Q4 2021 Guardant Health Inc Earnings Call
And thank you for joining our fourth quarter and full year 2021 earnings call.
I'll start off today's call by highlighting our progress across oncology as we continue to build on our strong position as the liquid biopsy leader.
I will then turn the call over to <unk> for an update on our screening program.
And finally, Mike will provide a more detailed look at our financials and our outlook for 2022.
Starting on slide three.
2021 was a significant year for garden, we launched a number of new products surpassed 100 Biopharma partners.
Reached target enrollment for our Eclipse study started enrolling a second registrational grade study in lung cancer screening continue to advance our technology platform and significantly scaled the organization as we prepare for future growth.
Our mission at gardens to conquer cancer with data and ultimately transform cancer care.
The driving force of our work is our commitment to putting patients first we are dedicated to bringing the absolute best products to market that will continue providing clinically actionable information to inform patient care.
Before I provide an update on our progress I would like to start off with a patient story.
In 2017, a 60 year old man was diagnosed with stage two retro cancer.
He quickly underwent surgery, but soon after surgery as oncologists discovered the cancer has already spread to lymph node.
The patient immediately began chemotherapy.
Fortunately he responded well to treatment was considered to be cancer free and transitioned to long term follow up care.
This past summer he was still feeling great and it was due for a periodic checkup.
<unk> scan was normal.
EBITDA was within normal limits, so as oncologists scheduled follow up tests, including colonoscopy, CA and the Cte scan to be pro forma six months later.
His oncologist also ordered a garden to reveal test, which came back positive for residual disease.
With these results because oncologists immediately ordered a pet scan that detected a small lung nodule, which had not been visible on the CPE scan.
After a biopsy the nodule was confirmed as an isolated metastatic rectal cancer.
The patient had a second surgery to remove the tumor and is recovering well.
This story highlights how garden reveal can bring critical information to oncologists and patients catching cancer recurrence early in order to treat cancer before it continues to spread.
Now turning to our performance on slide four.
We ended Q4 with another quarter of record revenue of $108 million up 38% over the prior year quarter.
This brought total revenue for 2000 $21 million to $374 million.
Up 30% over 2020.
Moving on to slide five.
During the year, we continued to build our commercial organization focused on oncology now a team of more than 250 individuals that we believe is second to none and they delivered strong clinical test volume for the fourth quarter, reaching 25600 tests, an increase of 48% from the prior year quarter over there.
<unk> of the year, despite continuing impacts from Covid clinical volumes reached 87600 tests up 39% year over year.
The products, we have in the market today or in a league of their own in terms of performance product market fit and customer experience penetrating the large market for oncology test it takes more than just amazing technology.
It takes clinical evidence regulatory approvals reimbursement and above all a very robust commercial channel.
I continue to be proud of how well our commercial team is executing in this environment and achieving strong growth, notably we are continuing to make inroads in community accounts, where we're growing twice as fast as in academic centers.
While we are continuing to grow in academic centers, our volume mix is becoming increasingly weighted towards the community setting where the majority of cancer patients reside.
Approximately 70% of our volume in the quarter came from the community setting compared to 63% in the same period last year.
Today, roughly 50% of our team's interactions with oncologists or face to face what are the remaining half of our virtual we've equipped our team with the tools needed to continue to drive adoption of our products through both virtual and in person interactions.
Across the board, we are seeing excellent traction with existing oncologists ordering more tests and new physician additions more and more oncologists are seeing garden as a whole precision oncology platform. We have the largest share of voice in the market nearly doubled the number of interactions with oncologists compared to our closest CGP competitor.
Looking more closely at recurrence monitoring on slide six.
We are encouraged by the growing interest and early success of Gardner revealed and are continuing to invest heavily in the vast opportunity ahead, while leveraging our existing channel of oncologists.
At the end of January we presented new data on garden reveal at the Astro gastrointestinal cancers symposium that demonstrated high performance, where our current detection and early stage colorectal cancer and interim analysis from Cosmos, a large prospective observational study showed that garden reveal when you use that for a curative intent surge.
<unk> for stage II III colorectal cancer can detect MRV priority disease recurrence with a longitudinal sensitivity of 91% and an average lead time of greater than six months.
The test integrates genomic and epigenomics signatures to detect disease without the need for tumor tissue tissue biopsies can be difficult to obtain time consuming and lead to complications all of which can delay a patient's treatment are blood based test can overcome these barriers and provide fast match nimble information to help guide treatment decisions.
Patients across the continuum of care.
Turning to slide seven.
The opportunity for recurrence monitoring has grown from $15 billion to over $20 billion today due to increasing frequency of utilization of such tests in the surveillance setting as well as a more favorable reimbursement landscape.
It should be noted that this $20 billion Tam is for a blood only approaches to it.
Shoot dependent or informed approaches will potentially only access less than half of this opportunity given some of the logistical challenges of accessing tissue, especially in this surveillance setting many years out from the date of curative resection.
Turning to slide eight outside of the United States, we are making great progress, particularly in Japan.
Our lab, there is up and running and we expect to receive regulatory approval for garden to <unk> in the near future.
Following approval, we will turn our focus to securing public reimbursement by the end of 2022.
<unk> represents a very large market opportunity with about 400000 late stage patients compared to 700000 in the U S and similar reimbursement rates for CGP.
We are also investing in Europe , and our partners are currently building two labs, one in Spain with elder Brown and another at the Royal Marsden in the UK, we expect their services have become operational over the next 12 months. These labs will be available for clinical research and clinical care, providing industry, leading next generation sequencing to private and self paying patients.
With the planned for future expansion for National Health service patients in the U K. We believe this strategy of building a global network of laboratories by partnering with key academic centers is the most effective way to unlock the international opportunity.
Moving onto Biopharma on slide nine.
