Guardant Health (NASDAQ:GH) Q1 2021 Earnings Call

0:00 Thank you. Earlier today, Garden Health released financial results for the quarter and did March 31, 2021. If you have not received this news release, or if you'd like to be added to the company's distribution list, please send an email to investors at gardenhealth.com. Joining me today from Garden is Helmy Eltoukhy, Chief Executive Officer, Amir Ali Talasaz, President, and Mike Bell, Chief Financial Officer.

0:52 Before I begin, I'd like to remind you that management will make statements during this call that are forward-looking statements. and the meaning of federal securities laws. These statements involve material risks and uncertainties that could cause actual results or events to materially differ from those anticipated. Additional information regarding these risks and uncertainties appears in the section entitled Forward Looking Statements in the Press Release Card and Issue today. For a more complete list and description, please see the Risk Factors section of the company's annual report on Form 10-K for the year ended December 31, 2020 and in its other filings with the Securities and Exchange Commission. This call will also include a discussion of certain financial measures that are not calculated in accordance with generally accepted accounting principles. Reconciliation to the most directly comparable GAAP financial measure may be found in today's earnings relief submitted to the SEC.

1:43 Except as required by law, GARDEN disclaims any intention or obligation to update or revise any financial projections or forward-looking statements, whether because of new information, future events, or otherwise. This conference call contains time-sensitive information and is accurate only as of the live broadcast May 6, 2021. With that, I'd like to turn the call over to Helmy.

2:03 Helmy Eltoukhy Thanks, Carrie. Good afternoon and thank you for joining our first quarter 2021 earnings call. Everything we do at Garten is motivated by our commitment to serve patients. In line with our patient-first commitment, I will start off our call today with a patient story. Six years ago, a 64-year-old man was diagnosed with metastatic colorectal adenocarcinoma and went through numerous therapy regimens and surgeries. In the spring of 2020, his cancer recurred, and his new oncologist ordered a garden 360 test. A BRAF B600E mutation was identified. It is estimated that this mutation occurs in approximately 8% to 10% of colorectal cancers.

2:49 By identifying this actionable mutation, He was able to begin treatment with a combination of targeted therapies of N-carotinib plus penetumumab, only recently approved by the FDA. Fortunately, the patient responded to this targeted therapy. But as we know, tumors are constantly evolving. After about six months, the patient was showing signs of progression. His oncologist ordered another GARDEN 350 test with our expanded panel that includes tumor mutational burden, or TMDs. This second GARDEN-360 test identified the patient's tumor as PMB-high. A few months earlier, the FDA had approved pembrolizumab for patients with PMB-high tumors of 10 new patients per megabase and above.

3:37 So this finding opened up another therapeutic avenue for this patient. This story highlights how genomic profiling using GARDEN-360 can keep up with the evolution of a tumor and identify ongoing therapeutic options. Turning to our first quarter performance, we started the year strong with revenue growing 17% to approximately $79 million. I am really proud of our team for their continued hard work this quarter, which translated to solid growth in our clinical business, as well as progress across our product pipeline. As expected, we continue to see residual COVID impacts at the beginning of the year, but over the course of the quarter, as physician offices started to reopen, business improved further.

4:23 Even with the persistent presence of COVID headwinds, clinical volume grew 21% to record levels of 18,390 tests. We continue to extend our position as a liquid biopsy leader for therapy selection, and there is still a vast amount of greenfield opportunity ahead in this market. The underlying fundamentals of our clinical business are very strong, and we continue to see growth in both new physician ads and receipt orders. Even with the residual impact from COVID that we anticipate this year, we expect our clinical volumes to grow more than 40% over 2020. We also made important progress on the reimbursement front. At the end of March, CMS confirmed that our GARDEN360 CDS test meets the criteria for Advanced Diagnostic Laboratory Test, or ADLP, status, which is reserved for FDA-approved tests as well as for innovative products that provide novel clinical information that cannot be obtained by any other method.

5:25 With ADLP status, Garden360 CDX will be reimbursed at a rate of $5,000 for all Medicare patients in line with our internal expectations. Now moving on to our recurrence monitoring opportunity with GardenReveal. We are very pleased with the tremendous enthusiasm we are hearing from oncologists since its launch in mid-February. As a reminder, Reveal is the first blood-only liquid biopsy test for the detection of residual and recurrent disease. With a simple blood draw, the test improves disease management of early-stage colorectal cancer patients by detecting ctDNA in blood after surgery to identify patients with a residual disease who may benefit most from adjuvant therapy and by detecting recurrence months earlier than current standard of care.

