Q2 2022 Guardant Health Inc Earnings Call
In the second half of this year, which should serve as an important catalyst for our business across a variety of our products.
Moving onto Biopharma on slide six we delivered 6000 tests in the second quarter, representing 65% growth year over year to date, we have partnered with more than 130 Biopharma companies as we continue to grow and diversify our customer base. This was evident in <unk>, where the power of the full.
Garden platform facilitated strong customer engagement.
Furthermore, we are pleased to announce we have successfully launched our smart liquid biopsy assay and early access for research use we have signed a number of agreements and started processing customer samples at the end of Q2 with.
With a healthy pipeline of discussions including for smart liquid biopsy. We believe we have a strong set up heading into the back half of the year.
Onto slide seven outside of the United States, We continued to make progress on our strategy of achieving global scale with a focus on large core markets.
Most notably for this quarter in Europe , our partner lab and Belga, Brian in Spain is now opened for business in.
In EMEA, we completed our planned purchase of the Garden's helped EMEA joint venture focusing in on Japan, We received regulatory approval of Garden 360, <unk> earlier this year and expect to receive reimbursement later this year and in China, We signed a strategic partnership with <unk> one of the largest lab companies in China too.
Our CGP to Biopharma customers all of this takes us another step closer to ensuring all cancer patients across the globe receive access to our technology I will now turn the call over to <unk> to provide an update on our screening program.
Thanks, Amit.
Starting with an update on the eclipse on slide eight.
Since our last earnings call in early May we made good progress with our central pathology review process and continue to find that Cup. Furthermore, CRC.
We've also continued eclipsing enrollment to ensure we have more than enough CRC cases for our PMA said.
To further build our biobank for future research and development.
With where we are today, we are now just one CRC away from our target range of 60 to 70.
Which will put us in a position to control the timing of when we unblinded study.
In parallel we have already started driving eclipse blood samples in the lab and are making good progress in generating the data.
Based on the rates of CRC confirmation in the last few months, we expect to eclipse will readout sometime in the fourth quarter of this year with exact timing depending on the identification of the last few crc's.
We are also making good progress with our analytical studies and other deliverables required for PMA submission.
We are pursuing a modular submission to FDA.
<unk> already submitted our earlier modules, which the agency has started to review.
As a result, even with the fourth quarter Eclipse readout. We believe we are on track to complete our PMA submission by the end of the year.
Assuming a successful review and approval by FDA.
Confidence, we can secure a DLT status on that.
The favorable Medicare pricing.
<unk> pricing is based on a well established process and initially depends on the list charge and then the Panama market base rates.
Over the long term, we believe we can achieve an overall ASP of over 500 dollar across all payers.
Yes.
Following FDA approval, we expect to be included in that American cancer Society or Acs guidelines.
Their recommendations by ACS are followed by a number of states due to the state level requirement for payers to cover Acs recommended colorectal screening tests.
Our best estimate is that there are about 15 states that could follow Acs guidelines covering about 20% to 25% of the population.
Okay.
A major milestone prior test would be inclusion in USPS TF guidelines with favorable gravy.
We have worked hard to understand the process behind the USPS TF decisions based on expert opinions and guidance from former task Force members.
We believe as long as our blood test gets FCA approval, we established performance even at the level of fit tests.
USPS TF fully include our test as a new modality for colon cancer screening.
Under the current USPS gifts structure, we have.
Expect guideline combination in 2026.
It is now the current USPS TF five year update cycle is not matching rapid developments in biomedical research on new technologies and can lead to a significant lag in the adoption of the new promising screening technologies such as the shield.
We are pleased by inclusion of report language in both house and Senate Appropriations bills.
Urges the USPS to utilize its early topic update process.
Reviewing new screening technologies up on FDA approval.
And in addition to this momentum from appropriators.
I'll say encouraged by recent letters to United States Department of Human Health services from the Energen Congress democratically theirs.
That's our Marsha Blackburn, which raised important questions about the USPS give process and illustrates congressional interests in addressing this issue.
Yeah.
Turning to slide nine.
And our shield LDP.
Im excited to share that the launch of our shield LDP is off to a great start.
Chip feedback on initial uptake are ahead of our original expectations.
Our core teases is that simple blood based testing will drive a higher compliance rate than still base testing and contributes significantly boosting overall screening compliance to over 85% in the next 10 years.
And our first 1000 order samples.
Observed over 90% adherence rate.
Simply this is the ratio of the number of blood test received seeing our loss to the number of tests ordered by physicians.
This real world adherence rate is much higher than the reported numbers for colonoscopy and still tests.
We are also launching clinical studies with some health system. This year to generate additional clinical evidence for favorable adherence rate for blood based CRC screening.
Okay.
Another advantage of higher adherence rate is significant increase in sales and marketing efficiencies by Congress I think higher fraction of ordered samples to pillar both cases.