We saw a healthy rebound in our Biopharma business with volume of 6600 samples up 36% from the third quarter and up 36% year over year.
We're also seeing growing interest with our Biopharma partners are using revealed in the adjuvant setting beyond just CRC indications, including lung bladder and breast.
Our partners see significant benefit with a blood only tissue agnostic approach and we look forward to growing usage of reveal in the biopharma setting.
In addition to increasing sample volumes the number of customers. We serve continues to grow we reached our 2021 target and ended the year with more than 100 active biopharma partnerships, we have a healthy pipeline of discussions and the breadth of our product offering strong customer service and our clinical market leadership makes us an attractive partner.
We expect the number of customers to continue to grow.
We recently signed two new <unk> contracts with a number of others in the discussion while we continued to see strong overall demand for development services. Several projects have recently been completed or soon to be completed and we expect some near term lumpiness in this revenue line given the timing of project milestones.
We are continuing to demonstrate the clinical utility and real world evidence of our products recently, presenting real world clinical outcomes data from the garden informed platform in both breast and colorectal cancers in December at the 2021, San Antonio breast cancer Symposium, we presented new data from the <unk> study demonstrating the benefits of using garden 360 respond.
For patients with advanced breast cancer to help switch therapy to a more effective option as soon as the resistance to treatment emerged.
Excitingly this approach doubled progression free survival, demonstrating the clinical utility of therapeutic monitoring via liquid biopsy importantly, there was no need for a tissue biopsy, which can be difficult and time consuming potentially delaying time to treatment.
Additionally, at ESMO Gi, we presented new clinical utility data that demonstrated that the garden's <unk> hundred 60 test the types microsatellite instability high status in patients with advanced gastrointestinal cancers at a similar frequency to tissue based testing.
<unk> is an important biomarker used to predict response to immunotherapy.
Moving on to slide 10.
At Guardant, we have always moved at a rapid velocity motivated by the Northstar of patient care at the Jpmorgan conference in early January I shared our vision for smart liquid biopsy platform, which we believe will be a quantum leap forward for liquid biopsies.
Our first product from this new platform will have capabilities that are profoundly more rich.
Current oncology products.
Drawing on close to 10 years of research and experience from hundreds of thousands of liquid biopsies are smart liquid biopsy will offer a genomic footprint nearly 100 times larger than garden 360 <unk>.
Even greater sensitivity.
And include comprehensive analysis of genomic epigenomics in immune signatures.
Among many other capabilities.
We believe this new platform of advanced liquid biopsies in the same way that smartphones up ended first generation cell phones by enabling a rich ecosystem of countless applications ranging from deep analysis of tumor genomics interrogation of the tumor microenvironment diverse immuno oncology applications much more.
Sensitive therapeutic monitoring identification of complex prognostic signatures and many others.
We look forward to sharing more about this next chapter of our smart liquid biopsy platform at an Investor day planned for the fall of this year.
I will now turn the call over to <unk> to provide an update on screening.
Thanks.
Turning to slide 11.
<unk> kind of thing to make great progress across our screening program.
At Garden, we've always believed that a blood based screening test nearing wellness checkups has the potential to guard against cancer.
Blood based screening is simple reduces the need for patient follow through is much easier to integrate into a health system workflows expand accessibility to underserved communities.
Likely improve the compliance the screening tests.
For blood based screening to save lives.
Must offer at test with high sensitivity in detecting cancers at the early stages.
In order to save lives at scale pay.
Patient need broad access to such that.
Ensuring that access requires a reimbursement pathway and a strategy for inclusion into the screening testing guidelines.
Alignment with value based care and the objective of health systems, and finally FDA approval.
For colorectal cancer blood based screening and then establish Medicare and CDN FDA approval pathway.
The utility of CRC screening is well established and guidelines or comments screening and the vast majority of individuals over the age of 45.
The benefit of screening has been limited due to the lack of compliance despite many efforts.
Days of use blood test holds great potential for increasing compliance.
Turning to slide 12.
Almost two years ago, we started our pivotal Registrational Eclipse study that we expect to readout in the middle of this year.
Given that this is a registrational great steady all data will be on line at the same time.
Although we have experienced some slowdown in our internal productivity as well as claiming cost site activity. During the last few weeks due to a resurgence of COVID-19 at this time, we do not expect a material impact to our study timeline.
We also expect to submit our PMA package to FDA in the latter part of this year and expect to receive that for <unk> 2020 three pending successful review by the agency.
We are on track to launch the LDC version of this assay called Garden Shield in the first half of this year and have already onboard and approximately 100 member PCP commercial team.
We are planning to gradually expand our commerce shale team to over 700 members by the time. Our test is included in USPS TF guidelines, which we expect in 2026.
Our strategy. This year is to engage in commercial development activities that will accelerate adoption olive garden's shield post FDA approval.
We have started to engage key stakeholders and target primary care physicians to increase our NSF block based CRC screening.
We are pleased with the early feedback we are hearing and the high interest in our blood based CRC screening.
It is increasingly clear that there is a significant unmet need for a high compliance modality for CRC screening with high sensitivity.
We believe that a successful early claim it quite experience with Garda and shield and confirmation of its potential impact improving compliance rates will be instrumental to drive long term adoption of the test.
Looking beyond CRC to our opportunity with multi cancer screening on slide 13, our focus is to develop a blood based test to screen for multiple cancers, where lives can be saved.
Similar to CRC lung cancer screening is known to save lives line.
<unk> cancer is the leading cause of cancer related death.
United States.
In terms of lung cancer typically do not appear until the disease is already at an advanced stage.
The evidence based screening guidelines III comment annual lung cancer screening for high risk individuals. However, this screening compliance studies demonstrate growth under utilization.
As only around 14% of people eligible for screening are up to date with screening or combinations.
We believe a simple blood test.
