Q2 2020 Guardant Health Inc Earnings Call
Guardian Health Q2, 2020 earnings conference call.
At this time, all participants are any listen only mode.
Following the presentation there'll be a question and answer session.
So the question via telephone line, Please press star and the number one on your telephone keypad.
I would like to now hand, the call over to your speaker today Miscarry Mandeville Investor Relations. Thank you. Please go ahead ma'am.
Thank you earlier today Garden, how released financial results for the quarter ended June Thirtyth 2020.
Not repeat business really R&D like the added to the company's distribution centers and garden how dotcom.
Before we begin I'd like to remind you that management will make statements during the meeting on federal Securities laws you.
These statements involve cause actual results or event to materially differ from Goldman.
Confirmation regarding these risks uncertainties, you're doing section entitled forward looking statements and press release Garden issued today.
More complete lesson discussion please see the risk factor section of the company annual report on form 10-K for that year ended December 31, 2018, and an other filings with the Securities Exchange Commission.
That does required by law Barton disclaims any intention or obligation to update or revise any financial projections or forward looking statements or because of new information future events or otherwise.
Our call contains time sensitive information is accurate only as of July broadcast August six 2020 that I'd like to turn the call over how many how can be on co founder and Chief Executive Officer Ami.
Thanks, Gary Good afternoon, and thank you for joining our second quarter 2020 earnings call.
Joining me today is a mirror always out there president and co founder and during the quarter Dodgy, our Chief Financial Officer.
The started I hope everyone is in the best Apollo and good spirits as we face continued ramifications of the pandemic.
As expected the impact of Cobot 19 created a headwind for then colleges base during the second quarter and not surprisingly various aspects of our business were affected to varying degrees, which I will review in a bit.
That said in the face of these ongoing challenges. The garden team has continued to make substantial progress across our business.
As ending new data for our winter to assay counting to new companion diagnostic partnerships and launching our garden informed platform.
Indeed, these past few months it may be more confident than ever in the promise of our platform and the significant opportunity ahead to transform patient care. Despite the challenges posed by this endemic today.
I'm extremely proud of the garden theme for the fire and dedication to have shown in this new environment.
The fuel to the fire so to speak their commitment deserve patients and consistent with these values I will start up articles, where the patient story.
Recently 60 year old man presented with a brain math and initial work of identified lung nodules and suspicious lymph nodes.
Fortunately as oncologist Brett this is in the community setting.
I've noticed that patients are coming in at more advanced stages due to delays in addressing symptoms as a result of a pandemic.
The brain as was the most urgent matter for this patient and brain surgery with perform the provider with suspicious of lung cancer. Given this technology of the brain biopsy in the presence of lung nodules, but along biopsy. Following the brain procedure was deemed too risky.
And then color just needed economic assessment of the tumor and while tissue from his brain, but he was sent upward genomic testing they were still awaiting results.
Provider decided to try liquid biopsy incentive garden threesixty as the suggestion of his colleagues a pretty good garden Threesixty user.
And Threesixty quickly identified and Thats on 14 skipping alteration.
Based on this result don't call. It just was able to so that's kind of them out in the for its first line treatment.
Not only does this story demonstrate the importance of the precision oncology paradigm, but at highlighting how our liquid biopsy platform is uniquely qualified to address the needs of patients during this challenging time.
Turning.
Sure business.
We ended the 3 million growing 23% over the second quarter of 2019.
Cynical volumes regard Threesixty grew 15% to 13690.
Second quarter of 29 team.
On our last earnings call I shared that our U.S clinical volumes were down about 30% exiting the first quarter compared to the average level clinical samples over the first 10 weeks and by early May we had begun to see a slight uptick in sample volume on the lowest points in early April.
We continue to see improvement into clinical volumes throughout may and into June and are pleased to report and we exited the quarter with the volumes similar to the levels. We saw in mid March prior to the impacts from corporate 19.
For this difficult time, our team was not only able to maintain uninterrupted operations, but was also able to consistently maintained our industry, leading turnaround time for garden threesixty of seven days or less.
Diving deeper into clinical volumes growth recovered more quickly in community hospitals compared to the academic setting. Additionally, we saw rapid shift towards Tele medicine.
Before the pandemic oncology visits very rarely used telemedicine, we'll just 2% of business performed particularly well.
Over the past few months. This trend has reversed itself to protect advanced cancer patients and extremely high risk population from exposure to covert 19.
As a result, there have been fewer physical visits to oncology offices and fewer new diagnoses factors that benefited the increased use of liquid biopsy testing, especially when coupled with our mobile about I mean services and digital offerings.
While these trends are encouraging we believe that the path.
Recovery is likely to remain uncertain in the near term.
Since the end of June we have seen a resurgence of cobot cases in some regions across the U.S. and is unclear how a second wave of closures, resulting from the pandemic may impact our clinical volumes through the end of the year.
Turning to our Biopharma business.
Volumes declined 47% year over year to 2805 tests. This was counterbalanced by 29% year over year growth and development services revenue of 15.3 million.