We believe this higher commercial efficiency, we will enhance the operating margins for our test relative to what historically has been seen for store base test.
Turning to slide 10.
The long term forecasted adoption of our blood tests depends on CRC sensitivity Readouts from Eclipse study.
We studied the adoption for sensitivities ranging from 92%.
Cologuard two <unk>.
75%.
Which is about the minimum sensitivity required by Mcd for Medicare coverage.
Yeah.
We expect a very robust adoption, Brian assay, even with sensitivity around 85%.
We are forecasting over 10 million tests per year in 10 years for such assay with annual revenue opportunities well over $5 billion.
Even at CRC sensitivities of about 75% there is still a significant opportunity for blood based CRC screening tests.
Under such scenario at 10 years out we're forecasting about three to 4 million tests per year.
Hi, Neil profitable opportunity of about $2 billion.
In our research.
We have not seen any notable dependency to advanced adenoma sensitivity in the current.
On PCP market.
As a reminder, our.
<unk>, obviously reported CRC sensitivities in case control studies ranged from high <unk> to.
To know <unk> and detecting early stage CRC cohort.
Turning to slide 11.
Our vision for early detection has always been to build a multi cancer screening brand.
<unk> is uniquely selected CRC as our need an anchor indication.
But not the only indication.
Unlike skill based tests that Ken just it takes CRC blood.
Blood based test will go well beyond this single indication.
We are planning to operate our shield <unk> tests to also screen for lung cancer in high risk individuals in 2023.
Previously we have reported our blood test can detect 87% of early stage cancers.
A case control study.
In midterm.
Blood tests will be upgraded to a broad multi cancer screening with a large panel of indications.
By adding new indications for our blood based screening test the resulting <unk> gain should further improve.
We are confident about our strategy in building highly sensitive.
They are accessible blood based multi cancer screening test with high patient compliance.
These are exciting times for us at Gardner.
Waiting to see Eclipse data, then further expanding our test to multi cancer screening while working in parallel to get FDA approval and building wide access to our tests.
With that I will now turn the call over to Mike for a more.
More detail of our financials and outlook for 2022.
Thank you Amit rally.
Turning to slide 12 total revenue in the second quarter of 2022 was $109 1 million up 19% from $92 1 million in the prior year quarter.
Total precision oncology testing revenue for the second quarter was $92 1 million.
With growth of 27% compared to $72 6 million in the prior year quarter.
This increase was driven by year over year growth in both clinical and Biopharma sample volumes.
Precision oncology revenue from clinical tests was $70 5 million up 15% from $61 1 million for the prior year quarter.
No thats in the second quarter 2021 clinical revenue included a $9 $6 million true representing cash received for test performed in prior periods, where the total cash received for those tests exceeded the total revenue that had previously been recognized.
Because our ability to estimate revenue has improved the second quarter of 2022 included only $1 $6 million in cash true up relating to prior period.
Excluding this cash based revenue recognition impacts the underlying clinical revenue growth was 34%.
Second quarter clinical test volume was 29300.
Which is an increase of 40% from the same period of the prior year as.
As well as strong government 360 growth on new products revealed tissue next in response again contributed to the growth for the quarter.
For the remainder of the year, we expect volume growth to gain momentum as both reveal and tissue next have now received reimbursement coverage for <unk>.
For the second quarter of 2022, the ASP for <unk> hundred 60 was in the range $2600 to 2000, and $700, which is consistent with the last few quarters and the blended clinical ASP was approximately 2400 Glenn.
Blended clinical ASP will continue to be influenced by both the volume mix of government 360, new products as well as the reimbursement for new products.
Precision oncology revenue from Biopharma test in the second quarter totaled $21 6 million.
Of 87% from $11 6 million for the prior year quarter.
Biopharma volume was strong second quarter samples totaling 6000, which was up 65% from the prior year quarter.
Osama sample ASP in the second quarter was approximately $3600.
14% from the prior year period was in line with the prior quarter due to some of the product mix.
Development services and other revenue in the second quarter totaled $17 1 million down 12% from the prior year quarter.
Although we had a positive impact from the milestone revenue related to our ethicon partnership, which we signed in the second quarter of 2022, and while we continue to see strong demand for our development services.
We still expect that our 2022 development services and other revenue will continue to be lower than prior year. Several companion diagnostic projects were successfully completed in the second half of 2021, and new projects will take time to ramp up.
Gross profit for the second quarter of 2022 was $72 4 million.
Compared to a gross profit of $62 2 million in the same period of the prior year.
Gross margin percentage continues to be in the mid 60, 66% for the second quarter of 2022 compared to 68% in the prior year quarter.
Operating expenses for the second quarter of 2022 with $202 7 million, an increase of 27% compared to $159 8 million in the second quarter of 2021.