6:13 We believe Darden Reveal is truly in a class of its own. with industry-leading sensitivity and specificity and an average turnaround time of only seven days compared to other tests that require a tissue biopsy and have turnaround times of four to eight weeks. Much as we saw with the launch of GARDEN360, a blood-only solution addresses the significant logistical challenges posed by tissue in this setting. Today, the standard of care is CEA, a blood test where you get your results a few days later. Importantly, GardenReveal fits into an oncologist's workflow in the exact same way as CEA is used, but gives them extraordinarily better performance. CEA has a sensitivity of 59% with 64% specificity in the surveillance setting versus 91% sensitivity with 100% specificity for GardenReveal.

7:07 So they are getting the better product market fit with the benefits of improved performance. It is still early, but we are seeing strong updates from both new users as well as customers that have been using other products on the market and benefiting from the deep relationships we have within the oncology community. From the onset, we have said that it takes more than just great technology to drive durable, long-term adoption of new products. This type of sustained growth requires seamless integration into clinical workflows, demonstrated clinical utility, Regulatory Approval, and Broad Reimbursement. As for our work with Garden 350, we are committed to achieving excellence in each of these to ensure that our product drives superior value to the market and maximizes access for patients. We are making great progress on the reimbursement front and are confident we will have Medicare reimbursement in place for Gardener Revealed by end of 2021.

8:07 At the beginning of April, The New York State Department of Health Clinical Laboratory Evaluation Program, or CLEPS, approved garden reveal for the detection and monitoring of MRD in patients with early-stage cancer. This approval is an important proof point for reveal and builds on our commitment to improving care for all cancer patients by expanding access to our tests through compliance with the appropriate clinical laboratory regulations. I am so excited about what is ahead for gardens and believe Thank you for joining us. We have generated data across multiple tumor types, including lung, breast, gastric, and bladder cancers, and multiple classes of therapies, including immunotherapies, that demonstrate a second GARDEN-360 test a few weeks after treatment initiation can segment responders versus non-responders.

9:28 To that end, a new study recently published in J.C. Oakes' Precision Oncology show that GARDEN360 provides an early indication of treatment response to pembrolizumab-based immunotherapy by detecting molecular response as measured by changes in circulating tumor DNA levels early on. This study adds to the growing body of evidence showing that our GARDEN360 tests can effectively measure molecular response, giving clinicians an earlier indication of whether to continue or stop treatment to explore other therapeutic regimens or to enroll the patients in the clinical trials. Monitoring molecular response is an important application of our technology platform that will soon usher in a new era of adaptive management of treatments and disease, all within the reach of any oncologist using a simple blood draw.

10:21 We are also looking forward to the upcoming launch of our first tissue product, which we believe will address the unmet need that persists in the therapy selection market today. due to the challenges with many of the existing tissue offerings. In recurrence monitoring, we'll continue to drive the adoption of garden reveals, just as we did with Garden360 several years ago, ushering in a new era of precision oncology for earlier stage patients. And finally, in screening, we expect to complete enrollment of our Eclipse file before the end of the year and to begin work on our expansion into other cancer types. To support our ambitious vision, we are continuing to grow our incredible team. I am excited to welcome Dr. Craig Eagle, who recently joined Garten as our new Chief Medical Officer. Craig most recently served as Vice President of Medical Affairs Oncology for Genentech, where he oversaw the medical programs across the oncology portfolio.

11:19 Craig has a wealth of experience driving medical affairs, clinical development, and clinical trial operations at leading pharmaceutical companies, and he will undoubtedly make a great impact as we continue to develop and commercialize best-in-class products and scale the company for the future. With that, I will now turn the call over to Amir Ali for more details on our biopharma business and our pipeline activities.

11:44 Thanks, Helmy. Our biopharma business as a whole is roughly back in line with the pre-COVID levels and we are pleased with the progress we have made in Q1. Looking at biopharma samples, as expected, volumes for the first quarter was sequentially down from Q4 levels, but higher than the COVID trough we saw in Q2 and Q3 of 2020. Biopharma sample volumes was 3,522 tests for the first quarter, a decline of 33% from the prior year period. We continue to serve a growing number of biopharma customers with more than 70 partnerships currently underway. We are supporting an increasing number of studies, and we have a robust pipeline of discussions for future collaborations.

12:41 However, while clinical trials are picking back up, enrolling patient volumes are still depressed compared to pre-COVID levels. continue to impact both prospective and retrospective sample volumes. Looking at development services, we continue to see strong interest in our companion diagnostic business following FDA approval of Garden360 in 2020. Development services revenue for the first quarter of 2021 grew more than 100% to $14.9 million. Last week we announced a strategic collaboration with Daichi Sankyo to pursue regulatory approval and commercialization of GARDEN360 CDX as a companion diagnostic for N-HER2, a HER2-targeted antibody drug conjugate being studied in the treatment of patients with advanced metastatic non-small cell lung cancer.