On the whole we remain pleased with our biopharmaceutical business Amir all he will give further detail and if you Miss.
As the board, we remain unwavering in our commitment to serving patients in advanced cancer setting and has continued to ship in market blood first paradigm for Genotyping.
The ended 2018, we outlined three key catalysts that will be critical to shifting the market to a blood for a paradigm.
First demonstrating concordance between liquid biopsy and tissue testing second Pancancer Medicare coverage and finally at the approval of our Threesixty, where they pancancer tumor profiling label.
In the first quarter, we began to see benefits from Pancancer Medicare payments outside of non small cell lung cancer and we're looking forward to achieving the third catalyst with approval of garden Threesixty for all solid tumor types.
We believe that they approval will help accelerate wider adoption of guideline recommended genomic profiling, increasing the number the advanced cancer patients who receive potentially life changing treatments.
Typically we expect FCC approval to strengthen reimbursement by advancing conversations with private payers and further improving existing Medicare coverage.
Extend momentum for our companion diagnostics business through increased opportunities to work with Biopharma and the clinical settings.
And over the medium to long term advance the use of burdensome associated with physicians have been slow to adopt CGP.
Looking ahead, we continue to believe that the unique opportunity. We have here at garden will allow us to serve patients well beyond those in advanced stages of the disease. During the quarter. We completed a follow on offering raising approximately $375 million of net proceeds, bringing our cash cash equivalents and marketable securities totaled.
So $1.1 billion.
We intend to use these funds to accelerate development in our lunar program and pursue the large market opportunities in front of us.
Im Chris credibility proud of the outstanding efforts across our organization and the last few months only reaffirmed my belief that we will come out of this period given stronger as a company with that ill now turn the call over to the mirabelli for more detail on our Biopharma business and our lunar program.
Thanks, helping.
All of you on your families are staying safe and healthy.
Turning first our Biopharma business.
As Howard mentioned, we had a strong quarter, our cdx development services offset by lower sample testing volumes.
Starting with Biopharma bond deals you have always analysis and likelihood of assets those in our Biopharma business.
In February on our 2019 year, and earning call we anticipated that biopharma volumes would be light during that first half a year.
In addition to these anticipated fluctuations opened 19 as clearly impacted the sample testing and prospective studies and also the tightly shipments by banks on calls property prospective studies.
Looking ahead to the next couple of course fares, we expect that the effect of August 19 may answer repo through Biopharma sample testing audio.
However through conversations with our Biopharma partners to try to answer Cedar robust future demand for sample processing specially using BARDA to omni.
On Earth me, we experienced strong growth in our companion diagnostic business, which speaks to the progress we are making it our cdx product development activities and they are robust and stress on our Biopharma partners.
We recently announced Kunio Cdx partnerships.
In early July with jet set for active antenna and investigational EG fr matched by specific antibody being steady thing the treatment of non small cell lung cancer patients with EG apart exxon's financier shafts fish cotton price or to 12%.
Non small cell lung cancer patients PDGF army of patients.
We are encouraged our partners are recognizing the value of comp ansys testing to find these patients and to support the broad commercial penetration to accelerate uptake of feedstock from targeted therapies from the first day of approval.
And last week, we announced this cps collaboration with radius health for Lss trends, our first companion diagnostic programs in breast cancer.
You bet that high prevalence of gone metastasis in AD as breast cancer disease, our current entries 60 liquid biopsy.
Help overcome the challenges of phone biopsies identified significant that pays more actionable biomarkers, including TSR orientation us which are being studied in their radius Emerald trial.
We are extremely pleased by the progress of our companion diagnostic business today.
And are encouraged by the healthy pipeline of others CBX discussions on their way.
Our companion diagnostic programs supports accreted, probably dispatch out target therapies, which we believe to be one of them. Most important drivers of car entries 60, claiming cloud adoption.
Well I inclining has taken more neo targeted therapies approved by FDA than prior years.
And we're already seeing the positive effects in cleaning call volumes or indications with recent drug approvals for example in prostate cancer.
We also remain deeply committed to content generating robust data us with fair to improve cancer diagnosis and treatment.
Hey, John will launch a real world clinical genomic platform partner in farm for help accelerate research and development. The next generation of cancer Therapeutics.
Each garden chasing since has provides critical genomic information on various schumer profiles and we have now for life. This genomic information our 900000 patients today.
Right I think farm combined this robust genomic data OVC identified clinical information for each Asia.
His clinical genomic data sets offers our biopharma partners real on the insight into how patients are treated based on their mutation profiles as well as pattern of drivers a sense of humor evolution.
The most notable applications Pragada in farm includes targeted drug development label expansion.
You mean culture optimization by incorporating real world clinical genomic data points to trial design and control arm development as well as post marketing studies.
Now I think are known their program.
Your containing our research and clinical development activities as relatively full capacity.
You have expanded our trial site in eclipse to over 130 sites.