Net loss was $229 4 million.
Our $2 25 per share for the second quarter 2022.
Compared to $97 6 million or <unk> 96 per share in the second quarter of 2021.
Net loss includes a one off charge of $99 8 million.
Related to the purchase of the approximately 50% of the garden health in May a joint venture that we did not.
As a reminder, in June 2022, we paid $177 $8 million to acquire the garden health equity interest held by Softbank and its affiliates.
As a result, we incurred a charge of $99 8 million.
So the non controlling interest liability line in the income statement.
Which represents the difference between the liability we were carrying on the balance sheet from $78 2 million and the final purchase price of $177 8 million.
Moving on to non-GAAP financial measures on slide 13.
non-GAAP operating expenses exclude stock based compensation and related employer payroll tax payments acquisition related expenses amortization of intangibles and contingent consideration.
non-GAAP operating expenses for the second quarter of 2022 were about $176 2 million.
A 41% increase from $124 7 million in the prior year quarter.
This increase was driven by the investments made over the past 12 months across both our oncology and screening businesses.
Similarly in our commercial infrastructure and the continued development of our product pipelines and clinical data.
Throughout 2022, we will continue to invest in progressing our strong pipeline of oncology products as well as in generating clinical data to support the reinvestment. The screening 2022 investment will be focused on the commercialization of our shield at retail.
<unk> the data readout from eclipse the PMA submission for our CLC Dubai and the continued development of our multi cancer screening test.
non-GAAP net loss was $101 8 million.
A $1 per share for the second quarter of 2022.
Third to $61 4 million up 61 per share for the second quarter of 2021.
Adjusted EBITDA was a loss of $94 3 million in the second quarter of 2022.
With $56 $4 million loss in the second quarter of 2021.
We define adjusted EBITDA as non-GAAP net loss adjusted for interest income tax depreciation amortization and other income and expense.
Turning to the balance sheet. We ended the second quarter of 2022 with approximately $1 $2 billion in cash cash equivalents and marketable securities.
Before moving onto our current year guidance I would like to take a bit of time to discuss our liquidity and capital allocation on slide 14.
I've got it we have always taken a measured approach to our investments and are ultimately being focused on the path to profitability as.
As we look ahead to how the business will develop in the investments needed to support the significant long term growth opportunities. When we look at both the future oncology business and screening business.
For oncology, we currently have strong volume growth, which is fueled by our core guidance 360 tests as well as new products.
Very good gross margins in the mid Sixty's and built a sizable commercial and operational infrastructure.
Going forward, we will continue to invest in areas that we believe will drive sustainable long term growth such as MLP smart liquid biopsy and developing the clinical data to support utilization and reimbursement.
Given the strength of our current business and our investment approach, we expect the oncology business will reach cash flow breakeven in approximately two years.
The screening we are currently in heavy investment phase.
Sheila LDC launch underway to be followed by a milestone driven commercial ramp up and with our multi cancer screening development assets.
Underpinning. This we have a fair amount of infrastructure investment that is necessary as we scale our operations.
Taking into account all of these dynamics, we believe that we can reach cash flow breakeven one to two years after shale inclusion and USPS TF guidelines for CRC screening.
We are in a fortunate position to have sufficient cash in our balance sheet to fund the business for the foreseeable future and.
And we will continue to actively manage our capital allocation with a goal to long term profitability.
Now turning to our revenue outlook for the full year 2022 on slide 15.
We continue to expect to be between 460 $470 million representing growth of approximately 24% over 2021 at the midpoint.
This is unchanged overall, but with some moving parts between the lines.
Reflecting the first half performance, we now expect clinical oncology sample volume for 2022 to grow by approximately 45%.
With the previous guidance of over 50% and we continue to expect Biopharma volume to grow by at least 30%.
Despite the revision to our clinical volume growth expectations.
We expect precision oncology testing revenue to grow by approximately 35% over the prior year as we expect second half tailwind for mobile Medicare reimbursement and the continued strength of our Biopharma business.
Finally, we continue to expect development services and other revenue will be at least $50 million in 2022.
Please note that while we are highly encouraged by the strong reception to the launch of our screening LDP test we are not expecting significant revenue contribution from it this year.
Moving to slide 16.
We are continuing to make great strides across our business obtaining reimbursement for our new products broadening our product portfolio with our shield <unk> and expanding our reach into the cancer screening market.
We are aggressively pursuing the best 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 it up to questions.
Thank you.
I would like to ask a question. Please press star followed by one on your telephone keypad. If for any reason you would like to remove that question. Please press star followed by two again to ask a question it will be star followed by one.
We are limiting each passion to just one question each thank you.
The first question today comes from the line of Puneet <unk> from SVP Securities. Please go ahead your line.
It is now open.
Okay, great. Thanks.
Merrily and thanks for taking the question so.
The first one.