13:43 This further strengthens the importance of comprehensive profiling as more and more biomarkers are being pursued in this duty. We are also investing in our global companion diagnostic footprint as part of our mission to make CGP broadly available to patients around the world. To that end, we recently received our CIVD self-certification for the EU. and submitted our initial PMDA filing in Japan. Our platform continues to generate data that further demonstrates the clinical utility of our product portfolio. At AACR, Amgen presented a clinical study that demonstrated how our GARDEN360 CDX was effective at selecting patients with KRAS G12C who may benefit from treatment with sotirisib.

14:41 This mutation exists in one out of every eight patients with non-small cell lung cancer. So, there is a critical need to improve access to high-quality diagnostics and more routine biomarker screening. Now, turning to Gargant Reveal. Before its launch, ctDNA-based tests developed to detect MRD mainly required tumor tissue to identify patient-specific tumor mutations. A new study led by Massachusetts General Hospital Cancer Center, which was published in Clinical Cancer Research, demonstrated that Guardians Reveal identifies patients most likely to recur with high clinical accuracy.

15:28 The integration of cancer-specific epigenomic and genomic signatures allows Guardians Reveal to detect minimal residual disease in early-stage colorectal cancer with industry-leading performance and without the need for tumor tissue. In the primary landmark analysis, 84 blood samples were taken from the curative infant patient population one month after completion of definitive treatment. In the subset of patients with at least one year of clinical follow-up, all patients with detectable ctDNA recurred. Gardner revealed sensitivity and specificity were 55.6% and 100%, respectively, for this single time point.

16:17 By incorporating longitudinal surveillance samples, sensitivity improved to 91%. Tissue-dependent MRD tests have previously reported sensitivities of 40% to 50% with a single post-surgical blood draw. Interestingly, Integrating epigenomic signatures increased test sensitivity by 36% versus just using genomic alteration alone. Also, CEA tests, the standard of care in colorectal cancer did not predict recurrence in this patient cohort. We believe that Garden Tree Bill can be a powerful decision-making tool for oncologists managing patients with early-stage colorectal cancer.

17:07 In addition, our blood-only approach offers a more streamlined workflow and faster turnaround time for clinical decision-making. We remain committed to generating clinical utility evidence based on prospective interventional studies. We are pleased with our progress in multiple studies, including COBRA, Stand-Up to Cancer, and Pegasus trials. We continue to believe that demonstrated clinical utility will be the critical component to drive long-term and deep adoption in this space. Turning to screening and our Eclipse trial.

17:53 We continue to see robust patient enrollment throughout the first quarter. We now have over 180 sites enrolling patients. Overall, we are pleased with our progress and we remain on track to complete enrollment by end of this year. As we prepare for the readout of Eclipse, We are beginning to establish a commercial team engaging industry groups and lay the foundation for a commercial organization to focus on the screening opportunity ahead. In parallel, we are continuing to develop screening data for CRC internally and look forward to presenting data from our largest early stage patient cohort to date at ASCO in early June.

18:42 We are also looking further ahead to the opportunities beyond CRC. We are starting to plan our next screening clinical study in other cancer types and expect to share more updates about this in latter part of 2021. With that, I will now turn the call over to Mike for more details of our financials.

19:05 Thanks, Amirali. Total revenue for the first quarter of 2021 was $78.7 million, up 17% from $67.5 million in the prior year quarter. This growth was driven by a year-over-year increase in both precision oncology testing revenue and development services and other revenue. Total precision oncology testing revenue for the first quarter was $63.7 million, a growth of 6% compared to $60.2 million in the prior year quarter. Precision Oncology revenue from clinical tests in the first quarter was $49.8 million, up 31% from $38 million for the prior year quarter. First quarter clinical test volume was $18,390, up 21% from the prior year quarter.

19:54 The clinical test average selling price was $2,710 in the first quarter of 2021, up from $2,489 in the prior year period. First Quality 2021 Clinical Cash Remedies includes approximately $5 million recognised from cash collected for a GARDEN360 test performed in prior periods. There are several factors that will impact the ASP of GARDEN360 for the remainder of 2021. Firstly, we will have a positive impact from the new ADLP Medicare reimbursement rate of $5,000 for GARDEN360 CDX. As a reminder, The $5,000 Medicare rate took effect on April 1, 2021 and will continue until January 1, 2022, at which time the rate will change to the median private payer rate. However, we continue to anticipate that the April 1 change to the ADLC billing code may have a short-term impact on the processing and payment of guarded 360 CDX claims by non-contracted private payers, which could offset the positive impact we will see from the increased ADLC Medicare reimbursement.

21:02 In addition, we expect the impact on ASP caused by prior period cash collections to start to reduce in the second half of the year, as our revenue recognition becomes more weighted towards tests performed in the current period. On the whole, we expect the ASP for guidance 360 to average approximately $2,600 for 2021. Note that it will take time to receive Medicare and private payer reimbursement coverage for newly launched clinical tests, such as GARNA-HEVIR. As a result, we expect minimal revenue for these newly launched tests in 2021, which in turn, and depending on volume, could impact the overall clinical ISP. Precision oncology revenue from biopharma tests in the first quarter totalled £13.9 million, down 38% from £22.3 million for the prior year quarter.