Enrollments began to Reaccelerate in late June following those throughout April.
In fact joined was a record much of enrollment.
You have continued to see growth shops declines departure.
Overall, we're very pleased we could probably read our progress, particularly during these difficult past few months.
We continue to believe Google comps 18 girl that waiting to 24 month timeframe I announced last November.
Outside of Equips. We're also developing robust paybacks are part of our known they're trying to stay.
At AMC RV shared data from in yield patient cohort that demonstrated improved performance. So filling our two assays to detect early stage colorectal cancer and average risk adults.
Our I'd say achieved 90% sensitivity and 94% specificity and detecting early stage CRC and even higher specificity wind restricting analysis of the controls to dealers who were negative for CRC Hi, colonoscopy.
Finally, our last earnings call. We shared details our efforts is ever looked at diagnostic test for Sars Koby too.
We recently filed for an emergency use authorization on our Ngs assay and are currently using getting house or say right last as tank car in the team. So please.
As an essential business weekly calls is 19 screenings.
Increasing costs in both Q can gehring police state and maintaining business continuity.
We continue to believe that similar screening programs drove an important component of assessed Andrew opening up the economy and educational systems across the us.
With that I will now turn the call over to dairy bird Archie for more information on details about our financials Eric.
Thanks, and the early.
Revenue for the second quarter of 2020 totaled $66.3 million up 23% from $54 million in the prior year quarter, but down $1.2 million were 2% from the first quarter 2020.
The increase from Q2 2019 was driven by an increase in precision oncology testing revenues, resulting from significant increases in average selling price forecast per test as well as higher development services revenue.
The decline from the first quarter of 2020 was driven by lower test volumes caused by the coated 19 pandemic, mostly offset by higher development services revenue.
Total precision oncology testing revenue for the second quarter was $51 million.
Hi, guys to $39.6 million clinical tests and $11.4 million from biopharmaceutical tasks.
Precision oncology revenue from clinical test included $2.6 million in revenue received from Medicare for samples processed in 2019.
Given the age of the samples associated with this revenue, we do not believe it to be indicative affordable recourse of operations.
Second quarter clinical precision oncology volume totaled 13694 test.
15% from 11875 test in the prior year quarter.
Put down 10% from 15257 tasks in the first quarter of 2020 due to the cobot 19 pandemic.
Clinical precision oncology ASP was $2893 in the second quarter 2020.
57%.
1800, $39 in the prior year period in up 16% from $2489 in the first quarter of 2020.
The 57% increase from clinical ASP over the prior year quarter was due principally to the reimbursement from Medicare for testing of non lung cancer samples. In addition to lunch sample starting in March 2020, plus a modest increase in reimbursement from commercial insurers.
And $2.6 million received Medicare for samples processed can 2019th.
In Q2, the processing of samples reimbursed by Medicare stabilized under the new coverage policy and as a result, we recorded revenue on approximately 85% Medicare sample from Q2.
Up from approximately 75% of Medicare samples in Q1.
This increase in Medicare reimbursement.
A modest increase in reimbursement from commercial insurers as well as revenue from Medicare.
Our samples processed from 29 team resulted in a 16% increase in clinical ASP in Q2 over Q1.
Precision oncology revenue from biopharmaceutical tests in the second quarter totaled $11.4 million down 44% from $20.2 million for the second year quarter and down 49% from $22.3 million in the first quarter 2020.
Second quarter pharma precision oncology volumes total 2805 tasks.
47% from 5285 test in the prior year quarter.
As expected second quarter volume was lower than the prior quarter down 47%.
Mainly to the impact the code 19 pandemic on customer programs.
Hey, ASP was $4054 up 6% from $3827 in the prior year period, but down 4% from $4230 in the first quarter of Twentytwenty.
The ASP was driven by changes in the proportion of total biopharmaceutical tasks using the garden Omni task, which has a higher selling price and the garden Threesixty task.
Develop it services revenue in the second quarter totaled $16.3 million up 29% from the prior year quarter.
111% from the first quarter 2020.
The increase was primarily due companion diagnostic revenue.
Including programs with Amgen and chance, which boosted develop it services revenue in the first half of 2020.
Gross profit for the second quarter, 2020 was $43.9 million compared to a gross profit of $37.1 million in the same period for prior year.
And $47 million in the first quarter of 2020.
Gross margin in the second quarter was 66% as compared to six.
9% during the second quarter 2019.
And 70% in the first quarter of 2020.
The decline in gross margin compared to the second quarter 2019 was primarily due to a lower gross margin on development services revenue.
The result of normal variability across programs.
The decline in gross margin compared to the first quarter 2020 was due principally to the lower ASP for pharma testing plus an increase in overhead cost per unit due to the decline in total volume Samplings Tesco.
Total operating expenses for the second quarter of 2020 were $98.5 million, an 88% increase.
$52.4 million in the second quarter, 2019, and up 20% from $81.9 million in the first quarter of 2020.
R&D expenses for the second quarter, 2020 were $36.3 million compared to $19.5 million in the second quarter of 2019.