Just a couple on eclipse.
Maybe if I can squeeze in one for Marty as well.
I'm merely you said timeline is now expected in the fourth quarter.
So I'm wondering if you could give a view of October is still a part of that timing.
You can hit I know you talked about September October initially so I just wanted to confirm that the pathology services and challenges are all resolved at this point and do you think you need to reach the 70 targets for CRC in order to power the study or maybe let's say, 65% is good enough or even low <unk>.
And then sort of lastly on eclipse, maybe could you talk a little bit about the.
Integral I think Thats a major question sort of what gives you confidence that the three year interval would be maintained under FDA.
And then.
When it is covered by commercial payers potentially and if there is any impact from advanced ad.
Adenoma performance there for help me if I could get pricing on the MRM revealed that'd be great. Thank you so much.
Okay. Thank you for your questions. So let's go through them one by one in terms of the.
Timing October is still.
Possibility.
What we mentioned in our last earnings call is our team very Wisconsin.
With me in the second half likely story of September October .
We continue to have very high confidence that the readout would be.
And basically.
Fourth quarter before we add they are for sure.
<unk> is still is a possibility.
Exact timing is a function of the timing of finding these.
Lower number of events.
Our studies already.
Sure.
Hi.
Yes.
Our target is 60%.
Effectively we are in full control in terms of when we want it to unblinded study or multiple factor goes into really the decision about tweaking the bundle that effectively lightning those steady and solid as for Comtech.
And to raise the bar for.
A blood based test that sky gets up.
Profitability bar for other blood tests down the road. So we are going to have a good balance.
Where we are when we are finding the CRC and it was mentioned it.
The decision on but all of the stuff that was kind of matter of the weeks that we are talking about so I just kind of be in.
In the fourth quarter, and we are going to have.
We have talked about.
Sure all over it.
Terms of interval testing.
As a manufacturer our recommendation is going to be our blood tests to be used every one to three years.
Hi.
And is there pricing is set for our test after we get.
True well established <unk> pricing.
A framework and process, which is nothing to the redemption of all testing.
That's our belief and that's the reason that we said our cash pay price at 895 and are these prices.
Over that so.
With confidence about our pricing strategy.
The negotiation that we are going to have with CMS not negotiation that process that we are going to go through with CMS both.
FDA approval and close to getting to <unk> status about market pricing.
Yes.
It was close at this time, but it's something we're working through and I'm sure. We'll announce it soon and then we'll be able to also pursue ADL.
As well.
Coming quarters, So thats still a route that is very much open to us.
Yes.
Thanks, guys.
Thank you.
Next question today comes from the line of Jack Meehan from Nephron Research. Please go ahead. Your line is now open.
Thank you good afternoon.
I wanted to focus on reimbursement strategy for guardant reveal notably there's been a little bit of a debate around whether garn can pursue ADL status for reveal.
Whether you're first in category with blood or whether your second and category when it comes to <unk> overall.
Was curious if you've gotten any indication around your eligibility for <unk> status for Medicare.
Yes, that's a great question Jack.
Of that route open to US this is a first of its kind.
The only true liquid biopsy in the space.
Shoot.
There is a significant.
Anywhere from 20 to even.
So in certain indications that don't have tissue available and even the ones that the us tissue, it's very difficult to get so this is a breakthrough for us.
At the moment for the field in terms of the <unk> and ADL piece that has played out.
Awesome and then also is there any additional color you can provide around the logistics of how Medicare will reimburse for the test so will it be one test bundle test for what period of time and then there was this reference to a three month window. After resection just comment like how is that chosen.
Yes, that's a great question based on the data we submitted an initial dossier this Israeli and.
Studying this is for a bundle of tests that will be reimbursed. So it would essentially be for serial monitoring and that bodes well.
Setting so the first is to be performed within anytime within that three month window.
And to have essentially a string of test that would follow.
A large.
The large intervals.
Thank you Amy.
Okay. Thank you.
The next question today comes from the line of Sara from BTG. Please go ahead.
Your line is now open.
Hey, guys.
Thank you very much for the questions and congrats on the progress.
Maybe two questions. The first is there was.
Some confusion about the.
Mardi Medicare reimbursement that came in can you just clarify if that can be used in both the adjuvant window call. It. The first six months of the patient journey and then also in the recurrence monitoring setting as well for repeat time points and then my second question I just wanted to clarify.
Are you pursuing <unk> status for the for the CRC screening test.
As an LPT or are you planning to apply for that.
After you get FDA approval.
Yes, that's a great question et cetera that might be one.
So yes.
Yes. This is for the adjuvant study for that initial peer.
Period after.
The intervention.
For monitoring those spaces.
So that time period.
Turned out for.
Considerable amount of time, but for the patients that are multiple years away, let's say.
Intervention.
Continuing to disc.