<unk> to detect and manage retail line cancer cases in the early stages, where it can most easily be treated and Ken all same crew of compliance to screening.
Moving on to slide 14.
As we shared last year to validate the performance of our assay in lung cancer screening cohort design and new prospective Registrational study called shale long.
Shield line is designed to provide regulatory great evidence for the accuracy of our next generation multi cancer screening Garden shield assay.
Individuals between the ages of $52.
Who undergoes stander of carrier screening for lung cancer, using low dose Cts scanning.
All subjects enrolled and ship, Mike will be a high risk for lung cancer.
We are targeting enrollment of nearly 10000 individuals.
We announced at the beginning of this year that you had already enrolled our first patient and expect to complete enrollment within 36 months.
Troy Eclipse our team has developed a core competency is running a larger registration with screening steady and I believe this expertise will prove invaluable for us.
We are expecting to present the performance of this multi cancer screening test and several cancer types throughout 'twenty or 'twenty two.
Turning to slide 15.
We believe the promise of blood based cancer screening is quickly, becoming a reality and we see a brighter future for humanity by improving population health.
If successful Readouts of our Eclipse trial will open up the $20 billion screening opportunity in colorectal cancer by bringing high performance lifesaving blood based cancer screening test to millions of people.
Shield line, along with other future studies, we will open up opportunities in line and <unk> cancer types paving the path towards the total addressable screening market of more than $50 billion.
I am confident about our strategy and developing a blood based test for the screening market.
I believe we can be the first to have a blood based cancer screening test with Medicare coverage kind of FDA approval.
With that I will now turn the call over to Mike for more detail on our financials and outlook for 2022.
Thanks Ali.
Turning to slide 16.
Starting with the fourth quarter of 2021 total revenue was $108 1 million up 38% from $78 3 million in the prior year quarter.
Total precision oncology testing revenue for the fourth quarter was $88 7 million with growth of 37% compared to $64 7 million in the prior year quarter.
This increase was driven by strong growth in both clinical and Biopharma sample volumes.
Precision oncology revenue from clinical tests was $64 2 million up 40% from $45 9 million for the prior year quarter.
Fourth quarter clinical test volume was 25600, which is an increase of 48% from the same period of the prior year.
The blended clinical ASP for the fourth quarter of 2021 was approximately $2500 in line with our expectations.
Got it at 360 ISP was between 2000 $602700 consistent with the last couple of quarters.
Importantly, the Medicare reimbursement.
Reimbursement rate of $5000 for Garden, 360, CTX, which was initially set in April 2021.
Being maintained at the same $5000 rate for 2022 and 2023.
As a result, we expect the ASP forgotten and 360 to continue to be in the range of 2600 $2700. During the course of 2022.
We are seeing solid traction from new clinical products, where deal tissue next in response and we expect volume from these products to continue to increase throughout the year. However, we don't expect these new products to start to significantly contribute to revenue until we receive Medicare and private payer reimbursement.
Before plus we expect gotten 360, <unk> asps to be stable in 2022.
The blended clinical ASP will be impacted as reimbursement of new products will take time to ramp up.
Precision oncology revenue from Biopharma tests in the fourth quarter totaled $24 5 million.
32% from $18 8 million for the prior year quarter.
Biopharma volume was strong with fourth quarter samples totaling 6636% from the prior year quarter.
Biopharma sample ASP in the fourth quarter was approximately $3700.
Now, 4% from approximately $3900 in the prior year period, but in line with the third quarter 2021, due to a similar product mix.
Development services and other revenue in the fourth quarter to $19 4 million, a 43% from the prior year quarter.
During the quarter approximately half of the development services and other revenue came from royalties related to the settlement and licensing agreement with Foundation Medicine, what was finalized at the end of 2021.
Specifically this revenue represented royalties starting in May when the legal settlement was reached through to the end of December was anticipated in our full year guidance for 2021 that we shared last year.
For 2022, we expect to start to recognize royalty revenue on a quarterly basis and anticipate full year royalty revenue to be similar to the total we recognized in 2021.
As we communicated last quarter, while we continue to see strong demand for our development services. Several companion diagnostic projects have recently been successfully completed and as such we expect that our development services and other revenues will be lower throughout 2022.
New projects take time to ramp up.
Gross profit for the fourth quarter of 2021 was $74 7 million compared.
Compared to a gross profit of $49 9 million in the same period of the prior year.
Gross margin in the fourth quarter was 69%, which was positively impacted by the royalty revenue we booked in Q4.
Compared to 67% in the third quarter of 2021, 64% in the prior year quarter.
Operating expenses for the fourth quarter of 2021 were $172 9 million, an increase of 23% compared to $141 1 million in the fourth quarter of 2020.
non-GAAP 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-GAAP operating expenses for the fourth quarter of 2021 were $146 2 million.
73% increase from $84 7 million in the prior year quarter.
Okay.
Other net income and expense increased to $25 9 million for the fourth quarter of 2021 up from $1 $2 million for the corresponding prior year period, primarily due to the $25 million settlement from Foundation medicine.
Net loss attributable to guardant health common stockholders was $19 9 million or <unk> 89 per share for the fourth quarter of 2021.
Compared to $93 7 million or 94 cents per share in the fourth quarter of 2020.
non-GAAP net loss was $70 4 million or <unk> 69 per share for the fourth quarter of 2021.
<unk> $36 $7 million or <unk> 37 per share for the fourth quarter of 2020.
Adjusted EBITDA was a loss of $64 6 million in the fourth quarter of 2021.
Compared to a $29 $7 million loss in the fourth quarter of 2020.
Defined adjusted EBITDA as non-GAAP net loss attributable to guardant health adjusted for interest income tax depreciation amortization and other income and expense.
Turning to the full year with slide 17.
Total revenue was $373 7 million.
About 30% from $286 7 million in the prior year.