21:52 First quarter biopharma tests totalled £3,522, down 33% from the prior year quarter. As previously mentioned, biopharma volume is now back above the lows we saw in the second and third quarters of 2020, but we are still facing headwinds with respect to clinical trial patient volumes. Biopharma test ASP was 3,944, down 7% from 4,230 in the prior year period, primarily due to changes in the mix of tests performed. Development services and other revenue continue to be a strong growth driver and in the first quarter totaled $14.9 million, up 106% from the prior year quarter. Gross profit for the first quarter of 2021 was $49.9 million compared to a gross profit of $47.0 million in the same period of the prior year. This margin was in line with our expectations and in the first quarter was 63% compared to 70% during the first quarter of 2020.

22:53 Operating expenses for the first quarter of 2021 were $157.8 million, an increase of 93% compared to $81.9 million in the first quarter of 2020. Non-DAP operating expenses exclude stock-based compensation and related employer payroll tax payments, acquisition-related expenses, amortization of intangible assets, and changes in fair value of contingent consideration. Non-DAP operating expenses for the first quarter of 2021 were $100.7 million, a 52% increase from $65.9 million in the first quarter of 2020. As mentioned during our last earnings call, Thank you very much.

24:12 We ended the first quarter of 2020. with $1.9 billion in cash, cash equivalent and multiple securities. Now turning to our revenue outlook for the full year 2021. We are pleased with our solid start to the year and view the fundamental drivers of our business to be very strong. However, we are not yet through the global COVID pandemic.

25:00 As Helmy mentioned, we are still seeing COVID impacts in our clinical business as some physician offices remain closed. Related to our biopharma business, while clinical trials are picking back up, Patient volumes are still depressed because of pre-COVID levels, continuing to impact both prospective and retrospective sample volumes. Given this backdrop, we continue to expect revenue to be between $360 to $370 million, representing growth of approximately 27% over 2020 at the midpoint of the range. We also expect clinical sample volume for 2021 to be greater than 90,000 tests,

25:46 Thanks, Mike. Before closing, I want to thank our team for their incredible work to bring to fruition the vision we had when we founded GARDEN of significantly improving outcomes across the entire continuum of cancer care.

26:13 We will now open it up to questions. At this time, if you would like to ask an audio question, you may do so by pressing star and the number one on your telephone keypad. Again, that is star one. We do ask that analysts limit their questions to one question and a follow-up. We'll pause for just a moment to compile the Q&A roster. The first question will come from the line of Panet Sota with SPV Wing Ring.

26:47 Hi, Helmy and Amirali. Thanks for taking the question. So first one is on the guide. You're obviously maintaining your guide as before. So I just wanted to get a sense from you what you're seeing in the channel and from the sales reps. Maybe can you give us a sense of what percent of the reps are actually in person and detailing the G360 and other products versus is still online. Obviously, vaccinations have ramped up. Patients are coming back to the clinic, obviously not at the same levels as before. Pandemic is still something here. ADLT reimbursement appears to be improving, though I appreciate what Michael is saying, but you also have FDA approval, and that's Thank you for joining us.

28:11 Thank you very much. Thank you. COVID Impact.

28:42 Those assumptions are playing out as we expected. We're very confident with the guidance that we've put in and out. I think when we get past these uncertain items, we'll have a much clearer picture for the remainder of the year.

28:57 That's helpful. And on Eclipse, I just wanted to clarify, you mentioned enrollment completion by year end. And I know, I believe, I think in past you had said sometime around October that would align with the October 2019 timeline when you started this trial. You had about 150 plus sites before. Now you have more than 180 sites. So it suggests that the enrollment is increasing. taking up so just wanted to get a sense of you know is this it's still the same timeline or is it you know moving a little bit it would suggest the timeline should move up rather than later and then in terms of the screening data for CRC that you mentioned at ASCO just wanted to get a sense from Amir Ali on that if that you know if I heard that correctly that large cohort how big is that cohort and is that still very much a case control to study or this is more an average risk?

29:58 Yeah, so regarding timeline for Eclipse and last patient enrollment, still we're on track to finish it at the timeline I would be set within the 24 months. So the timeline that you mentioned is actually where we think we're going to have the last patient in. So that's going to be before the end of the year. We are going to see and monitor the field and see if we are going to have some up and downs, but we feel very confident that it will finish by the timeline that we always mention throughout this course of study with all the up and downs that we had due to COVID, which we are very excited about. In terms of the ASCO data, actually, it's a pretty interesting cohort.