Discussions with Medicare.
Additional data too.
Pursue some of those.
Dwell is obviously indications outside of CRC over it.
Regarding <unk> status for the CRC, our shield LDC SaaS.
Our plan is to wait for FDA approval secure CMS coverage.
Chad that applied for <unk> status, obviously NHS.
Medicare cartridge first before you applied for.
A DLT at based on criteria that would be I mean.
<unk>.
These are requirements of our current plan is to go through it in sequence of SaaS <unk> all that.
Quickly CMS coverage and access.
As for Adl's two sets.
Perfect. Thank you.
Thank you.
The next question today comes from the line of Brian Weinstein from William Blair. Please go ahead. Your line is now open.
Hey, guys. Thanks for taking the questions.
Just wanted to ask you about the core business a little bit here you mentioned the volume growth was below forecast you talked about may and June being a little bit weaker.
Can you just reiterate kind of what was going on specifically what you thought was weak or was that an industry thing. There's obviously some new competitive products that are out in the market was there some competitive headwinds that were going on.
Does it look like again in in July and I guess, where early August and that doesn't count, but just through the first part of the third quarter. Thanks.
Yes, great question.
No. We saw obviously very strong growth regardless, both on the core business with $3 60, and new products as well.
We're already robust, but as we mentioned we.
We had a very strong April and then.
Weaker may and June and what we saw in the field in general.
The lingering effects in terms of Covid omicron.
A lot of hospital staff shortages and so on.
Okay.
But I think the compression in the overall space, we're not seeing anything new from a competitive front that would worry us and in fact as we mentioned.
That has been very strong and we are seeing things.
Okay.
Yeah.
So does that.
Fix underlying metrics, we mentioned in terms of depth and breadth continued to increase.
Essentially be correct.
And half of the year and we think we can close some of the gap.
Just on the progress we're making.
Okay and then.
You said that you expect.
The CRC product that you expect Acs guidelines is that based off of the conversations that you've had already with the Acs guidelines or is that based off of precedent that we saw with with Cologuard.
Scott.
That's our expectation based on stuff.
So solve the history.
It means that engagement topic conversation on it sounds stakeholders.
There is some kind of.
<unk>.
Potential that if there is a strong pivotal study readout coming out that shows really a very favorable outcome for blood based testing there is even a probability of seeing some guideline.
Before FDA approval, but post FDA approval based on what we heard so far there is a good level of confidence by us that.
Pan Cancer Society based on their request.
My recommendation on changes that they make neighborhood brief comment.
Again, assuming eclipse data would be as we expected it to.
Okay that makes sense. Thank you.
Thank you.
The next question today comes from the line of Kyle Nixon from Canaccord. Please go ahead. Your line is now open.
Hey, guys. Thanks for the questions congrats on the quarter.
So I have if I could ask one question, but multipart so for Amir Ele me.
He said over 90% adherence on the first 1000 samples.
Lastly, I just want to emphasize though.
Maybe how has adherence trended recently and then who are the early years of the task by age group I guess curious obviously commercial private payers are reacting anyway, and then for help me.
That's on the reveal reimbursement could you just talk about why that took so long and why you're confident that reimbursement for the future indications is not going to be like similarly delayed it was destroyed by at least six months.
Yes.
Yes. Thank you for your question.
Right.
Confirmation of that.
Stuff that looked kind of.
Now we are seeing.
Patients really preferred blood tests on that Crs using blood test would be high.
<unk>.
And over 1000 samples on rates of ordering physicians across.
Very few weeks actually.
Saw almost steady adherence kind of week to week, So Scott Chang to stay.
Thank you.
Adherence that youre seeing as event by China.
Debt at closing, but we don't want to get off our skus too quickly and get too excited but based on the trends that we're seeing I think.
Really large cash show very high at the type of accounts are obviously, we are targeting early adopters at this stage. So against this matrix adherence is a matrix that chance to monitor and see what's going to happen. Please note that Trs that youre talking about my calf guard and we don't have.
Huge patient navigation kind of programs significant amounts of investment there to make sure patients really start to hit. This outflows. This is the reality jumping on what's happening.
Previous strong.
The patients and physicians.
We are very excited about.
Yes in terms of.
No delays with MRV.
This is rob.
Really a novel nodes.
Okay.
Mike.
In the space.
So there's definitely some back and forth I think.
Learnings and education required in terms of really dive into that.
And the work in house.
Could you, possibly to earn so without having tissue.
So we're very confident now that we've gotten over that.
Hum.
I've come to a place where.
They're confident.
But understand Brooks.
So now I think will be mostly limited.
The speed of.
Clinical validity data.
Getting that out into the publication space.
Great. Thanks, guys.
Yes.
Thank you.
The next question today comes from the line of Mac Sykes from Goldman Sachs. Please go ahead. Your line is now open.
