective successor is duly elected and has qualified. The company's bylaw requires that a stockholder provide advance notice to the company of a stockholder's intent to nominate persons as directors. No such notice was received. Accordingly, I declare the nominations for directors closed. Are there any questions? No. Then we'll be moving over to the proposal 2, ratification of appointment of independent registered public accounting firm. The next matter being submitted to stockholders for action is the ratification of the appointment of Deloitte as the company's independent registered public accounting firm for the fiscal year ending December 31, 2020. Are there any questions at this moment? No. Then we will now move to Proposal 3, which is the Say-on-Pay. The third matter being submitted to stockholders for action is to vote on an advisory basis on the compensation of our named executive officers as presented in the proxy statement accompanying the notice for this meeting. Are there any questions? No. Then we will now move to proposal 4, which is the frequency of Say-on-Pay. The fourth matter being submitted to stockholders for action is to vote on an advisory basis on the frequency with which the compensation of our named executive officers will be subject to a stockholder advisory vote. Stockholders may vote to have the advisory vote occur every 3 years, every 2 years or every 1 year, or they may abstain from this vote. The voting frequency option that receives the highest number of votes cast those by stockholders will be the frequency for the advisory vote on named executive officer compensation that has been selected by stockholders. Any questions? No. Then we will now move to proposal 5, which is the approval of amendment of the 2014 Equity Incentive Plan. The fifth matter being submitted to stockholders for action is the approval of an amendment to the 2014 Equity Incentive Plan to increase the number of shares of common stock that may be issued under the plan by 400,000 shares. Are there any questions? No. Then let's go over to voting. The company did not receive any other proposal for consideration by the stockholders at this year's annual meeting. Because no further business is scheduled to come before the stockholders, we will move on to voting. I now direct that a vote of the stockholders be taken on the foregoing matters. Each holder of common stock is entitled to 1 vote for each share of common stock held of record at the close of business on April 21, 2020. Any stockholder who has previously given their proxy need not vote unless the stockholder desires to revoke their proxy and vote at this meeting. No ballots or proxies or revocations or changes of proxies will be accepted after the polls are closed. I declare the polls for each matter voted upon at this meeting closed at 10:08 today and direct the inspector of election to tabulate the ballot. Will the secretary please report the preliminary results of the voting.

Yes, I can provide the following preliminary results from the inspector of election. I've been advised by the inspector of election that a plurality of the shares represented at the meeting voted in favor of the election of Mr. Goldberg and Dr. Maag. Accordingly, Mr. Goldberg and Dr. Maag have been elected as Class III directors of the company. Each to serve for the term expiring on the date of the company's 2023 annual meeting or until his respective successor has been duly elected and qualified. Second, I have been further advised by the inspector of election that a majority of the shares represented at this meeting and entitled to vote thereon, voted in favor of the ratification of the appointment of Deloitte & Touche LLP, as the company's independent registered public accounting firm. Accordingly, the ratification of the appointment of Deloitte & Touche LLP, as the company's independent registered public accounting firm, for the fiscal year ending December 31, 2020 has been approved. Third, I've been further advised by the inspector of election that a majority of the shares represented at the meeting voted for the compensation of our named executive officers as presented in the proxy statement accompanying the notice for this meeting. Therefore, this proposal has passed. Fourth, I've been further advised by the inspector of election that a majority of the shares represented at the meeting voted in favor for holding an annual advisory vote on the compensation of the company's named executive officers. Fifth, I've been further advised by the inspector of election that a majority of the shares represented at this meeting and entitled to vote thereon voted against the approval of the amendment of the 2014 Equity Incentive Plan to increase the number of shares of common stock that may be issued under the plan by 400,000 shares. Accordingly, this proposal was not approved. The inspector of election has indicated that she will furnish me with a written report of the final vote count with respect to the matters voted on today. A final tally of the votes will be published in a current report on Form 8-K filed with the Securities and Exchange Commission on or before June 23, 2020.

Thank you, Jeff. Please include the inspector of elections' written report of the final vote count in the minutes of today's meeting. There being no further business to come before the meeting, the 2020 Annual Meeting of Stockholders of CareDx is now adjourned. Now we would like to answer some stockholder questions. Before taking them, I would like to say thank you to everyone for attending today's meeting and for continuing support of CareDx. We can begin with a few questions that we receive in advance of today's meeting through the web portal. Please note, we will attempt to answer as many questions as time allows, but only questions that are relevant to the meeting will be addressed. Are there any questions? We see no questions. So we have received no questions. Once again, thank you all for attending today's meeting and for your continuing support of CareDx.

Ladies and gentlemen, this concludes today's conference call. Thank you for participating. You may now disconnect.