Q3 2022 Guardant Health Inc Earnings Call
Talk to any time sensitive information that is accurate only as of the lab broadcast November three 2022 with that I'd like to turn the call over to him.
Thanks, Alex Good afternoon, and thank you for joining our third quarter 2022 earnings call I will begin the call today by providing an update on our progress across oncology I will then turn the call over to <unk> for an update on our screening business, including progress with eclipse and multi cancer screening and finally, Mike will put.
A more detailed look at our financials and guidance for 2022.
At Guardant, we are dedicated to helping patients across all stages of cancer live longer and healthier lives with the data provided from our powerful blood tests in line with this commitment I would like to start off by sharing an example of how our recently launched Shield laboratory developed tests is positively impacting screening.
For the Noncompliant population.
Our shield LDC test is off to a fantastic start and has vastly exceeded our expectations with shield, we have a unique opportunity to impact outcomes at both the practice and health system level.
In one primary care practice over 100 shield tests were completed as of early October . This test primarily address a noncompliant population, who for one reason or another have not completed CRC screening buyers tool test or colonoscopy.
From these tests so far five individuals have completed a colonoscopy following a positive shield results.
Of these five four individuals have polyps, including Adenomas and one of the individuals with polyps has been referred for further evaluation for potential cancer diagnosis.
Redeveloped shield with the intent to reduce cancer mortality by ensuring more individuals our screens.
We are very proud to see that only after a few short months. This is already becoming a reality.
What time, we believe shield will be a powerful tool for primary care practices and health systems to boost screening compliance in their communities now turning to our performance on slide three.
We ended the third quarter with record revenue of $117 million.
24% over the prior year quarter.
Within this precision oncology grew by 29% while development services and other revenue declined by 1%.
Moving on to slide four clinical test volume reached over 32400 tests up 42% compared to the prior year quarter.
Turning to M. R D.
Shortly after last quarter's earnings call, we launched starting to reveal for multi cancer, adding breath and lung cancer to CRC.
Collectively the three cancers effect 6 million people annually in the United States alone, but obtaining tissue in these settings can be challenging.
This makes our tissue curry reveal as a a crucial options and we're very pleased to be able to extend the benefits of a reveal test to more patients. Following days expansions, we saw significant growth in the number of reveal tests ordered.
Finally, following the positive CMS reimbursement, we spoke about last quarter. We are pleased to report that our Medicare reimbursement rate for garden reveal for CRC was recently increased from approximately $3600 to over $4900.
We also made great progress over to build out of our ethics DMR integration capabilities and have the first group of practices expect it to be Onboarded in Q4.
Turning to slide five and Biopharma <unk>.
<unk> reached 6750 samples a record number of 40% on a year over year basis.
During Q3, we side rapid uptake of a recently launched smart liquid biopsy garden Infinity, which is available for research use by Biopharma partners.
And can it be accounted for more than 10% of our quarterly Biopharma volume just months after lunch were.
We're very pleased with this rapid uptake and believe we are just scratching the surface of infinity potential which will be a major area of focus for us heading into 2023.
Additionally, we received at the approval for Garden 360 C. D S. As a companion diagnostics for her too and non small cell lung cancer patients with activating her two mutations.
Add to her ever growing list of F. D. A approved companion diagnostic indications for Garden 360 C. D S.
Moving to slide six <unk>.
I wanted to take a moment to share a bit more about why we are so excited about infinity and the capability that brings to our customers. We often use the cellular phone analogy to try and put the significant step changes we are delivering into perspective and 20th working we launched garden 360 is the first comprehensive liquid biopsy, enabling them call. It.
The genotype their patients tumors with a simple blood draw rather than a tissue biopsy tests that is increasingly part of today's standard of care.
That was nearly 10 years ago.
We are now entering a new age the age of the epigenome.
With a smart liquid biopsy platform garden Infinity, we are shining a light on the area of human biology that has been largely dark and underexplored for a variety of technological reasons years of research pursuing early cancer detection has enabled us to develop a revolutionary new chemistry, and powerful informatics pipeline that enables broad and Tara.