30:43 It's the largest cohort data that We are showing still it's not like a prospective screening cohort that we are getting in ECLIPPS. Really ECLIPPS is one of a kind and we have to just wait to see what results we are going to get from ECLIPPS. But systematically we are removing some of the technical risks in terms of some potential variation in different cohorts, potential variation in terms of types of patients that they were in the cohort. So please stay tuned here. Please put that data and Okay, that's what we're hoping.

31:23 Yeah, please. I think we're very pleased with the progress there. You know, we've been able to maintain our initial timeline of 24 months since we started the trial, and I think that's a testament to the level of kind of resilience and the level of execution that the team has had. You know, we're seeing other, you know, trials, you know, delayed from, you know, where they were initially kind of close to it. So, you know, I think it puts us in a singular position.

31:54 Okay, great. And then last one, if I could just squeeze in. In terms of the reveal data in the CCR paper, you know, obviously a really good paper. Is that clinical utility data good enough for reimbursement, or are there other data sets that you would want to add here before, you know, getting the reimbursement from, you know, by Medicare by the year end? and wondering if there are any, you know, indication, as far as indication expansion that you're thinking about revealed. Thanks so much.

32:26 Yeah, so that's something we are very pleased with. That paper, it was a collaboration which we had with NASA at MGS for a while. And, you know, there are some additional ISPs that we are doing in the same space of CRC, which, you know, the data is giving basically cooking and, you know, we are going to show the data at the right time. In terms of reimbursement, we are pleased with some of the conversations we had with some of the major players in the field. Is that something which would convince all the major national players to cover this test? No. If you thought that would be the case, we wouldn't do the clinical utility studies that we have started since almost a year and a half, two years ago.

33:14 We think the readout of some of those studies would really impact long-term adoption, commercial adoption of the test and long-term reimbursement by many payers. And that's why we prioritize those activities over this commercial launch. But still we are seeing some interesting and exciting signals from some of the conversations we have. So please stay tuned. Hopefully we have some good information to share in the future.

33:43 Great. Thank you.

33:44 You asked about other indications very quickly. For a while, we talked about our platform technologies definitely way beyond CRC. CRC is our leading indication, not the only indication. We have been working in a few other cancer types, and we are pleased with progress that we've seen in really multi-cancer setting, which has some The next question will come from the line of Dan Arias with Steeple. Dan Arias Thanks. Helmy, just maybe a couple on some other clinical trial.

34:35 I think we'll see what makes sense. It depends on timing. Obviously, if timing works out, I think it could be unveiled at a trial, but it's obviously a very sensitive data set that would likely need to be shared in a timely fashion.

35:05 We'll make sure I get those then.

35:08 Okay. And then maybe on the MRD side, Stand Up to Cancer and COBRA, I think the primary completion date for Stand Up to Cancer is listed as February of 22, and then COBRA is summer of 22. Do you think we might get an interim look at data from either of those before those dates, or is that more or less the time that we should think about when it comes to just sort of seeing results and having something to evaluate?

35:34 Yeah, so those are the timelines for enrollment. This is a multi-year trial in terms of figuring out the clinical endpoints that we have in those studies. Some of those studies, in fact, go all the way to end up overall survival. So it's going to take a few years for some of those studies to have a solid readout on the clinical endpoints while the enrollment was finished. And those are the timelines that you stated. It's going to take us some time to really get some good return out of those investments. But as I indicated before, we believe those are very key for the progress that I think the whole MRD field needs to make to really open up this big opportunity that we are excited about.

36:26 Okay, sorry, one last quick one for Mike. Mike, are you able to say what percentage of private payers are actually billing using the miscellaneous code right now?

36:38 No, Dan, we don't really break out the codes that we use. So, you know, if you're trying to get at how that ADLT impacts the private payers, I think all we're saying is that those non-contracted payers, The next question will come from the line of Derek DeBruin with Bank of America.

37:17 Hi. Thank you for taking my question. This is Ivy Olm for Derek today. First, I want to start with Reveal. I just wanted to see if you could share a bit more about the uptake so far, and also what kind of revenue growth trajectory you are looking for, and can we look to the G360 lens? I know it's still early, but would appreciate any comment on that.

37:46 They're very pleased with what we're seeing so far with Reveal. I think it's meeting all of our expectations in terms of having Thank you very much. Thank you. I think we couldn't be more pleased. I would say that in terms of the ramp that you should expect, we have much deeper relationships today than we had seven years ago when we launched Garden360.

38:44 And I think part of the success we have is the credibility we've built and the deep relationships we've built with the oncology community in those There's seven years now, and so I think we're leveraging a lot of that, and we're very, I think, cautiously optimistic in terms of the kind of continued uptake of garden reveals for the remainder of the year and beyond.