The increase was primarily attributable to increased spend to support our lunar programs, including the eclipse clinical trial.
Our ft, a submission for garden 360.
And other research and development programs, including development of our closed at 19 cats.
Sales and marketing expenses for the second quarter of 2020 were $25.0 million compared to $19.4 million in the second quarter of 2019.
The increase was due to growth in sales and marketing staff.
Spend on programs to increase education and awareness liquid biopsy.
General and administrative expenses for the second quarter were $37.2 million compared to $13.4 million in the second quarter 2019.
DNA expenses for the second quarter included $18.3 million in stock based compensation for SBC related to market based restricted stock units granted to the company's founders on May 26020.
The remaining increase in gene expense was $5.5 million, which was primarily due to additional staff to support the growth of the company.
Legal expenses and the cost of compliance with the requirements of becoming large accelerated public filings with the SEC.
The market based restricted stock units were designed to focus the founders on the long term operational and strategic development of the company.
Including the successful development and commercialization of the key lunar programs.
The design of the market based restricted stock units builds upon the successful company performance founders have led to date.
And the board believes the market based restricted stock units further align founders interests with those with the company's long term stockholders, because divesting will depend on accretion.
Significantly enhance stockholder value over the following seven years.
Net loss attributable to garden health common stockholders was $54.6 million or 57 cents per share compared to $11.6 million.
Or 13 cents per share in the second quarter of 2019.
We ended the second quarter, 20, $21.1 billion and cash cash equivalents and marketable securities.
Beginning this quarter, we added disclosure of adjusted EBITDA.
Non-GAAP financial measure to our financial reporting to assist management and investors in evaluating performance from our core business by removing the impact of income for expenses attributable to material noncash items.
Perfectly stock based compensation.
Fair value Remeasurements due to the subjectivity management judgment and market fluctuations involved it needs from Alex.
We exclude certain other items, because we believe that these incomes for expenses.
Do not reflect expected future operating expenses.
Additionally, certain items are inconsistent in amounts and frequency.
Making it difficult to perform a meaningful evaluation of our current or past operating performance.
You will find a detailed presentation of non-GAAP adjusted EBITDA may full reconciliation to GAAP net loss attributable to garden health Inc. common stockholders.
Q2, 2020 results press release in quarterly 10-Q filed with the SEC.
Our use of adjusted EBITDA as a non-GAAP financial measure is not intended to be considered in isolation from a substitute for whereas superior to the corresponding financial measures prepared in accordance with GAAP.
Non-GAAP adjusted EBITDA was a loss of $25 million in the second quarter of Twentytwenty.
Compared to $9 billion in the second quarter 2019.
The impact of coated 19 created headwinds for the oncology space during the second quarter.
Due to its unpredictable evolution.
We do not believe that we can reasonably estimate the magnitude or duration of specific impacts on our business.
Accordingly, we are not reinstating financial guidance at this time.
As Tony mentioned, we exited the second quarter with clinical test volumes similar to the levels. We saw prior to the impacts from Cobot 19.
That said, we believe the effects from coded are likely to continue to impact the oncology space in the near term.
And we anticipate third quarter clinical volumes.
We will be up modestly from the first quarter.
Clinical precision oncology ASP in the second quarter was $2702 when we exclude the $2.6 million of revenue received from Medicare for samples process can 2019.
We expect this clinical ASP to remain steady through the balance of 2020.
As a merely mentioned.
We expect that the effects of cobot 19 may continue to impact Biopharma sample testing volumes.
During the second half of the year.
Nonetheless, our customers continue to demonstrate strong interest in our capabilities.
And we saw a record redevelop services revenue in the second quarter.
That said given the lumpiness of our Cdx programs, we do not expect development services to remain at this record peak in the second half of 2020.
At this point I'd like to turn the call back you tell me for closing comments.
Thank you Derek.
In closing I once again, thank our garden for this thing dedication and efforts have shown particularly over the past few months.
And these unprecedented times have even more confident in the valley that liquid biopsy can bring to the cancer treatment paradigm.
We are well prepared operationally and financially and strategically to navigate through this challenging period and we remain focused on our long term opportunity ahead of us to transform cancer patient care.
With that we'll now open it up for questions.
Yes, Sir and ladies and gentlemen, just as a reminder, in order to ask your question. Please press star and the number one on your telephone keypad.
First question comes from a line of Mr., Doug from Cowen.
Hey, guys.
Good afternoon. Thank you for taking my questions are.
Starting on.
Clinical testing revenue that was up sequentially as you know quarter to quarter, I think a lot of folks, including the we're expecting a decline.
Keeping in mind, how you exited Q1.
And.
That's encouraging in your commentary also really encouraging regarding how you exited the quarter and what you're looking for Q3.
What I'd like to dig in on and on a little bit more is where you see the recovery modest I mean, I know you talked about academic centers versus the community, but I guess, if you could cut at a different way and talk about existing accounts versus new accounts.