<unk> of the epigenome at very low cost and.
Indeed with Infinity, we have achieved a seemingly impossible product form factor with 100 times, greater breath and garden 360 C D S and higher sensitivity.
At reasonable cost.
Furthering the analogy candela smartphone or infinity platform opens up countless new potential applications. Examples include predicting drug efficacy such as from PARP inhibitors, Nino therapies, assessing drug toxicity and tracking tumor dynamics with greater sensitivity and breath.
The possibilities do not in there.
We believe our epigenomics capabilities could lead to countless future applications for liquid biopsy that may one day extent indications even beyond oncology, we look forward to sharing additional details with you as we continue to develop these next generation capabilities.
I will now turn the call over to <unk> to provide an update on our screening program.
<unk>.
Starting on slide seven without an update on Netflix.
Since our last year and they call in the area I guess, we've made great progress Sunday Club studies.
We have all been patiently waiting for the results of this study and I'm pleased to report that we are very close to locking our study database read about 70 Crc's in the next few days.
This means we are now in the final phases and are on track for this study to reach out during the fourth quarter.
The remaining face consist primarily of the final steps of Q, a Q C checks of the clinical add lap dataset.
On blinding the database and data analysis.
Pending a successful right out we will submit our final scam a module.
Which remains on target for a cure for submission.
Moving to a slight eight at our progress which shell.
In May of this year, we launched our shield laboratory developed test with the ultimate goal of increasing overall compliance colorectal cancer screening.
And the United States Dara about Sunday 37 million people between the ages of 45 and 85.
<unk> hundred 20 million of these individuals are at average risk and eligible for CRC screaming.
The latest estimates show that only around 71 million people are current is screened for CRC.
At this screen group Colonoscopy is the main screening mortality and about 15 million individuals are being screened for CRC using still tests.
<unk> 49 million individuals are not getting screen.
This <unk> translate to a potential annual offer insurance you have 16 million tests for shape.
<unk> Triple testing.
Not only we are confidential can significantly increase screaming into unscreened individuals.
Based on our early learnings from the market.
We believe shield will make a significant impact across the entire eligible screaming population.
Turning to a slight ninth and are learning from shield L. D T.
By the end of the third quarter, we received more than 8000 orders from over 600 accounts far exceeding our expectations.
After only five months on the market.
Average steps are ordering per month for shield there'll be T was over four tests care provider.
Is much greater than the depth of ordering for color guard after many years being on the market.
We are excited by this uptake and believed the promise of blood screening for patience is becoming a reality.
The show patient <unk> continues to be more than 90 per cent.
As a reminder, redefined patient adherence as the ratio of blood samples received to the total number of tests ordered.
By comparison, one out of every three patients that received a cologuard kit.
Never it completes their tests.
With significant resources spent on.
Patient engagement that navigation programs.
These early data points of the power of truly take ratings CRC screaming into a patient visit at that high unmet needs that exist for screaming test that'd be able to be completed.
Turning to a slight tan.
We believed or multiple factors that contribute to the adoption of blood based trc screening tests.
First is compliant Santa on that name.
As I mentioned earlier 49 million eligible people are currently on screen.
The overall compliance of CRC screaming using available squirrel, pink and stole test has slots at.
And new modality of screening is needed to address this huge unmet needs.
For this on the screen population the best test is the test that gets done by the patients.
Second is the performance level of the tests, which impacts the physician that option right.
Level of CRC sensitive became a cliff salaried out is a key contributing factor.
Third is patient access to the test.
We believe once or she'll test is approved by FDA existing Medicare and C. D. It will open up access for millions of individuals and pathways for Acs in U S. P. S. T. A guideline inclusions relate to full access <unk> over time.
Fourth is patient preference.
We believe patient satisfaction for your transfer blood test over other modalities.
Acts as a major catalyst for a chat option over time.
And the final factor is the enhance utility of blood tests.
Over time blood tests will be upgraded to multi cancer screening beyond CRC.