Precision oncology revenue increased <unk>, 9% to <unk> $4 3 million and was comprised of clinical testing revenues of $236 4 million, which grew 38% year over year and Biopharma testing revenue of $67 9 million, which increased 5% year over year.
Clinical test volumes for the year grew to 87639% year over year from 63200 test.
Overall blended clinical ASP, including the impact of cash true ups for test performed in prior periods was approximately $2700 to 2021, which was consistent with the blended clinical ASP in 2020.
Biopharma testing volume increased 16% year over year to 18600 test.
Biopharma sample ISP and the full year was approximately $3650.
Down 9% from approximately $4000 in the prior year due to changes in product mix.
Development services and other revenue grew 38% to $69 $3 million in 2021, reflecting the successful completion of two of our companion diagnostic partnership programs during the year as well as royalty revenue from the licensing agreement, we signed with Foundation medicine.
Gross margin for the full year 2021, 67% compared to 68% in 2020.
Operating expenses for the full year 2021 was $661 7 million, an increase of 47% compared to $449 1 million in 2020.
non-GAAP operating expenses for the full year 2021, with $506 8 million.
1% to 2% increase from $295 2 million in the prior year quarter.
2021 was a year of significant investment as we expanded our oncology commercial team and launched several new products during the year.
And as we started to build out the infrastructure to support our future screening business.
In 2022, we will continue to invest in progressing our strong pipeline of oncology products as well as in generating clinical data to support that reimbursement for.
Screening 2022 investment will be focused on the commercial launch of Garden Shield ODT.
<unk> the data readout from eclipse the PMA submission for CRC device and the continued development of our multi cancer screening test.
Net loss attributable to guardant health common stockholders was $405 $7 million in 2021 compared to $253 8 million in 2020.
Net loss per share attributable to guardant health common stockholders.
It was $4 in 2021 as compared to $2 60.
In 2020.
non-GAAP net loss was $251 $7 million for 2021.
Compared to $91.0 million for the corresponding prior year period.
non-GAAP net loss per share was $2 48 for 2021 as compared to 93.
So the corresponding prior year period.
Adjusted EBITDA was a loss of $231 5 million in 2021 compared to an $84 $4 million loss in 2020.
As a reminder, we previously shared our decision to exercise our call right.
Such as the 50% of the Guardant health EMEA joint venture shows that we do not currently own.
We still expect to complete this transaction before the end of the second quarter of 2022.
We ended 2021 with $1 $6 billion in cash cash equivalent marketable securities we.
We feel we have a strong cash balance that can support our ongoing operations for the foreseeable future.
It gives us flexibility to continue to invest in our business to drive robust future growth.
Now turning to our revenue outlook for the full year 2022 on slide 18.
We expect revenue to be between 40, and $60 $470 million representing growth of approximately 24% over 2021 at the midpoint.
Included in this range are a few key assumptions firstly, we expect clinical oncology sample volume for 2022 to grow by more than 50% compared to 2021, and biopharma volume to grow by at least 30%.
As a result, we expect precision oncology testing revenue to grow more than 35% over the prior year.
Secondly, as mentioned earlier, although we had a strong development services pipeline.
These partnership projects will take time to ramp up as such we expect development services and other revenue to be approximately $50 million for 2022.
Finally, while we are excited about the upcoming launch of government Shield <unk>, we are not expecting significant revenue contributions from it this year.
Moving on to slide 19.
We made great strides in 2021, as we continue to broaden our oncology product portfolio and expand our reach into the cancer screening market.
We are aggressively pursuing the vast opportunities ahead, and we are confident that we will be a leader in cancer across the continuum of care.
At this point, we will now open the call up to questions.
Thank you for our Q&A, if you'd like to ask a question. Please press star followed by one on your telephone keypad now if you changed your mind. Please press star followed by <unk>.
Please limit yourself to one question and one follow up and one prepayment to ask a question. Please ensure you're punished and muted locally.
Our first question comes from Tycho Peterson from Jpmorgan. Please go ahead.
Sure.
Thanks, guys, maybe just first to clarify on the numbers the ASP decline in the quarter or was that just all a function of reveal in response kind of weighing down the average or was there something else there that you would point to.
Yeah.
Don't take that Mike.
I can tell you Tycho.
That's right.
It came down as we expected.
<unk> hundred 60, <unk> ASP was similar to previous quarters and this 2600 2700 range, yes, it's new products with lower reimbursement, just bringing down that overall blended so that was that was expected and probably expect that to continue.
Through 2022.
And our guidance at the high end Youre coming in you know Tad below the street. Despite the foundation royalties is that really just reflecting lingering COVID-19 uncertainties and anything you can say about clinical volume trends in the first quarter and then also as the UK lab contribution embedded in guidance.
Yeah, no so I'll start and maybe Mike can Sachin.
We feel very bullish about clinical volumes for 2022 were projecting.
50% growth year over year, which is I think very strong in.
Excellent to see.
That being said, we did see some impact from omicron first part of first quarter physician access with certainly limited we're seeing that begin to resolve very nicely and so we're hopeful but.
Throughout the year that we'll start seeing.
More positive trends in terms of really.
Moving away from some of the negative impact of Covid.
Arms of the UK lab, I think thats still in its early days. So it's not a significant contributor to this year I would say that we are projecting very strong growth in the precision oncology business, both in pharma volume samples and clinical samples.
One of the challenges has been just the development services revenue. We're just in a low really we have large projects ramping down in new large projects ramping up and we're sort of in a trough in terms of the between those two statements.
I don't know if Mike there is anything else okay.
Yes.
So anything else for me.
That's one.
Okay. Okay, and then last one just on pipeline on smart liquid biopsy or you're able to kind of fine tune timelines, there and talk about what needs to happen ahead of the launch and then similarly on reveal can you just talk about reimbursement.