I'm just wondering if you've started to be able to be more successful and adding new accounts over the course of the quarter hours. The world started to open up a little bit more I ask because in some ways that there would be great to hear that you are able to once again open more accounts, but in other ways. If you're still challenged with that metric that could be argued that the rebound that same store sale.
This is all the more impressive.
Yes, the great question, Doug This is element.
Yes.
Yeah, It's really interesting when you look at the data.
Clearly we've been in the market now for.
By over six years.
Over 7000 oncologist that enter 2000, and you have ordered our test at least once and so the merger the majority of the market does.
Measure to garden.
They have used to at least once.
And Thats, where early we believe we had have an advantage and this time, we think this sort of.
Time period of uncertainty and.
Lack of access at least.
Asus at least.
Based assays.
Favors the incumbents in the space.
Okay, which we are that in the liquid biopsy.
Testing arena and so we have seen and continue to see addition, no oncologist, but the majority of our businesses really.
Catering to existing find some customers and those that may have only sporadically user services in the us and getting them to use it more consistently and to give you a little bit of color.
We tried a lot of metrics in our business and I can tell you the June.
The record month for us in terms of a number of kind of unique order the physicians in the month. So we did see I think.
Fundamental progress in terms of the caveat is we look at.
Underlying those numbers and so we do see some certainly positive signs of recovery.
That said.
We are seeing certain regions.
In closing down again, there are clearly many hot spots that are raging on and that has an impact as well, there's some city going on in terms of.
Virtual consultations and so on in terms of these physician offices and so it's something we're continuing to monitor and we see the ebbs and flows recently, but I think the.
Underlying message is that.
We think we're building.
Rental strength I would say in terms of.
The landscape as a whole in terms of really the compatibility of our offering and the advantages of our offerings admitted amidst the backdrop of covidien the challenges that presents.
Okay Super helpful Holiday, Thank you for that.
A mirror early walk through some of what you released during the quarter on one or two some some nice data updates.
I'm just wondering when when we should expect the next data release and kind of building off of that Bob It's encouraging and frankly, maybe even a little bit surprising to hear that clicks is getting going in terms of a wrong enrollment and site openings. So quickly. That's good news for you and frankly in terms of what it implies about what's going on.
Our corn Oscar piece, I think thats, a good sign for all of us.
That being said I'm just wondering given the momentum you have there are the original timelines in terms of what you'd expect completion and readout.
Still intact or at this point should we be thinking that there's going to be at least one or two mark maybe three months delay given given where you are right now.
Yes regarding data presented at.
Your your tax rate and all.
Hi, Duraseal major on process and oncology.
Lets you or Jason.
Congress as we always have some idle presence in terms of.
Updates.
Regarding eclipse actually we're very pleased radar.
Progress in fact hearing that days that patient Andrew all numbers slowed down because of call. It a lot of energy behind bringing new sites off.
And I'm very happy that you have over 130 sites by end of this order here.
Basically reached our 150 sites target as we have eclipse Mazzotta, Joan was our record volumes.
In Q2, and all the quarters, we've tried to light was even better in terms of enrolling patients in the trial and we do believe recap and initiatives that it within the origin all timeframe would that be matched last November which was within that 24 months.
And we think still three asbestos study.
Endearing views and environmental within the timeframe you mentioned earlier.
Okay Super helpful. On my last one and that all I'll leave it to others.
Really pivoting to a completely different topic, I mean, I think a lot of us or at least I tend to think of our garden is primarily focused on.
Internal development of products and advancement of internally development developed products.
That said this is your exit the balance in a really good spot.
More broadly, there's clearly been a pickup in the pace of the industry consolidation.
I'm wondering if there's anything.
And.
How you would describe your appetite and youre ready for more material M&A.
Yes. It was a great question I think certainly all of that is on the table in terms of having a balance sheet.
We have right now we.
As they've done some small acquisitions.
But.
I think if we think about the commercial channel that we though the Arctic portfolio, we have where we're going in terms of market. There's certainly a place for.
Inorganically, adding to that and increasing leverage in terms of.
The core competencies, we have and our business so as a.
It's something that.
We are certainly open to and we are.
We continue to look at opportunities.
Okay. Thanks again.
And our next question comes from this that students from as the E series.
Great.
Thanks, Amit So first one on bio pharma revenue.
And thanks for the details there im early appreciate those details.
The important question there is despite the impact you you're seeing.
Due to cobot in prospective samples in the biobank retrospective samples yeah. What would be helpful. Is if you can help us understand your view on the underlying studies that are driving those samples to you do think those studies are simply delayed or is there any fundamental change in those studies, if you could clarify bad.
And probably just a few Ken in terms of when do you expect.
Sort of those samples to return back to you.
And into the second half or.
Maybe even later thank you.
So what the various is actually a lie out.
Well it has already been known in terms of.
Prospective studies sponsored by pharma.
I'll tell you that our prospective trial site.
And what else we experienced it is going to solve the major pharma companies are putting a lot of assets into it.