This utility booster will further drive adds up shop blood based test and the longer term.
We have <unk> name the impact of CRC screaming have guidelines on axis now resent their name calls.
Now I want to spend a bit more time on the impacts of patient three fries.
Moving to a slight 11th.
This table is a readout from our survey of 559 individuals comprised of people who were at Compliances screening as well as those who were never screen.
And this survey we ask individuals to identify their previous training modality.
And he said blood tests were available.
<unk> they would choose next time.
These results seem Australia that is strong patience for your friends for blood based test.
For individuals who are previously screen with a stool test.
Seven out of 10 said no to still test again and voice is strong preference for blood over still testing.
Four dose for never being a screen.
Three fries for blood relative to still was almost 521.
Turning to slide 12.
Our experience, which sailed L. D T gives us confidence that the market upper transfer for blood screening tests could be higher than our previous forecast.
While the performance of the assay in terms of CRC sensitivity to use real farm. This starting point for physician adoption.
Overall adoption Outta CRC screening <unk> by more than this specification of the assay.
Patient pre France, and physicians ability to pump state CRC screening.
The ring a routine care is proving to be a very compelling value proposition for blood testing relative to other screaming with allergies.
We also believe adoption of blood based CRC screaming, we will accelerate and deepen once the test utility. It goes beyond just CRC and becomes a single screening test for multiple cancers.
Additional clinical you tend to to benefit will further give competitive advantage for blood tests relative to a single cancer screening of modality.
The future cockpit landscape between blood then it's still test will be a choice between a patient preferred blood test multi cancer screening.
First a single cancer CRC screaming using stool.
In summary, we believe longterm I, the upshot shield CRC screaming, you'll be boosted by patient pre France, and multi cancer screening across the spectrum up as a performance.
That's it <unk> will be a significant competitive differentiator once multiple blood tests come to market.
I'm excited about the future of shields and the potential impact for many millions of people.
This task Kennedy reduce the cancer mortality in a meaningful way.
I'm looking forward to get through a clips read out and continue to build this business.
That I will now turn the call over to my for more details of our financial outlook for 2022.
Thanks, I'm in Raleigh.
<unk> disliked tsetse total revenue for the third quarter of 20 twenty-two was $117 for a million dollars 24 per cent from $94.8 million and the <unk>.
Total precision oncology testing revenue for the third quarter was $102.1 million, increasing 29 per cent compared to $79.3 million in the prior year quota.
This increase was driven by year over year growth and both critical M. Biopharma sample volumes as well as by improves reimbursement for new products, specifically tissue next which received medical coverage. Another 2022 and review, which received medical coverage for colorectal cancer Media recently received your rates increased from approximately three.
Thousand $600 to just over $4900 precision oncology revenue from clinical tests with $77.8 million 27 per cent from $61.3 million for the prior year quarter.
So let's go to clinical checks for Ya.
2400, and increase of 42% from the same period prior year and an increase of approximately 3100 from the previous quarter.
As well as strong gotten 360, great a new products reveal tissue neck. Some response again contributed to the growth for the quota.
For the third quarter of 2022.
Piece of gotten in 360 within the range 2600 to $2700, which is consistent with the last few classes.
The <unk> clinical latest P was in line with our expectation of replacing by the $2400.
As we have previously stated the blended clinical ISP will continue to be influenced by both the volume mix of gun 360 of new products as well as the reimbursement received from new products.
Position on Cold your revenue from Biopharma tests in the third quarter totally $24.2 million or 30.
35% from 17.9 million for the price of a quota.
<unk> problem with William Strunk.
I just want to samples to 6750, which was a 40 per cent from the prior year quarter.
<unk> in the third quarter was approximately $3600 a slight decline from the prior year period between line with the price quote.
Development services another menu in the third quarter total $15.4 million down 1% from the prior year quota.
As we as previously noted while we continue to see strong demand for a development services. We still expect that 2022 development services and other revenue will continue to be lower than prior year. Several companion diagnosed it projects successfully completed 2021, new projects will take time to ramp up.