Dates there.
Yes, so smart liquid biopsy.
As is typical we'll launch that to Biopharma initially.
And that'll be later in the year, we hope to present a lot more details about how that platform at our Investor day in the fall.
And then shortly thereafter, we'll launch it to the clinical markets, but we're very excited about that new platform.
And we're very excited to share details around that with our reveal.
There's been some back and forth and we've submitted more information when we're still waiting for final feedback from <unk>.
Okay. Thank you.
Yes, Thank you Duncan.
Our next question comes from Brian Weinstein from William Blair. Please go ahead.
Hey, guys. Thanks for taking the question.
I guess starting out.
You've talked about you utilize some different types of technologies as you can.
Build out your capabilities, especially around smart liquid biopsy, but I'm just curious about kind of more of a multimodal approach here can you talk about the importance of that and how you're positioning yourself to move kind of beyond genomics you made that.
AI imaging deal you were an investor eliminate earlier I'm, just curious kind of your thinking longer term about bringing in other kinds of technologies.
Marilyn.
Yeah sure so Brian actually I'm very excited.
It just takes time.
Gordon Thats something that we are.
Working on it yet.
Yes, Yes, yes garden in general we have.
Allocate that based on unmet planning called names to figure out what are the technologies that you can use to really.
Open up that.
Net meaning.
Meaningful way and impactful way.
Like for instance, on our epigenomics side on maturation. The Abbott novel assay like many other players in the field are just using off the shelf reagents and all things are diverse.
And I had that mentality.
Novel Adulation assay.
Mentation epigenomics bonds I think.
Second to none in terms of our performance and contributions there.
Over time, we were talking about the detail on how that technology stack works regarding radiology AI defense is that something that youre working mainly with our partners.
One of them is one that we talked about it before and hopefully like in near future maybe in the fall analyst day.
Go over into the southeast detail Tomorrow.
Great and then I am.
CRC as that product gets launched I'm just curious how you see.
That product over time, playing out in terms of where volume comes from obviously there is unscreened folks theres colonoscopy the stool DNA and then there is fit.
T.
I think you're kind of leaning on the on screen side, but I'm just curious kind of what the plan is there.
To really target those patients, especially seeing that most of those don't really interact very much with the health care system potentially.
Anyway. So how do you really go after the unscreened people and where do you think your volumes will come from.
I think initially I can't bet on the same patient population Nielsen screening patient population.
What I mean by the age of 45% to 49.
So our total of about $40 million to $60 million up.
That are in play.
The unmet need is really big in fact, a good fraction of them are actually in touch with the health system.
We got the people.
Say yesterday morning get tested by store base.
Colorectal cancer screening device and they never submit samples are basically.
Lost you workflow just based on how much patient follow through if needed.
Asia <unk> those kind of tests are not so a bunch of banks really connected with the health system.
And we feel very good about it and I think really like as <unk> experienced with our test and a closer to readout comps and a serially our superior performance.
Do you expect kind of the expenses.
All information for it I think.
Based on patient trade finance, which is toward blood.
Bunch of dose testing as a potential to get coverage is broad based.
CRC screening as he asked to see they have to see what they are screened out with be ad.
The initial experience of the doctors with our blood test that would be.
Great. Thank you so much.
We now turn to touch Us Sharon from Morgan Stanley . Your line is open.
Hey, guys. Good evening I'll start with one on that Marty and then switch to Biopharma.
So help me can you share any sort of quantitative color on adoption, so far and what exactly is embedded into your guide for reveal in response is it fair to assume thats contributing to volumes, but youre not expecting much in terms of contribution to your clinical revenue this year.
Yes, so we continue to be very pleased with the progress around reveal we see very robust adoption of that.
Product I think the patient story that you use.
We mentioned I think shows some of the really exciting applications of that technology, and how it's having impact today.
In terms of.
We're not right.
For competitive reasons, we're not necessarily breaking things out in terms of each of the individual products, we made in the future, but we're keeping.
That volume kind of aggregated at this point.
I would say that in terms of revenue contribution certainly the core products.
Garden 360.
Contributing the bulk of our clinical volume.
We do have a risk based approach in terms of our guidance in terms of the.
Likely.
Kind of puts and takes in terms of reimbursement obviously.
Private payer reimbursement on the reveal side we.
We will take much longer.
Medicare being a near term opportunity.
We think with tissue, we think Thats also a near term opportunity and response once again I think will be more similar to the deal.
Got it that's helpful and one follow up on pharma.
Seeing any impact from cancellations here in terms of your backlog or should we be should we be expecting a more backend loaded year in 'twenty two and then on the smart <unk> launch that you spoke about as being positioned for pharma customers.
Is it fair to expect that to essentially be a replacement for omni on a go forward basis at a similar price point or too early to tell.
Yes, so maybe I'll take I'll start with the smart liquid biopsy and maybe Mike you can.
To the first question.
With smart liquid biopsy, we typically launch to Biopharma initially.
Especially in the <unk> setting.
As us to fine tune that test.
I'm really start I think important clinical collaborations around collecting data so.
It's really no different than other products that we've launched in the past, we do see it as segmenting.
Our customer base between.
Smart liquid biopsy on the Garten 260, <unk> and so we see it as another opportunity to.
I think segment and provide a full gamut of tests for the.
The entire spectrum of applications that biopharma will have but certainly smart liquid biopsy.
Will be the future of guard and $2 60.
At some point.
And maybe to add on the on the Biopharma volume.
We had a very strong flows out of the year and we've seen that sort of healthy.
Rebound in the second half of 2021, and we see that.
Definitely coming into 2022, we've not really been impacted by any any cancellations or any real impacts on the business.
It's always back end loaded on the Biopharma side Q4 is always.
The strongest strongest quarter so.
Although we are forecasting biopharma volume growth of greater than 30%.