What was 19 I seem to have a little Derrick.
Just looking into their pipeline activities.
So having said that.
Your.
Very pleased with all the conversation rehab across many many pharma companies around the utilities got our products, especially around Garda Ami.
We still expect that express vehicle is 19.
Recall screws or rest of Europe is for a couple of quarters, but.
Optimistic about the future as all the conversations that add around our portfolio, especially out.
Yeah I imagine there is at one thing you know Arizona here.
Our same having very good underlying signs in terms of the business in the pipeline is progressing very strong as well as you know diversification in terms of the types of partners that are using omni and.
Deepening use of that.
Okay, all the other kind of underlying metrics, we look at.
But in our view.
Okay, that's great and if I go to have.
Follow up on.
In terms of.
Or lunar one program can you elaborate where you stand on different efforts I know you're in a number of biopharma collaborations and partnerships are ongoing.
The Cobra trial that you have invested into and few other so maybe just give us a sense of where that stands and then potentially when can we see that product and recurrence monitoring market.
This year or the next if you could provide any color on that and then I have a small follow up.
Yes, that's actually are doing our one slash our R&D product initially I'd argue over time, it that you're happy clinically validated or about product or CRC, which you're running call laid out good trials based on that.
I am pleased actually we solve their progress made on the R&D side we.
We've been working for a while to expand our.
Marketing platform technology from Pcps, CRC device or CRC assay to multi castrate type so.
Please which on the progress that the team has made on that product and space today Oh.
Data.
Sharing her out that platform averaged around multi John Scheurer MRV nice.
Okay, Great and last one if I could on co. Good testing I recall, you are working on a differentiated high throughput platform.
And thanks for the update on that in terms of falling to you anything you can provide in terms of the volumes per day that system can produce or cost store turnaround time, and maybe potential pricing. If you can thank you. Thanks for taking the questions.
Yes so.
This quoted the tests have you found like chart you a few weeks back so and in parallel we are arguing with.
Potential partners in terms of bringing that test all or.
BARDA installation.
Smart due to the yesterday pretty high throughput we are bringing.
Hi, good operation.
Having said that we never looked at over three at or ahead of the new business line for US you know you're.
We brought it up at the social responsibility and you know, we even to partners, who can gas or the ones that are.
Alignments with our mission sound to value add that we want to having a feel on their side. We are trying to make sure that does with entropy.
Activities, yet guard asset.
Loss, but.
Your pricing is social responsibilities universe, just barely making it business line item in our yes.
Great. Thanks, guys.
Our next question.
From a second Peters from JP Morgan.
Hey, thanks.
How many on the reimbursement front you brought up.
For CMS, Nebraska, CMS cadence for non lung can you just give us a sense of what percentage of the payments today from CMS. Our Nonlegal I guess, how you think about that you know trending until you have the FDA approval.
Great.
So tyco.
Approximately 85% of our Medicare samples.
Our covered now under our current ER.
Reimbursement from Meridian, and whether it long or over a long long. It's about the same so I think really the way you want to think of it is.
Most all of our Medicare samples are covered now.
There is an opportunity with an FDA approval on the MCV have a slight increase in that but at 85%, there's not a huge amount left to improve there.
Okay, and then Derek on the development services side you noted.
Milestone component for Cdx can you just talked about how significant the milestone piece was in the quarter.
It's actually making progress towards those milestones so not a we don't take revenue on a individual milestone is little bit about.
Misnomer in the way the wording was.
So we just continue to make progress what we had was a lot of programs.
Active in in the quarter. So therefore, we had a lot of progress in the quarter. Those programs as you can well imagine with Biopharma programs. There you know peaks and valleys in those programs. So at this happened it's been a very strong quarters for the.
Any diagnostic revenue, which is the bulk of the development services revenue.
Thanks, and then just one last one following up on the question earlier on lunar one we've been hearing more about some offerable you say I guess as we kind of think about.
The commercialization strategy here, you've got the research use only product and then a clinically validated as you mentioned you can you just talk on you know how material you think Luna one could could be for you guys going forward and to what extent, you're making the investments in the channel their tier two rolling out more broadly.
So in terms of actually level of investment you're excited about it area teams focused on that program and our belief is one of the main thing that needs to be got into R&D space is proving the clinical utility in order to really accelerate your claims by adoption.
It might put it in a marketplace.
Being in conversation with all major kills oil has a lot of experienced with us on the order entry six who started around MRV ongoing conversations around.
It is so.
But you know so just putting a clinical grade press that'd be hard right now in the market.
We always was this philosophy that.
Oh boy aggressive after the clinical evidence generation on prior to that or Joe's.
On the housing market and that tried to condiments everybody's Weiss with where that's used 50 biased by the still on the remaining or utilities are a question or why do you think about this and lawn care.
We do believe actually the wave you're doing Mark yesterday is gonna revolutionize the patient journey and oncology space and it was really rich stories that we have on AD mass cancer treatment selection on so as you any idea about that.