Okay.
Thanks for taking my questions.
A number of my questions have been asked so maybe I'll just keep it to one and make it pretty high level.
If we look back like a year and a half ago. I think there was a view that given all of the funding environment that it was becoming potentially a crowded field in terms of overall liquid biopsy with a number of private companies coming in the space just given the changes in the funding environment. How are you guys thinking about the competitive environment I know, you're obviously focused on achieving your goals but in term.
Of how youre looking at the competitive landscape Peters out and what potential impact could this funding environment actually have on the competitive landscape for liquid biopsy in your view.
So let's say that.
Obviously, we're monitoring kind of the space.
Interesting you see some of the developments.
This continues to be a hot space continues to be money that's driving it.
Others that have been raised over the last.
A few quarters that continues.
Invested so.
We're taking kind of a.
All of the metal at least in terms of our internal programs. We're always we've always been very disciplined in terms of the <unk>.
Operating the business and we're going to continue to be so in this environment, but.
We're not we're not necessarily going to take.
We're not we're not going to slow things down in terms of both the FERC.
<unk>.
Bose.
But I think theres going to be some opportunities as well as things progressed in terms of.
Apologies consolidations, we feel.
I'm, very well poised and well positioned.
As.
And what the next few quarters could mean for the liquid biopsy space in general.
Thank you very much.
Okay.
Thank you.
The next question today comes from the line of <unk> from Morgan Stanley . Please go ahead. Your line is now open.
Hey, this is Neal on for David I, just have two quick ones. So now that the lobby space fully operational any color on early traction here and then with full operational ownership of EMEA joint venture how should we be thinking about planned investments to support the scale up in Japan. I know you mentioned that you anticipate reimbursement in Japan by yearend, but any extra color on when we can.
<unk> see some updates.
Yeah.
Yes, Great question, we're very excited about the progress we're making internationally.
I think it's too early to say.
There are literally just.
Getting the first two samples out there so we're excited.
It's really a first of its kind laboratory.
In Europe , and certainly in Spain.
That's going to give a lot more access to that technology. There we have similar work being done.
And then UK and we're excited about that.
Joint venture.
Baird.
We're very bullish about the upcoming.
Catalysts that we have there.
Extraordinary market in terms of size number of cancer patients reimbursement rates.
Have a great studies on the clinical side, great connections with all of the hospitals, there and so we think.
There potentially could be some upside in the years to come in term.
Stephanie Okay. Once we have reimbursement once we're fully there I think us taking control of that allows us to really.
Yes really of a unified global presence with the pharma companies.
Okay.
Best thing.
Really.
Making kind of real.
The opportunity we have.
Obviously, we just signed.
And announced a partnership in China, as well, which is a very big market opportunity for us.
Yeah.
So youre going to justify the investment we're making.
That region.
Okay.
Thank you.
Thank you.
The next question today comes from the line of Dan Arias from Stifel. Please go ahead. Your line is now open.
Hi, guys. This is Daniel my second for Dan Arias.
So first for how many sorry to repeat it again.
On the reveal reimbursement a few questions.
So bear with me.
What is the timing on when we might see that and then also when it might be effective.
And then will it come under the current umbrella LCD for I'm already solid tumor cancer.
And then within the coverage decision is the language you initially expect to cover for serial testing initially or does that come over time.
And then lastly are you able to provide any specific studies that palmetto reviewed to come to their coverage decision I mean or is this just.
The comprehensive of MRI studies, you've done today within colorectal. Thanks.
Yes.
Dennis.
Let me give an overview of what the reimbursement.
Yes.
Reimbursement for a bundle of.
Essentially serial monitoring of.
Colorectal cancer patients phase II and phase III.
In that adjuvant setting the first test.
The first three months after.
Either treatment or surgery.
That individual and then subsequent testing can extend.
Time after that.
And that's a reimbursement that is I think now in effect.
We're still in discussions with them.
The look back period.
And that can.
Okay.
Perspective.
Billing opportunities.
Yes.
It's something that.
I think as a bank.
I would say.
Stone product.
And I think it bodes well for continued indication of expense.
For time.
Hopefully.
I think that answered most of your questions.
Anything else ever.
Yes.
Yes, Yes, you did.
It.
Is it going to be end of the same.
Obviously.
MRV testing in general.
That will give you the general.
But to this category.
Ours.
Okay. Thanks, and then maybe I'll just change gears, because a lot's been covered for Amira Lee.
Adding <unk> to shield in 2023 could you just give us an idea on what.
Logistics of that might look like in terms of data actually launching the test FDA approval and then all the way up to reimbursement. Thank you.
Yes.
<unk> about that and we think that.
That's actually a feature that's created takes these blood testing to even the next literally like serious I think a lot of conversation that into just the field of CRC.
How much blood can add value, which is significant and I think when you start adding some other cancer types with Europe IV.