It will be back ended so I think we will see sequentially lower volumes in Q1, and then that starts to ramp up throughout throughout 2022 again to get 30% plus growth on volume.
Very helpful. Thanks for the time guys I appreciate it.
Thanks.
Our next question comes from Puneet Suda from SVP Leerink. Please go ahead.
Yeah.
Yes.
<unk>. Thanks for taking the question. So first one on screening if I could ask.
Eclipse you mentioned is nearing.
Enrollment completion of 13000 with 12750 enrolled already could you, maybe just elaborate where colonoscopy.
<unk> and <unk>.
Do you feel still good about reaching the desired event rate for CRC that you want to have in this trial.
You can provide there that'd be helpful. And then a question that I get from investors is around advanced Adenomas Holland.
How important are they in your view and should we expect to see any data before the pivotal eclipse readout.
Sure. Thanks, Brian .
Question, So in terms of the.
12750 actually enrollment in reach that.
Right now so.
Thanks This is active patient.
Sorry buying through the FTE.
Michelle patients start getting into the whole workflow to Jeremy.
The biopsies and diagnostic tests for patients that colonoscopy or find something.
Staging, which typically involve some additional imaging to really figure out at this stage of the disease So different defense.
<unk> population and defense phases of that journey.
So far.
Over 10000 Colonoscopy reports.
For the ones that you have on us got very poor as a bunch of them are going into the next phases of the diagnostic journey is until we really get into the <unk>.
<unk> identification and confirmation by the Central bank by the Central technology that we have.
So that's why this thing takes a few more months.
Now all in.
And so a lot of details in terms of the timeline.
Still we are expecting that this readout.
Tie around middle of this year.
Excited to see what's going to happen regarding advanced adenoma.
You talked about it earlier too.
It's kind of interesting when we look at the PCB market as of that is based on our findings so far mainly coming from 300.
Physician survey that we've done.
The differentiation of that segment performance and cost control.
As to out there are.
Or not there is <unk>.
And that really distinguish difference based on their performance and a lot of focus has been around CRC sensitivity, having said that in midterm to long term I believe.
Advanced Centinela FRS with guests.
A lot of guys here a lot of detailing on messaging and education.
The lion's share of this would be a competitive kind of factors.
Data generation in terms of timeline to put the data out there David.
<unk>.
Collaborators Erik.
And presenters in conference as of yesterday eclipsing laid out which is basically we have full control of disclosure of that data top line data and whenever we have it as it goes very quickly.
Any bonds of length of contracts is obviously, so in terms of timeline rehab to see which one is back.
But I think the main data is going to be presented as part of a cluster.
Got it Super helpful.
And then just a quick follow up on MLD and reveal and recurrence monitoring.
Tell me what sort of data Readouts, we should be looking out for.
Terms of maybe larger patient size or other prospective trials or more action ability around the reveal and when can we get an early glimpse of the smart liquid biopsy performance. Thank you.
Yes, no great question.
We presented some updated data some new data that is <unk>.
Our recently and we're very excited by that they presented some data on breast.
At Jpmorgan and we're hopeful that we can present kind of a fuller analysis of that in the interim so I would say that those two trials I think we'll continue to have.
Data readouts.
The year in the.
The interim there are other studies, we are working on besides.
Oracle and Cobra and some of the larger studies.
We will likely to read out over the next few quarters.
Something where the engine is working and we're hopeful that there'll be a steady stream of data not just across CRC, but other indications.
I would imagine the smart liquid biopsy platform, probably the deepest.
Kind of most extensive maybe preview we would give them that would probably be at our investor day.
And this fall.
Okay, Alright, fabulous guys. Thanks.
Yes. Thank you.
We now turn to Derik de Bruin from Bank of America. Your line is open.
Hello, Good afternoon, and thank you for taking my call.
A couple of questions I think the first one is on Biopharma.
Getting asked by investors about the competitive dynamic in that space just because there is clearly a lot of companies that are.
Going on there I'm trying to go into that market can you talk a little about.
Yeah.
POW your partners.
Our choosing guardant and are they running head to head trials with.
With 360 and with reveal in so many other things like there is just some of this like what gives a flavor of some of the studies that are going on in the competitive dynamic in there.
Would be really helpful.
Yeah, No that's a good question.
I'd say that for therapy.
Therapy selection market around 360 and omni.
We're past that head to head phase I mean, there was a few years ago.
And that's an area that we do extremely well.
If we if we don't win its largely because.
Maybe someone's broken the bank on their end in terms of cost or so on so we obviously want to keep our.
Margins in line when it make sure the costs and prices kind of remains stable and so it's not something you typically compromise on.
And so yes, we feel like we've had.
Excellent win rates there.
Working with over 100, Biopharma companies now and growing.
So all the metrics. We track are very positive we don't see much churn on the biopharma side in terms of new products.
We're often in that phase where.
Pharma companies are doing head to heads.
And we've also been very pleased with the results of all the studies.
We've been we've been a part of and so we very much see it as the early days of Garden 360.
And we're seeing interest from some of the newer areas. We are working on smart liquid biopsy and other products and so we see.
That not only are exist not only is the demand for existing products continuing to grow.
Even something like 30, 360, <unk> has grown very nicely and we're seeing more demand as that's now an approved platform that.
De risked some of the analysis that can be done with that but we're seeing really strong demand from new products that we're launching as well. So we're very pleased with the breadth of the portfolio and as it as it is getting broader we're seeing.
We're able to create a stronger engagement and frankly stronger moat around our relationships with biopharma clients.
Okay.
Thanks for that and just one other one just digging up some ancient history. When we were doing the IPO in 2018, there was a lot of focus on lung during our discussions and then the.
That shifted more to CRC for obvious reasons, I guess, what's the what's evolved and what's changed.