Marty positive patient treatment selection too.
Early cancer detection pipeline.
So we're very excited about it and we're.
Thanks, a lot of investment around that space.
Great. Thank you.
Yes.
And our next question comes from Miss Ivy May from Bank of America.
Hey, this is I'd on flight deck today. Thank you for taking your question.
First the on.
Q.
I'm just wondering if you had any initial.
Conversations with the I wish to CMS since there are lot of some companies working on Pancancer early detection. The stage. So why did you see is there any feedback on pancancer reimbursement or multi conserving basin or how are you thinking about.
Replacements for your body, Kevin Daniel Thank you.
Hey are doing their true CRC screening program that you have you seen obviously in touch with Asia CST a.
National CMS, both size and I have a good picture of what it takes for SK approval as a national reimbursement or maybe if you're a site.
And.
One of the reason that actually Garda strategies to go after CRC screening Ers Avondale, maybe anything.
Follow on multi cancer screening down there always is one of their recesses reimbursements.
I think Atlanta call value I met.
Oh I see just CRC has we believed to reimbursement pathway for CRC. All these screening is an art.
Very defined on multi cast Rogers with cost paper.
And claim.
Same time for potential FDR, Google App.
And I'll CMS coverage policy.
[noise] by them all to capture side, there are a lot of amortization on.
Workshops actors are you guys are familiar with.
It's not easy so he asked to see what's going to happen oncology accuracy.
We are bullish about our strategy of going from armed CRC device.
Great. Thanks, and then bio pharma.
We're seeing a lot of companies and drain the liquid about teach space. So why do you see if you're seeing more competition.
Our omni and how that that shake that revenue trajectory going forward.
And then if they're setting quantifying cotter you could offer on how to look at the companion diagnostic line going forward. It would be helpful. Thank you.
No I guess I jumped on the denominator.
I would say that yeah from a competition by the view that give us is basis over the.
Dozens of.
Companies and it probably even eight years ago when restarted in many of those company, there's still exist and there's some of them are done under a new companies that have come in.
From a competitive point of view.
Yeah, I mean is really I think really second to none of this older the bode.
Really any other offering we see in this space and so that's.
That's something we frankly see a lot of in terms of competitive noise, especially with this but to the omni yeah I think we're much more.
I would say.
Focus and laser focused on the evolution of the therapeutic pipeline and where that's going and continuing to meet I'm really the requirements in terms of the tests are biomarkers that are interest or Biopharma partners and so that's that's really what we're focused on in terms of so they listening to our customers and.
Moving and advancing our offerings.
In step with that.
Great. Thank you and let's see if I may on PC 16 could you update us on safety a truly situation how that conversation going out there are some delays due to the whole colleagues situation I wanted to see if there's any updates appreciate the color.
Yeah I stay experience that you had you know we.
We we experienced any it's slow down in our Sta traction because it will it be or.
It's basically the progress that remains as based on all the conversation I think we're very close so.
So you say Jones.
Great. Thank you again.
Okay.
And our next question comes from a Patrick Donnelley.
Thanks for taking the question.
Yeah. Thanks for taking the questions guys held me, maybe just calling the second we have a cobras you mentioned you saw a little bit a pullback on the volume side can you talk through I know you guys get some pretty real time data GR geographically where are you how sharper you see in the pull backs doesn't seem overly concerned given by the guidance you guys gave but just curious in terms of.
The one on how impactful the second wave is bad and how confident you are in the outlook is this ah.
Uptick from here.
Yeah, Great question, but I mean, certainly.
No we're as close to I think the first wave and the impact. It was there I think the job under the first time was it was a it was the first time by definition of what ended up.
During what is kind of situation and so there was just a lot of learnings in terms of how to deal with this sort of new normal we see certainly a lot more resilience in terms of.
Impact will be second waves and re closures and so on.
I would say the.
Sure I would say minor perturbations on regionally as you see some of 'em. Some of these closures and some of the orders that are going into place regionally.
So it does have impact and it's why it's.
Difficult to forecast, obviously you have.
All of these things simultaneously and multiple parts of the country then.
Yeah, that's certainly going to have some negative impact on volume no diagnoses patients coming in and so on and so forth, but we've been saying these kind of ripple through I know then different parts of the the nation.
But.
So it's a it's certainly.
Lets severe so far higher than what we saw in March.
That's good to hear Yeah, and then maybe just one on on mobile Phlebotomy I know you talked about that being a good opportunity in twoq and even beyond as maybe the market focus shifts a little bit towards that how did that trend relative to expectations and just your go forward view on that side as well.
Yeah, I think as we mentioned last call. We certainly saw a certain regions the leverage that offering a quite a bit.
That said you know, it's just the very nature of liquid biopsy is is so much simpler than tissue biopsy based approach and see if you think about the coordination of multiple medical specialties weathers.
Oh, Gee or a surgical oncologists already you know interventional radiologist, the fact that essentially can.