Gross profit for the third quarter 2022, $76.9 million compared to a gross profit of $64.0 million in the same period of the prior year.
Gross margin defenses continues to be in line with our mid sixties target B 66 per cent compared to 67 cents and the <unk>.
Operating expenses for the third course of 2022 with $221.5 million, an increase of 29% completed the $171.3 million in the third quarter of 2021.
Net loss was $162.0 million or $1.58 cents to shift for the third quarter of 2022.
<unk> $107.5 million or one dollar and six cents per share.
Third quarter of 2021.
Moving onto non-GAAP financial measures on slide 14.
non-GAAP operating expenses exclude stock based compensation and relate to them pay a payroll tax payment.
Besides I should've intangible assets and contingent consideration <unk> operating expenses for the third class of 2022 with $200.5 million or 48% increase from $135.1 million in the prior year closer.
This increase was driven by the investments made over the past 12 months across both oncogene screaming businesses, primarily in the commercial infrastructure and then continued development of a product pipelines and clinical data.
2022, we have continued to invest in progressing got strung pipeline of oncology projects as well as in generating clinical data just pull the reimbursement.
The screening 2022 investment has been focused on the commercialization about shield L. D T test.
Completing the day to read that for me clips Dpma submission for Sci Fi device, and then continued development of a multi cancer screening test.
None got net loss was $120.8 million or $1.18 cents per share for the third quarter of 2022.
Compared to $72.5 million or 70 cents to shop for the third quarter of 2020.
Adjusted EBITDA was a loss of $112.8 million in the third quarter of 2022.
Compared to a 65.2 million dollar loss coach of 2021.
We decided just an EBITDA is non-GAAP net loss just for interest income tax depreciation amortization under the income and expense.
So I need to the balance sheet, we entered the first <unk> 2022, with approximately $1.1 billion in cash cash equivalents a market to go with that Securitas. We continue to be in a fortunate position to have sufficient catching up on the sheet to fund the business for the foreseeable future.
We will continue to actively manage capital allocation with a go to longterm profitability.
Turning to our revenue outlook for the full year 2022 on slide 50.
We are revising our revenue guidance from the previous range of $468 million to $470 million to now be in the range of $440 million to $450 million.
Could you provide guidance represents growth of approximately 18% to 20 per cent compared to 2021.
There are a few notable changes to our guidance since at Q2 N's call in early August .
Firstly with regards to a clinical volume.
Below our previous expectations, we were pleased with both the 42% year over year volume growth under sequential volume growth, we saw it in the third quarter 2022.
Which we view as a strong leading indicator of the trajectory of our business.
I expect to see sequential clinical temple growth in the fourth quarter. However, as Hell, Let me notate, we continue to feed challenges with practices still experiencing staffing shortages of lingering access restrictions the majority of which we have to expect it to be resolved more quickly.
In addition to the fourth quarter.
We also saw an impact on our volumes due to the hurricane in Florida, which is a major region for our business.
Give me an idea today growth at the end of Q3 Faxes just mentioned, we now expect full year clinical volume growth to be approximately 40 per cent.
Although we consider this can be a very strong growth is lower than the 45% level that'd be previously died.
Secondly, reimbursement timing has affected our forecast, although we receive Medicare reimbursement the tissue make some revealing trying to switch to.
Our previous guidance I'd assume Medicare reimbursement for responds in garden, and 360 C. D S reimbursement in Japan. During 2022, we now receive reimbursement will come after the end.
The mid point of the range for $145 million.
<unk> guidance as soon as flu, yet biopharma volume growth of approximately 40 per cent compared to 2021.
Four year development services and other revenue of approximately $55 million.
Although we have a good line of sight to the end of the year for most of our business.
Potential swing items, which include the timing of proceed until elaborate contracted biopharma samples, which could impact our ability to process and recognise hurting you by the end of the year and the timing of revenue recognition related to some of that companion diagnostics project milestones, which I dependents partners.