In the lung assay I mean, your garage or you've got a next generation assay, but houses that have been enhanced with the new smart protocols and also.
There is another company out there that's looking in the liquid biopsy space on lung cancer.
I mean at first glance, they look like they are using perhaps some similar.
Technologies, but any sort of might compare and contrast on what's going on in the market and how that's evolved over time would be really helpful. Thank you.
Primarily.
Well said.
Long versus CRC some question around training.
So the exciting thing is I think since 2000.
And as we started publicly talking about our <unk> program, which is around our screening at a M. R&D we talked about.
Multi cancer kind of initiatives and during those days ever for <unk>.
Answers that.
Started at the same time ovarian cancer or non cancer breast cancer and ovarian cancer.
Other cancer types over the years is added and in terms of understanding the biology and generating visibility data now.
Now why is CRC became our lead anchor indication.
It's really because of other factors, including regulatory pathway now in fact reimbursement pathway.
At it this way that once we have this FDA approves CMS and Medicare covered.
Yes.
Really our chest and Andy J, thus far vast manager ETF.
Paul.
At the age of 45 or above and Thats, a very good actually anchor indication for us to really add other cancer attacks on top of that so.
That's why I think CRC has become our antenna indication, but as you've seen their ads.
<unk> line and throughout 2020 , two you're going to see the data from a few other cancer types I think already in some conferences, we've shown data in pancreatic bladder.
Couple of other cancer types, but youre going to see more off dose. So it's been really a multi cancer screening journey for us.
Yes, our anchor lead indication.
We now turn to Max Masucci from Cowen and company. Please go ahead.
Thanks for taking the question.
First on <unk>, you have a rough idea or expectation what the split will be between MRV monitoring clinical volumes coming from the adjuvant setting.
First <unk> task used for cancer recurrence monitoring in 2022, and then how quickly do you do you expect that volume mix to shift in favor of cancer recurrence is that a 2023 event.
You mean, just the kind of.
Break it out like you know first kind of test after in the adjuvant setting versus tests, we're monitoring that or subsequent to the to that first task.
Yes, exactly as you said just in 2020 share what percentage of <unk>.
Mardi monitoring volumes across all vendors will come from tests that are used on patients in that six months adjuvant window.
Those that are in remission and are using the test.
Cancer at current spot.
Yes, we're still in the early days.
And obviously, our co points is mostly to the oncologist and so given that we're still ramping up.
Very strongly.
We're getting a lot of those initial time points and so we think that.
Throughout 'twenty, two and certainly into 'twenty three.
Majority of that test, we will continue to be that.
Initial time point.
But we are seeing the strong growth and that sort of recurring testing stream as well. So we're we're monitoring both.
Side seeing that mix and it's something that.
I think we're very pleased with the progress with I think over time to your point.
I'm one of the advantages of a blood only test is really being able to access that prevalent population do you think about the 15 million cancer survivors.
There are the majority of them, 90% or more than a year out from their curative resection, where that adjuvant kind of period and so we see that.
As we continue to build our position that there is a enormous opportunity we have before us even as we build out our primary care franchise for instance on the screening side, there's really a lot of the synergistic interplay. We can have in terms of accessing that prevalent population even in the primary care setting.
We're very excited by.
Kind of what the future holds for us.
Okay.
Makes sense and you built up 100, 100, plus person primary care sales team.
It'd be great to hear what sort of initiatives and responsibilities. The PCP sales reps have on their plate today.
And how much time and effort they are dedicating to the garden shelled Ltte launch versions preparing for a broader rollout in 2023 after a potential FDA approval.
Yes, sure I assure you that the team is now.
Ah well onwards, as well trained and a bunch of them got deployed Tunis setting the scheduling.
<unk> saw that meaningfully in fact started to add that as I mentioned.
Mark and I in terms of.
Bringing out wariness of blood based cancer screening and getting their feedback.
Our target is <unk> in terms of the way we are looking at that market I can tell you that.
We are very pleased with bunch of these early feedback that we're getting from the March and in fact, many of them are waiting for Garnett Shield <unk> come alive.
All of them already have patients in mind that if the red light Datelines, who start using that test so.
Very encouraging for us and JD com for a bunch of assumptions that we had.
So the team is busy with <unk>.
Hang on getting this <unk> launch is a very successful launch for us.
And then they're going to actually expand their activities to support the IV launch, but all of the focus for us at this time would be as successful <unk> launch in 2022.
In the first half of 2022.
We now turn to Jack Meehan from Nephron Research. Please go ahead.
Thanks.
I had a question for Mike you talked about the investments going into the business I was just hoping you could walk us maybe down the income statement.
Gross margin R&D sales and marketing G&A and just give us some color on cost guidance for 2022.
Yes sure.
No.
Gross and gross margins, we always talked about this 16% to 17% sort of target that.
We have in fall 2021.
Successful then we had to gross margins.
Full year and about 67, 7% I think we will expect to see some pressures on gross margins in 2022.
Mainly coming from the fact that we've got new products the volumes starting to ramp up but it's going to take time to get to get reimbursement.
So we probably expect the gross margins to be in the sort of below the low sixties.
And then on the on the Opex side.
Again, yeah, we talked about the investments on the on the prepared remarks.
<unk> failure.
Sure.
We increased.
Opex about 17% of this is non-GAAP opex.
17%.
'twenty one most of that most of that growth was coming from R&D and in sales and marketing and we've made heavy investments.
I think when we look at 2022.
<unk> level is going to be lower and it's probably going to be a growth of about about 40%.
And probably most of that growth will be on the on the commercial side, we hired hopefully 100 people on.
Screen side of the business towards the end of the end of <unk>.
So all of those expenses are going to flow into 2022, So I think.
Of that growth coming on the sales amongst inside and then on the research and development side, we're still pushing on the product portfolio.
Generating data around.