39:10 Great, thank you. And then I wanted to touch on Luna 2. Can I get your opinion on your targeted performance on REN2? And in your opinion, what kind of eclipsed data you would need to sort of have a faster ramp-up versus the other non-invasive option out there in terms of VIP screening, aka cold guard? and also on the commercialization side. I realize it's still early to talk about the plans, but I wanted to see what you think in terms of launching it as an LDT versus going full FDA approval approach.

39:59 Thank you. Sure. So depending on the performance, actually, I think the indication of use of the Some bars that looks like it's getting set in terms of getting successful national CMS coverage. Looks like pretty reasonable bars. Effectively, it means our sensitivity to performances of FIDS, maybe a little bit more than that. And then the next kind of target number is and numbers by stool-based testing.

40:49 We believe actually liquid biopsy and blood has the opportunity to even meet or exceed the numbers by stool-based testing, but we have to see. We have to see actually what we are going to get in ECLIPSE. When you look at all the data that we've seen so far and we put out there, we are within striking distance of having a performance test Very comparable, competitive, or potentially that could be better than school-based testing. But we have to see what eclipses that show us in this kind of screening trial. There are still a bunch of risks left there. But we feel very confident, based on everything that we know about liquid biopsy, that liquid biopsy would play a major role in screening, especially in this lead indication that we are targeting in colitis.

41:46 In terms of commercial build-out, we are continuing to do investments on that time that we are building the team. So we are building it top-down. We have a bunch of senior executives that we have added to our screening core, and we are continuing the recruiting and build-out of the team to be ready for potential launches of our screening tests down the road.

42:12 Great, that's very helpful. Last question. I apologize if I missed it in a prepared remark, but did you talk about the volumes on both clinical and biopharma in April you've seen so far, or just the X-ray rate? Thank you.

42:31 We haven't mentioned what volumes are, but I can say that I think we're pleased with how things are going. Certainly things picked up quite a bit in March, and I think we're continuing on that trajectory.

42:48 Great. Thank you. The next question will come from the line of Piha Savit with Morgan Stanley.

43:01 Hey guys, good evening. Just a couple of follow-ups here on review. So first, Helmy or perhaps Amirali, can you just elaborate what the lead time was versus imaging for the assay in the MGH paper? and then second in terms of the failure rates for the assay is that something that is sort of we should expect a significant improvement upon given that you know the paper was based on an older version or how much more optimizing is there for you guys to do there to get those rates down?

43:39 Yeah so I'm going to take that question so for guidance review actually in that paper I think it's interesting what we're hearing in this field. But in that paper, actually, the samples that we did in collaboration with MGH, we were getting volumes of 1 to 4 ml from different patients, and in terms of cell-free DNA, even as was 4 nanograms in a bunch of samples. So in different kind of settings, we had kind of exclusion QCs for that study. For some of the patients, actually, we They never followed through with follow-up imaging or they didn't comply to the blood testing. We have some exclusion around it. And I can share with you what we are seeing now commercially in our clinical lab across many tests that we've done during the last couple months. Our Q&S rate or failure rate or cancellation rate, whatever way you look at it, has been less than 1%.

44:42 So we believe in the quality of the assay we develop and robustness. So that's the experience that you're seeing on the commercial side in our clinic a lot. It's not 1% failure or S rates, to my best knowledge. Regarding the decline to the imaging, I think that's really a function of the cohort and I think maybe a better indication to look at is the clinical sensitivity and specificity in relevant indications. which we believe you need to look at landmark time points and the surveillance time points.

45:43 Differently, we are going with standard of care definition for landmark time points, which if you're interested, we can talk about it. But based on whatever way that we cut the data, although it's relatively smart cohort, we believe we have leading performance in the field even without the need of tumor tissue. So that's our belief.

46:08 Super helpful, AmirAli. And then one quick follow-up for me. In the past, you've mentioned and so have some of your peers just around the fact that background noise from surgery prevents liquid biopsy use for the first few weeks. So from a real world standpoint, how much of a difference does a tumor agnostic approach make relative to a tumor informed approach in terms of when the actual monitoring of the patient actually begins? I mean, is that even a fair question? I'd love to hear your perspective on that.

46:45 Yeah, sure. Actually, there are a bunch of literature around this. Now we know the science much better than earlier days of liquid biopsy, both for reveal and garden 360 in terms of like both any kind of intervention, like invasive intervention. We are recommending that blood draw to happen at least four weeks after that intervention, to my best knowledge. We have some publication, even But what we typically recommend is four weeks after these invasive procedures. And then you can look at molecule response rate in terms of treatment efficacies, and also if you want to look at MRDs in adjuvant setting or any kind of landmark time points, still you can get solid information with very high clinical accuracy.

47:44 Got it. Super helpful. And then one final one for me on Gardens Inform. Can you just share an update there on the conversations you're having since the platform went live and perhaps any sort of marquee deals that have come about thanks to that launch?