Comp safely. So would you just simple stool tests subconscious did take one thing.
What are your organic Brian .
SaaS highly compliant tests.
But very relevant stuff.
We are going to upgrade our elites.
In 2023 to be able to look at lung cancer.
We've shown data are ready in case control studies.
So these kind of studies.
We have done.
Validation study in terms of sample collection since 2017, so its been a five year study for us to call.
And as part of.
Great work on that.
Actually Ron and talking more.
So I think that we've done.
The passport LDC.
Great.
<unk> steady for getting the FDA label.
We're doing our shield like studying in parallel that we started January of this year. We had January of this year, we had the FBI and it's got to take some time to really finished and raw mats and get there.
Steady.
Thank you guys.
Thank you.
The next question today comes from the line of David Whiston back from Piper Sandler. Please go ahead. Your line is now open.
Hi, Thank you for taking the question. So can we talk about some of the sensitivity metrics in <unk> testing and garden reveal I mean actually specificity characteristics one of the interesting things that we.
Have found in our checks from from things like asking though is that we found people tend to think about this in context of multiple testing in serial testing is kind of we just discussed and at that point a lot of that specificity the metrics <unk>.
Mount over time, so when we're thinking about specificity and what kind of numbers you need to really have commercial success with oncologist. What do you think we're at.
I think all of the data we've shown us.
When the 90 days, if not close to a 100%.
Sure.
So very confident about the performance of the us.
Okay.
Yes, there seems to be a misperception, but somehow.
If you don't have tissue information, but you can get.
Yes.
We haven't seen that to be the case and we're very confident about that.
The performance of the assay, we are seeing really good performance, both on sensitivity and specificity.
The beauty of it is just such a simpler approach.
So both blood and leading the sort of logistical balancing of undefined tissues.
Perfect. Thank you that's very helpful and I am not sure. If this has been asked I've been jumping around three calls today. So.
In terms of any of the incoming competitors, particularly private I mean, I think there is there is one thats been though a lot of money on marketing has a fairly compelling.
Proposition in the CGP space are you and they just entered liquid biopsy I believe a couple of weeks ago are you seeing any any any different competitive threats that you've seen in the past that you haven't seen in the past or is it continued to be kind of the same environment just given the fact that we really haven't.
Under penetration of liquid biopsy, and really frankly, and underpinned generation of CGP generally and then I'll stop there of course.
Yes.
Haven't really seen anything.
Some of these.
Competitor, Yes. This is Ben.
Almost normal in this space.
Everyone and their brother.
Yes.
Yes, it's a lot more difficult I would say then.
Putting a test out there there's performance brand is data.
Frankly, a lot of these competitors haven't even seen it.
A vacation or a poster from fab.
Fast.
I think we are now over 300 obligations.
The gardens technology.
Yeah.
Yes.
And it really hasnt changed.
Yeah.
Yeah.
Thank you.
Okay.
Thank you.
The next question today comes from the line of Karen <unk> from Bank of America. Please go ahead. Your line is now open.
Hello, Good afternoon.
Thanks for taking my question, So I've got two.
The first one is how do we see the ASP.
Rolling out into next year.
Realize you are talking about $2400 blended asps.
For 2022, but as you get.
As you ramp up revealed and tissue.
But you also have shield coming in with it. It's like is that 2400, a good number to sort of look at it as a base for next year and also and I. Appreciate you've got it sort of did youre going to have to build out your commercial infrastructure for shield, but could you give us.
A little bit more.
Clarity on some of the ramp, particularly as we sort of looking into 'twenty three in terms of what.
How are you going to do it and in particularly.
You have to have hire salespeople are you.
Are you going to meter. This ahead of guideline inclusion just just a little bit more clarity on how to sort of think about the opex ramp. Thank you.
Yes, Eric.
Mike.
I will tell you that yes from an ASP point of view.
One thing that.
That's very clear is with respect to guidance 360, you know we've had this ASP.
ASP of 2600, 2700, now pretty consistently for the last the last few quarters.
And.
The potential.
It could go up if we get some of the larger private payers start covering.
Got it $360 or CGP in total but.
As a base case, we would probably say for next year, it's going to remain remain the same and then overall from the from the blended perspective, yes, I mean, we've got good news now.
<unk> for Medicare We've got good news for reveal reimbursement from Medicare. So that's a positive for us I think.
It's going to depend on on volume.
And on the mix between <unk> hundred 60, <unk> tissue reveal responds and then Medicare Medicare So.
Foundry is probably.
A good starting point, but there are is.
There are potential potential movements.
Yeah.
And then from the Opex ramp I think.
From a sales and marketing perspective.
Last year, we invested heavily on the oncology commercial.
Commercial site really built out the commercial sales team.
And then.
Elliot also a later last year.
Those have the screening salesforce.