For oncology products and on the screening side of the business.
Continuing to develop the multi screen device so.
Can we expect the opex to grow about 40% into it.
We announced that Matt <unk> from Goldman Sachs. Please go ahead.
Hi, Thanks for squeezing me in I'll just leave it to one question given the time just on the.
Community oncology market, just given the importance in your to your clinical volumes I think you mentioned that the commercial teams around 250, just what are your plans in terms of growing that do you feel like you've got a good size right now to drive that volume growth and then just on the 50% of interactions with oncologists that are in person are there expectations that that increases or have some of the digital engaged.
Meant that your reps have been doing could offset that if that sort of 50% level stays the same throughout the course of the year.
Yes, good questions.
I think we're hopeful that.
Essentially that the 250 reps, we have you know I think theres still some room to grow in terms of.
Really I'm getting up to speed in terms of some of the new hires we've made obviously the access hasn't been the best in terms of Windows.
Reps have come on so we see a lot of room to potentially grow as restrictions are lifted.
Access has opened up.
We're hopeful that the diagnose many of the pharma companies.
Sort of downsized some of their teams and are going to do much more digital engagement.
This test.
<unk>.
There's a lot more information behind that.
There's a lot that we do to actually help support positions.
Specially on the decision support side, so we really see that as an opportunity for them very close engagement with physicians that being said, we are increasing our investments on the digital side I think theres a lot of opportunities there that have opened up.
Not just the.
The technology has gone, but I think.
Sure.
Physicians I think are much more adept and more.
A more open to some of those engagement channels now so thats definitely an area of opportunity for us.
<unk>.
The second part of your question.
Yes.
Yes.
Okay.
Yeah.
Yes. Thank you.
Thank you okay.
Thanks.
Yeah.
We now turn to Dan Leonard from Wells Fargo. Please go ahead.
Hi, Thank you just hoping you could elaborate on the Heald L. D. T launch how are you framing success, if youre not planning for material revenue in 2022 and could there be more of a revenue opportunity than you framed.
Blood screening test is on the market with some healthy sales expectations for 2022, so perhaps you could compare and contrast your opportunity. Thank you.
Yes, sure. So you know.
Our strategy for commercialization of shield.
In general <unk> down the road <unk> to go through.
Classic our router.
Gage mess with Payors and securing reimbursement pathways in order to make sure. We can go forward just long term win here, which is unlike <unk>, one 1 billion dollar Tam and tens of millions of people, we need to really get access.
Through our screening tests.
As a result like in the early days, obviously since we don't have any coverage policies and in payments by payers.
Very minimal kind of ASB.
And as a result, we cannot contribute match.
Meaningful way to the top line of Garden revenue.
That's the first major reimbursement that we are expecting and planning now is hopefully post FDA approval would be Medicare coverage in Australia.
Followed up by maybe Chad vantage on bunch of early Payors would come on board following the Medicare decision.
But that would be by Canada.
Post FDA approval, which at this time, we are expecting them to buy and finance fee. If that review goes well. So that's the main reason that that in 2020 . Two at this time, we are not projecting any material revenue contribution.
Very low ASP.
We now turn to Patrick Donnelly from Citi. Please go ahead.
Hey, guys. Thanks for squeezing me in here.
Help me maybe one for you just on the international side I know you guys have laid a lot of groundwork there in Europe , you have the Japan JV, how should we think about that kind of building in 'twenty, two whether it's a catalyst or maybe even some volume build.
What should we be keeping our eye on the international side as you guys continue to expand there.
Yes, no great question.
We're very excited about the progress we've made over the last couple of years in Japan.
Zinc were nearing an important catalyst, which is regulatory approval of garden 360, we're hopeful.
That will become in the coming months.
And as we mentioned, it's a very large market opportunity with 400000 late stage patients reimbursement rates.
Or similar to the reimbursement rates in the U S around comprehensive genomic profiling. So we're building up that team and we're gearing up for.
Think a very nice launch of that product.
Given you know ramp times, it's unlikely to be.
Significant in 'twenty, two but I think it could be something very nice in 'twenty three in terms of its contribution.
In terms of Europe , we're also laying the groundwork with there was.
Two lab that should be up and running in the next 12 months or so in the U K and Spain and.
We're very hopeful that in those partnerships, we can work together with those kols and academic centers to really secure public reimbursement.
Once those are those labs are up and running that'll be a longer term.
Horizon, but it's.
It's something that.
I think it was a very nice setup for us to really do international the right way and hopefully in a way that really unlocks a significant revenue opportunity.
Our final question, we tend to Carl Mixon from Canaccord Genuity. Please go ahead.
Hey, Thanks, I want to go back to shut off for lung, though so let's say you launch short for long like a few years, presumably after the.
CRC launch maybe you have reimbursement approval for CRC at that point, how do you envision like the two cancer assay ferring in a market where you already have maybe 10 cancer 50 cancer test already kind of relatively established and I. Just wanted to ask do you think there are disadvantages to being one of the first market and that could actually help your case.
Yes so.
We have an LDC routes and IBD route so Garda and shield Lv 10 Gardner.
IBD after FDA approval and you can expect that LPG device would have faster site.
Upgrades.
At innovation behind it and that's guidance Sheila IBD.
It's a longer time.
Time horizon for approval for assessing the case of blind I expect we should be able to upgrade garden Shield L. D.
So we include lung indication much much faster.
At the time that we have shield volume readouts or FDA submission I'm going through FDA review cycle to really upgrade that device.
That's going to take few years for us so.
Similar story kind of get a flight to other cancer types.
A panel of cancer attacks can get added to the LDC device much faster and getting IBD claim.
For Joe's cancer types.
I hope that answered your question.
We've come to the end of our Q&A, we'd like to thank you for joining today's call. You may now disconnect your lines.
Thanks.
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