While the reduction in our revenue expectation for the disappointing to US we believe our core business is as strong as ever demonstrated by the approximately 40% year over year volume growth. Both are critical biopharma businesses. Despite the challenging backdrop throughout the year.
Finally note that are clinical.
Clinical volume does not include screaming volume.
While we are highly encouraged by the strong reception to the launch of our shield L. B T test.
Not expecting significant revenue contributions 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 that permit portfolio without shield elleithee test 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 up the call to questions.
[laughter]. Thank you as a reminder, if you'd like to ask a question <unk> one on your telephone keypad.
If you'd like to withdraw your question you might press start too please.
Please ensure you unlimited lately when asking you a question.
Oh first question for staying comes from Puneet Suda from SBB Securities Puneet to your line is open.
Hey help me early thanks for taking the question. So first one is really on the timeline and learning from the Shield launch you mentioned September October timeline before and that was all already extended from the summer. So I mean I appreciate your lucky in the database.
With 70, CRC, but what is the level of confidence you have at this point to have the data released by September and this did not stretching to Q1 and then on the learning side from the 8000 orders that you received I mean, it's great to see the 90% of <unk>.
But just wondering what what have you learned about the performance of the test in terms of sort of sensitivity specificity. There in the real world setting I mean I appreciate does it not enough data registrational trials, but just wondering what what learning should have on the performance there and have a quick follow up on the side.
Yeah. Thank you plan for a question I'm, sorry, I think first starting with the eclipse trolley right out as we mentioned that last.
Yeah.
Last name call.
The mentioned actually navier expecting it cause I was trying to read out to be Q4.
As I mentioned a prepared remark.
Then next very few days, we are basically like King the database. So it's.
It's gonna be Q for a <unk>, so I'm just gonna be soon.
Regarding actually the she'll there'll D T and the 8000 samples that'd be content.
We continue to be very pleased with the level of actually adoption feedback that really we are getting on the marketplace.
In terms of the performance, it's very hard since we are not doing registry steady to really track of the patience, it's very hard to get a sense of the true performance of the task I need to leave your hearing their stories, we share the patients or like you know a few patients stories and are prepared remarks are a bunch of other anecdotal cases that we have here.
Uhm practices, but it's hard to connect to those anecdotal positive stories to review the performance of the tests, but all in all just based on the positivity rate that'd be or singing or device in terms of what's getting reported.
It's in line with what we think the device should generate so, but it's very hard to connect that to CRC sensitivities change.
<unk>.
Prevalence of CRC is very low.
Okay got it and then on the $20 million in your lowering your guide by $20 million Bitcoin I mean that is still.
Risible.
How many can you elaborate a little bit on the stopping challenges and other things that you're seeing in the market and why is this sort of unique to the clinical side and then you know I think the question was getting frequently get is on the competition side. Obviously G. 350 has been well established product in the marketplace, that's up to you and.
And then reimbursement too so are you seeing any impact from the larger panels in the market.
It's surprising to see you know this lowering I forgot it thank you.
Yeah no. Thanks.
Obviously, we said some really high I think expectations of the beginning of the year for 50% volume.
Your volume growth and.
We're heading both 40 per cent, so still fantastic growth, but not what we expected at the beginning of the year and that's largely just because we expect you to snap back from some of the lingering effects of Covid and the second half of the year and it just hasn't happened.
Just as we expected that being said.
Let me look at the underlying metrics of the business in terms of number of physicians that are ordering per quarter.
The ordering our share in terms of liquid even how we're doing on the M. R D Mart market.
Revealed of the month or quarter for us in terms of the expansion in terms of breath.
Breast and lung.
We're very pleased.
Super pumped about where the business is going and.
And we're not even getting started in terms of what we're gonna do with some of the technology and then 23 and so we feel like we're very well.
<unk> of this market and where we are obviously we thought.
More explosives, but 40% year over year is.
Still very very strong growth and we believe we're growing faster than the market. So we believe we're still taking sure and we're a dominant force in the liquid biopsy field.
Okay.
Hope back into the queue.
Thank you next question comes from my check Mehan of net from research Jack Your line is open.