<unk>, which is growing.
Very well.
Going forward for the.
Screening.
We're really fill that out on a milestone basis and so we need.
But I think when we're on track for that.
Okay.
Reimbursement then we'll we'll look to.
So commercial launch so we've taken it.
And it's going to depend on those models.
Thank you.
Thank you.
The next question today comes from the line of Julia Quinn from J P. Morgan. Please go ahead. Your line is now open.
Yeah.
Hi, This is Amy Julia Thank you for taking my question. So I have two specifics on the review pricing encourage the first one is could you maybe I missed it could you expand a little bit on the potential cost for a review and when can we have some clarity on that is that we wanted.
Thank you Steve.
When can we expect to see any update on coverage for additional indications outside.
Thank you.
Yes.
Cause if that was the question.
Yes, it's something that.
Just like every other product.
So we typically.
Targeting.
Gross margins in the <unk>.
60, plus percent range and we're very confident.
And as we can.
Get a private payer reimbursement.
Really get to operational scale.
I would say in terms of the indication.
We announced that we're going to launch lung and breast.
The second half of the year in terms of reveal and we're working on Dave.
Data in terms of publication or at least some of it but.
Our data collecting more data from those studies.
We have been published.
So in the coming quarters.
That would be the basis for <unk>.
Further.
Validation data.
Okay. Thank you just a quick follow up can you give us a little bit update on the reimbursement or the G 260 response.
No there's no update there we're still in discussion.
Okay.
Alright, thank you.
Thank you.
The next question today comes from the line of Max Masucci from Cowen and co. Please go ahead. Your line is now open.
Hi, This is Stephanie on for Matt. Thanks for taking my question a quick one from me can touch on some early feedback.
Thank you.
Early access launch of the smart liquid biopsy platform along with your plans for your product.
<unk> launch of the platform.
Super.
Okay.
There's just.
I think it's really.
I think speaking the kind of imagination.
Our partners in terms of what they could potentially do with a Z.
Generating a lot of interest in terms of new studies.
Okay.
We think it's.
But has the right product market fit for the.
But it isn't.
Yes.
In terms of scaling.
Throughput to be able to handle everything.
Good demand for that product.
We'll keep you posted as we make more progress with that platform, but we're.
We're really I think.
Right on right on target right on schedule in terms of itself in Nevada.
It's going to be really the future of one of our products.
The oncologists.
Okay.
Got it that's helpful and a quick follow up.
On the strategic partnership agreements.
On China, how should we think about the impact to biopharma testing volumes going forward.
Yeah, it should be helpful.
A lot of our partners are global companies. They do a lot of work in China, which is quickly becoming the second.
Largest opportunity from the Biopharma side, and so it's going to give us the ability.
I'm really unify testing cross one one platform the darden platform. So all of our partners.
We're very excited about the opportunity level large pipeline already.
Building.
Sure.
<unk>.
Launch of the laboratory.
Oh.
Hey.
It's going to be very positive.
Yeah.
Got it thanks for taking my question.
Thank you.
Our final question today comes from the line of Patrick Donnelly from Citi. Please go ahead. Your line is now open.
Hey, guys. Thanks for taking my questions immediately maybe two quick ones on Eclipse can you just talk about you mentioned the USPS TF from 2006.
You view that as kind of the big potential inflection point of volumes or do you think we could have material contribution before that and then secondarily just in terms of confidence level that would be.
But the study size is correct and you guys have enough cancers any update I know you can kind of see the amount of cancers that you have so far can you talk about where we are and again conference level. The enrollment is the right number itself.
Yeah in terms of match your revenue contribution rebuilt.
We believe.
Theory get CMS coverage for Erik and I really have a material contribution to garner.
Topline.
You know I actually I'm, just getting more and more opportunities.
So you've got the volume project based on what Youre seeing today, so, but not zero contribution would be post CMS coverage expansion.
The approval.
Some time next year, maybe by end of next year at CMS coverage right after that based on that CD. So.
And the way before USPS.
But the USPS TF is a major milestone.
Take us through it.
That kind of leak it.
Definitely a catalyst.
A big catalyst volume and volume growth.
Regarding number of Crc's as I mentioned earlier right.
Alright.
In terms of when to on blinded study. We are just one CRC away from that 60 to 70 AD.
We are kind of in line insurer. This study what's happening.
It's not just.
So the aerospace already powered very kind of defending consciously theyre also setting a precedent for are there.
Just in terms of their absolute visibility at their review so Erik I'm constantly there that in terms of when we work on that.
Cyclic press the button on online that database.
He is also readout, but they have full control over that we believe actually.
That's a very good confidence of sky.
For the fourth quarter.
Understood. Thank you.
Thank you.
There are currently no more questions registered so that concludes today's conference call. Thank you all for your participation you may now disconnect your lines.