48:02 Yeah, we've been very pleased with quite a big pipeline now of conversations and frankly many deals. The next question will come from the line of Brian Weinstein with William Blair.

48:43 Hey guys, thanks for taking the questions. To jump on the eclipse train that everybody seems to be on today for some reason, when we do see that data, I know it's still a little ways away, are we expected to see just the top line data? Are we going to see data by stage? Are we going to see advanced adenoma data in there? Can you just give us an idea of kind of what the construct will look like when we do see something?

49:11 Yeah, sure. So, you know, in terms of phasing of the data, we have to see when we get the reports, you know, which one of the data we can actually generate. But when you look at our clinical trial report, you're going to see some of the primary endpoints that we have in that study and also secondary endpoints that actually highlight some of the data that we would generate effectively, which would be, you know, clinical sensitivity and specificity, some advances in overall performance, We are going to actually have, you know, stage information for a patient. So we are going to have that information. Also, it's just a matter of the timing of when we are going to get access to that information from the ass report of the patient. So all these will be analyzed by best knowledge.

50:00 So, yeah, we are going to share all the information that we are going to see.

50:09 Got it. Okay. And then, Helmy, you know, we've seen others that are in the broader precision oncology space spend significant assets or spend significant dollars on adding Assets, be it technology or other hard assets that are available. We really haven't seen you do that yet. I'm curious what you think that says. Are you guys more discriminated about what you are looking for? Are you typically not willing to pay up or do you just really not think that you need to do it? Not that there's a gun to anybody's head, but it's an observation that you guys have kind of not gone down that path as much as really at all versus others that are being pretty aggressive on adding technology.

50:54 So kind of your broader thoughts on M&A and what that says about what you guys are looking at.

51:01 That's a great question. No, I mean, we're very much, I think, pro-M&A, where it makes sense. We have a team that is actively sourcing deals and reviewing deals. But I think we're in an enviable position in terms of the pipeline that we have in the platform. We have events, of course. You know, when we do pull the trigger on certain investments, you know, they're going to be investments that, you know, make sense. And we have a high bar for that, given where we are internally in terms of the development platform. But that being said, you know, I do think M&A is healthy. It brings in new talent, new technology, diversifies the pipeline. So it will be an important aspect of the business going forward.

51:51 Okay, and can I sneak one in for Mike? It's just on the ADLT stuff. With respect to the weighted median here, is there any reason to think that that 130% kind of target that CMS has set as it relates to the ADLT pricing, that there would be any kind of an issue there? Are you kind of thinking that you guys are going to be in that, I think it's like $3,800 or something, or better on the weighted median, just as I'm thinking about 22 pricing?

52:18 Yeah, Brian, I would say we're The next question will come from the line of Patrick Donnelly with Citi.

52:56 Great. Thanks, guys. Obviously, a lot of ground coverage. Maybe I'll just keep it to one. Helmy, can you talk a little bit more about the investment in the global footprint this call? You talked about different approvals in the EU and Japan. Can you just talk about the global strategy? Obviously, early days, but how important that is and what we should be on the lookout for in terms of traction over the next six to 12 months?

53:19 I think we're continuing to ramp up our investment globally. We're making very good progress with JV in Japan and Asia as well as the Middle East. Japan, I believe, we should have our labs up and running sometime later this year. And we have obviously submitted to the GMBA. We're very hopeful that's going to open up really kind of new ramps and opportunities in the testing. and Bruce in Japan. In Europe obviously we've announced a public-private partnership with Algaron in Spain. And so you see that I think globally we're thinking of a more kind of partnership and decentralized approach which we think is necessary for some of the different regions that we're targeting to really improve access to this type of testing and frankly The inflection point is going to be winning a public reimbursement in each and every country.

54:29 There's no cookie-cutter approach, but we believe the approaches we are taking are very tailored towards each region and what's likely to be most successful. The next question will come from the line of Jack Meehan with Nephron Research.

54:53 Thank you. Good afternoon. I wanted to go back to Garnet Reveal. Helmy, I think you mentioned you felt confident about getting Medicare coverage before the end of the year. Can you just talk about what events need to take place for that to happen? Do you need some of these interventional studies to read out? And then can you talk about how you're thinking they'll approach pricing for the test?

55:20 Yeah, so the discussions have been good. in terms of working with our Medicare counterpart and to leave all the data that is necessary. We have in hand already. And so now it's kind of more procedural in terms of some of the back and forth. So we're fairly confident by the end of the year we should have both reimbursement and pricing in place. In terms of details and pricing, that's still You know, that's still something that we shared earlier.

55:56 Okay. On the biopharma side, you talked about kind of the continued impact on clinical trials from the pandemic. You know, on the CRO side, we're seeing a lot of momentum helping customers catch up. Are you seeing that for the year as well? And can you just talk about within the guidance what you're assuming in terms of revenue for the year?