Thank you good afternoon, guys Uhm wanted to start with a focus on to reveal uhm what was the catalyst for the price increase with Medicare are there any other changes in the coverage there and similar was there any medicare reimbursement quarter or back pay that you've received yet.
Yeah. So we had ongoing discussions with <unk> around pricing, we believe the <unk>.
Missing didn't quite reflect some of the value in some of the.
Kind of capabilities of the test and they agreed with us and revised pricing. So it's the same indication, but just a much better price that we now have an alternate over to Mike for them. The second point, Yeah, Jack on the <unk> <unk>.
Medicare reimbursement yet for four revealed for the for the eligible samples we were able to book revenue this quarter.
And actually that reimbursement coverage was backdated to this thoughts of the year. So so yeah. This call to includes that sort of ketchup on those samples yet today that had been eligible for for reimbursement from Medicare.
Got it and that might cause a follow up for you you know and tell me and merely kind of referenced I think you did as well kind of a challenging environment.
Can you just talk about you know how you're planning to manage costs did you go into 2023 and is there any color you can share around investment levels on sales and marketing and R&D just any color everything about cash burn would be really helpful.
Yeah, I you know I.
I think [noise] and we've said it sort of on previous call that.
Managing OPEC spend.
Very very carefully and I think with the change you know revenue guidance actually with the way that we <unk> Opex in Q3, and what we'll do in queue for there's no real impact to to the bottom line for us.
With that revenue reductions so yes.
Taking steps were looking at everything that we.
We invest in.
Again, we said before as we go as we go forward, particularly on the screening business. We know that we're gonna have to build up the commercial infrastructure as we get closer to F. D. A approval and so we're still mindful and taking those milestone approached increases in an opaque so.
And again, we follow very closely and we're managing.
Pretty tightly.
Great. Thank you.
Thank you next question comes from <unk> Goldman Sachs match your line of <unk>.
Hi, good afternoon. Thanks for taking my questions, maybe just on Mike your comments around the reimbursement till it is impacting guidance in Japan and other places do you see that it's just sort of a few months with age there's no other issues in there that would cause that to to last longer.
Expect an early twenty-three.
Yeah that that that's right. We we were hopeful for both for both response and gotten 360 C. Dx in Japan that we'd get reimbursement well well before the end of.
Of the year, but it looks like that's getting pushed back into into 22, and three but there's no fundamental issues where.
Continuing to have a dialogue with <unk> with with respect to responds and we know there's a lot of work happening in Japan on that on the reimbursement from so both of them were hopeful far will come relatively soon in 2023. So it's just the timing impact for us.
Great. Thanks for that and then I'm really just on that on slide nine where you had the four task provider per month, you said it was above kind of your expectations for what it would be what where you're kind of expectations and what do you think.
What do you think that could potentially go and then what's obviously very early.
But in terms of what you are now longer term expectations are on TUSK for provider basis, what are you thinking.
And in terms of facts patterns that we kneel renewed like the what the industry benchmark is in terms of the utility of tests My color guard to some extent like the utility upset like when you look at history called <unk> to my best knowledge and access man.
Like almost from beginning to now many years after.
The utilization of that test prescriber per month has been like less than one order of mind <unk>.
<unk> that actually Don that need here is very deep.
But industrial benchmark is industrial benchmark literally seeing like just even less than five months after being in the field.
The test, which is totally brand new kind of even modality still we don't have you been our eclipse draw. The Readouts. We don't have that yeah prove all we don't have coverage policies, we are not in any guideline.
And literate, even Joseph right off the bat, you're saying there's more than four.
Cats fair provider Paramount.
It's a lot of excitement for us, it's really a confirmation of the reality that unmet need these big and the patients that we are talking about are not the patience, which are like in the rural area that they don't have access to anything it's very hard to get access to them.
These are really their patients at the doctors are saying and.
Now these prescribers or dying or chest. Some of them are the same prescribers were using other kind of mortality. So we're very excited but I'll also if you don't Wanna get too ahead of our skis and me after my interest to see what happens here, but it's pretty good.