Empower on colleges with the ability to identify biomarkers through symbol blood coast.
Itself, and but very nature is very well suited to be.
Practical realities that co the imports.
As base right now and so even data alone or that mobile for low to me is.
Something that the huge advantage as something very beneficial to the position, but clearly there's going to be a subset of patients, but fund is very difficult to come in and that's where mobile fill bother me has been really key in terms of being able to provide a complete offering for really the majority of patients better than colleges. They have.
So it's been something that's very synergistic with.
Ease of use of liquid biopsy itself, you know clearly our turnaround time as you know a is sometimes half for a third of other based the other tissue based approaches and so you really can't and beat that holistic offering in our view.
Compared to two some of the other approaches are getting that information.
That's helpful. Thanks.
Thank you.
And our next question comes from a Max from Canaccord.
Hi, This is Max procedure.
So the supply of covert 19 cashing in in the U.S. is still well below demand.
You asked is conducting about 700000 covered cash per day by our estimates.
As a bit underwhelming compared to say, China, which has capacity to process around 5 million cash today, so what what role for magnitude do you think you can play in coven 19 casting now they're testing is becoming more widely available for asymptomatic individuals.
Versus the early prioritization cashing for healthcare workers in first responders.
Yeah, that's a great question so we.
Certainly our providing testing on a weekly basis or employees a garden.
We found that to be from multiple as the bugs. So very critical for continuity of the business for ensuring I think the safety of our employees and really are making sure that we can continue to weather. The storm of you know these surges in the raging pandemic, that's going on or around those.
No.
And so we see first and the value of testing testing for surveillance in essence, amedica individuals and so it's something that we continue to explore were.
Speaking with a multiple partners and so on in terms of you know there I'm kind of potential us potentially jumping in and really hoping or what are the undersupply that exists today, but I would say stay tuned and well be happy to update.
Everyone as we continue to me.
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Great and then on the sales force can you share how your sales force is adjusting to the covert 19 virtual environment, you know what sort of initiatives are targeting strategies or sales reps having success with.
Yeah. So I think its a logo to be outlined isn't going to reduce earnings call is.
Really the fact that we're able to.
And do a lot of consultations online through to resume.
We're able to Oh boy or medical affairs team.
Essentially I hope with interpretation of affords you know obviously over over over zoom or and.
Teleconference.
As well as you know the mobile so lot of me services that we brought on line.
And you know we have other kind of financial assistance.
Programs that are Ah.
Specifically tailored to those affected by co that we found that that the overall offering.
Was very helpful in terms of really.
Supporting a physician offices and they're kind of need answer some of these challenging.
We believe we were one of the earlier companies to to provide that's kind of suite of services on too. Many of these offices and I think that are really helped us in terms of.
Achieving that kind of rebound that we saw during the quarter and.
Great. Thanks for taking the questions.
Thanks.
And our next question comes from a Mr., David with Guggenheim Securities.
Hi, Thank you for taking the question. This is David Westenberg. So my first question is with kids Keytruda as approval and P.M.B. high patients does that maybe changed to look in terms of the ramp for garden omni and if it doesn't can you at least talk about the appetite for larger panels from oncologists.
So I actually accurately.
Clinical product I'd be happy guard entries cc four oncologists order. So I'll provide can be score by BARDA economy, which has been a product that we opened up to our pharma companies are unable to do that we've been working with bought show arm on high school, we're in right.
And as it can be side, not just can't even on the yeah.
I have biomarkers that rehabbing, BARDA, and automate and I'll add.
Ill, there's a b C. There's a lot of excitement.
Conversation on have you ever off guard at hobbies.
He wrote laws, although the are cautious about what's.
Thanks, very helpful orders based on coal that.
Conversation around garner Tommy has been solid one up one of the drivers as fans can be.
Got it. Thank you and then I'll just say quick one for Derek is there any as we're modeling the back half a year or is there anything to call out in terms of comp I know that you've had pretty strong quarters and then you've also had some maybe back payments from from certain payers I just want to make sure that our models are tight in the back half a year.
Sure as we think about year over year comps and I'll take the rest offline.
Right. So what we tried to do is give you know nuggets of information.
We expect modest increase in volume clinical volume in Q3 compared to Q1, so not comparing to Q2, which is obviously a down quarter going all the way back Q1, we're expecting modest volume.
Oh, you an increase in Q3 in clinical you also indicated that.
Or is he purposes, you want to pull out.
The effect of that.
What do we earn from samples processed in 2019 they were [noise].
Changes in the Medicare.
Interpretations of the NPV, which allowed some prior samples to get building reimbursed. So you Shouldnt assume that's what I gave you a 2700 U.S.P. for you to use.
And.
Oh, we talked about the bio pharma.
It was a record quarter for health and services.
We won't have a record quarter every quarter.
Thank you.
And that is all the questions we have at this time.
Thank you everyone and look forward to.
Headquarters.
And ladies and gentlemen, this does conclude today's conference call. Thank you very much for your participation participation you may now disconnect.
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