56:18 On biopharma or just?

56:21 Yeah, so my guess on the within precision oncology for biohormone.

56:31 Yeah, so I think we're seeing that trials are picking back up. They're obviously getting back into the swing of things. The challenge is, I think, patient volumes. Even though the sites are back up, the trials are picking away, the patient volumes are still depressed in terms of enrollment There's still been a big shift towards telemedicine. There's, you know, even though patients can go back in, they're not necessarily going in, they're not necessarily traveling, you know, the 50,100,150 miles that they have to travel to different clinical trial sites. So that's going to have residual impact, you know, certainly first half of the year and maybe even beyond to some extent.

57:18 And so that's, you know, depressing. and perspective sample volume. That being said, I think our development services revenue has been very strong. We saw very high growth there. So we're seeing the overall depth and breadth of relationships we have with our farmer customers is continuing to expand. But I think we're assuming, I would say, in terms of guidance. Yeah, I mean, I would just say, I think our volume this quarter was sequentially lower than Q4. I know we previously signaled that. We had this

58:22 I'll leave it there. Thank you guys. The final question will come from the line of Doug Shankle with Cowan.

58:52 Hey, good afternoon, everybody. Thank you for taking my question. So just to talk a little bit more about Garnet Reveal. First, how would you characterize biopharmaceutical interest in working with you with this assay? Second, with regard to the data in the PERIC study in CCR, are there areas where you'd like to see further improvement as you do further optimization work? I'm thinking things like, again, not a huge study, but the failure rate seen there were a little higher than I think we would have liked. and then third, there are some including competitors that have asserted that there were differences in the study readout on certain metrics relative to those that were published in some of the tumor-informed studies.

59:42 Things like adjuvant therapy inclusion and the treatment of inconclusive tests. Just based on this, when you head to the market and you're talking to folks in the field Do you have any concerns about how apples to apples the results really are relative to others?

1:00:06 Yeah, sure. So on the biopharma side, you know, so you can look at some of the interesting clinical trials happening in the MRD space. There are not many of them in fact around CRC, and that's something that has been impacted some of the conversations with biopharma. Our lead indication is CRC, but a bunch of other biopharmaceutical interests are in other cancer types. Now that we have some additional data in some other cancer types, we are seeing a bunch of warm-up in conversations around MRD trials with biopharma. Already some pilot experimentation is going But I think that's one of the issues we have with Biopharma in terms of some mismatch of clinical lead indication versus the lead indication necessary for Biopharma trials.

1:01:01 On the review, like clinical experience, as I mentioned earlier, in our clinical lab, like in the commercial setting, we had less than 1% failure rate, QNS rate, you know, all that's inclusive to just less than 1%. So I think some interesting statements we are hearing in this field is in that MGH cohort, we were getting small amounts of plasma volumes as well as 1 mL, as I mentioned earlier, as well as 4 nanograms of cell-free DNA. So hence, we have kind of a higher failure rate. in the commercial setting, as I mentioned, we had less than 1%, less than 1%.

1:01:51 In terms of head-to-head comparison, we tried in that NTH cohort to make the analysis as close as possible to what's been published by the tumor-informed assay before, with the caveat that we believe the landmark time point really we need to go with the right clinical is inclusive of any curative intent treatment. It could be surgery. It could be neoadjuvant plus surgery. It could be surgery plus adjuvant. So we highlighted that data for what's our performance in landmark reports. In the supplemental data, all the data is broken out. And whatever way you break out the data between surgery, adjuvant combination, whatever, what we believe is we are showing the leading performance and I think over time through other studies and I think clinical experience, I think this is going to get further and further concerned.

1:02:54 Okay. That's super helpful. Thank you for that. And I know we're late in the call, but maybe if I could just ask one last one. Not related to Guardant Revealed, just thinking about COG's improvement initiatives over time. You know, keeping in mind you have a supply agreement with Illumina through 2033, I believe. So noting that, but also acknowledging the fact that others in the space are either evaluating or actively working with or investing in competitive technologies with the intent of reducing COGS over time. Do you have the flexibility to work with suppliers other than Illumina over time? And if so, is that something that you're actively considering?

1:03:41 And what are the characteristics you're looking for?

1:03:43 We have the ability to work with any supplier. We have a good relationship with and, you know, with Illumina in terms of, you know, our working relationship. But, you know, as I said, as we, you know, continue, as this space continues to evolve, we're going to obviously prioritize technologies that give us the best cost advantage and performance advantage. It's like any other part of, you know, the reagents and suppliers that we work with. That's great. All right.

1:04:29 Thank you very much. Have a good evening. With that, this does conclude today's conference call. We thank you for your participation and ask that you please disconnect your line.