Great. Thanks.
Thank you next question comes from my <unk> from kind of Cold <unk>. Your line is open.
Hey, Thanks, guys for the questions I'm, just thinking out of the cost <unk> gets onto that $200 range over time I know, it's been touched on before I just want to kind of revisit that given extensive question, which is on recently so hidden gardens clinical causes professor so currently around like a thousand dollars per test.
Question remains like what gives you confidence there's a path there to get to that 50% margin, perhaps $200 and Cox per test on that 508th Street.
You think you've said in the past that if.
Illinois lowered it then just cost should we get down to that hundred dollar protests on me they did lower down to price per gig of two bucks for <unk>, how does that affect your thoughts on Cogs in the market profile she'll every time.
Yeah sure maybe I'd start on it might you have some additional comments please freelance so.
You know the maybe starting just from the sequencing cause sequencing causes. It you know macho part of our beloved macho, but not a significant part of our <unk>. So yeah.
<unk> some sequencing cost reduction in a roadmap for the next three years, but not to the level to actually solve the new technologies or even something new promises by.
<unk> actually <unk>.
Kind of new assessment for us all of that would be <unk> really the one that that is stuff that we have to do are mainly around process engineering and additional information to take labor out of our systems Lara.
Large extent and you know amortize are fixed costs over a larger volume.
Without going into a lot of details now that liked to be kind of ran a clip samples on commercial samples effectively like you know via running relatively at high throughput still like now the other half half a million sampler year kind of throughput and our cost structure is not 200 dollar yet, but it's pretty reasonable.
Believe that this scale that you're in so we just need to reach the higher volumes and improve our processes my introduction of automation and I see this.
<unk> for us that we can get to the 200 dollar kind of a cox and gross margin I'm at the 60%.
Yeah, I mean, I think the only thing I would reiterate because kind of thing you mentioned.
Relative to God, and 360, Cokes and as you mentioned you know even with just the eclipse volume and what we've seen from the <unk> to launch a coke zones shield currently lower than the God in the 360 Coke. So we've made really good progress in such a short time on the on the coach windshield.
Okay that was great. Thanks, Mike merely Mike Mike just a question for you.
Maybe on next year's a previous through the street was modeling over 30 per cent top line growth for garden and twenty-three just given the guy down today and that lower run right kind of come back to the 20.
22.
Are you guys more comfortable with like a lower grocery for next year, maybe like in the 20% range I'm I'm, just kind of asking because like in theory. The comp is better for 2023 and I'm just wondering what your thoughts are now given to us.
Pieces, I kind of like a relatively new tests.
Yeah, you know [noise], we don't we don't want them, particularly give out 2023 guidance today and his home and mentioned, we feeling really strong about the fundamentals of the business as we sort of go out of the crowd of 2022, and we've got 40% year over year volume growth in both clinical mm.
Biopharma, Inc.
We are trending towards this year on total revenue is around about 20% year over year, and obviously will be starting got a bit of a lower base in queue for so.
We're probably at least comfortable with that going into 2023, but now I'll plan, obviously will be as we usually do giving 2023 full year revenue guidance. When we do our queue for a call in February next year.
Okay. Thanks, Mike <unk>.
Thank you next question comes from Mark Massaro from Beachy I G.
You're lying that's now open.
[noise] Hey, guys. Thanks for the questions maybe the first one on reveal CRC nice to see the reimbursement.
Reimbursement rate increase their to 4900 can you just confirm that you're still planning to obtain coverage in the surveillance setting because how may I think you said it's for the same indication and then are you expecting.
To submit additional information to secure that.
Yeah, we have a number of studies federal compiling and they're under way that would go into a sort of subsequent submission to be able to secure the surveillance heading indication.
Okay and my second question, obviously, we're all looking forward to the eclipse data.
I just wanted to ask about the market sizing you did.
The 100, sorry, $120 million average risk individuals earlier this year you size. It is 110.
Just the difference, including the 85.
Age cohort from 84.
Cause I don't think there was a huge population increase in the U S. Just trying to get a sense for why you know that Tam seems to have increased from you know a few months ago.
Yeah. So actually this is I'm ready so solve the you know as we are going I shall we are kind of.
Updating our models based on all the latest information I think one of the one of the important changes that has happened recently is actually introduction.
<unk> screening in the younger age patient population of 45 to 49.
That's a relatively kind of a new addition to their market sizing and you know it's just based on.
As you go based on that guidance upgrade like what fraction of those for that specific here, which could be eligible I think that's one of the.
Main contributors if I recall rights based on.
<unk> 110 versus hundred 20.
Okay. Thank you.
[noise] 19, our next question comes from <unk> from Morgan Stanley teach US your line is open.
Hi, This is Neil <unk>.
Certainly reveal and one of the push vaccine for one of your peers. These definitely shifted CMS in regards to evidence requirements for P. M. S and has driven any changes in your approach if you'd like to expand coverage for therapy and.
Receive coverage for breast and lung down the road.
No I think we have a better understanding now obviously you know all the dialogue that we've had and.
Bottom line is you need clinical studies clinical validity studies showing the performance of the test published in peer.
To review journals and so that's that's the bar for everyone and.
In this space and it's something that we are committed to and.
We have underway in terms of the studies for the various indications that we're pursuing.
Okay.
Got it and you know you mentioned the headwinds on the clinical side.
But in Biopharma are using any delays clinical trial enrollment sandwiches, that's given some of the recent challenges peer and there's also been some noise around budgetary concerns for far on biotech.
Dynamic that you're seeing based on your recent interactions.
Yeah, Yeah, I know I I.
I think we have a very strong growth on the biopharma side, but that being said there have been slowdowns and some of the prospective trial.
<unk>, let something we continue to to monitor the Evans progressed as fast as I think farmer someone perform a partner who would've liked and I think it's still TBD in terms of some of the budgetary concerns related to inflation reduction Act and Tom.
Great and then one quick one for me would you be able to quantify the catch a payment to be soffer reveal in the corner.
No.
We're not break breaking that out I think.
[noise] in the past we've talked about.
Really breaking out shall our volumes between reveal 360 tissue in response and so yeah. We're not gonna have sort of provide the detailed on that that got your payment.
Got it I appreciate that thanks.
Thank you Uhm next question comes from Amy Klein from J P. Morgan Amy Your line is open.
<unk>.
Hi, Thank you for taking my question I have to question mm shell.
First I appreciate that.
Alright, So I was just wondering how do you address.
<unk>.
Population definitely to achieve that goal.
<unk> current status.
Support the revenue in 2024.
Scott.
[noise] Yeah, right now you know for the Shield L. D C actually the main targets crosses just because it's <unk> kind of position and marching that test for unscreened patient population versus really pushing hard on changing.
<unk> screening so all the kind of the depth of <unk>.
Ordering that I mentioned in it for you today, while you're just promoting for really on the screen patient population.
Regarding the size of the sales force you know our primary shall team it's about 100 people now.
And we're gonna expanded in a milestone base way effectively as we'd be able to ASB, we're gonna increase our investment on the commercialization. So as we get actually two F. D. A approval I'd be risking that you may increase the size of that channel and as we ethics that we'd be able to E. S. P N.
The top line for that business.
Increase our investment on primary <unk> observation of the test.
Mmm, Okay. Thank you so much that question you ask you a question.
Like to travel trial so.
If you can share like what does the staging makes the looks like so far and finally.
Finally information <unk>.
Because of your previous study showed like.
Two 3% one dollar <unk>.
Between that early stage one two sensitivity first of all can we expect to see similar patterns.
Perfect. Thank.
Thank you.
Yeah cause.
There's this question <unk> main focus on our trial operation focus supposed to get to this final analysis of our top line information to see a really wants the sensitivity specificity of Crs, Yeah Ash adenomas.
In the study.
So we expect that top line data to include those information for a fraction of CRC is actually that patients are staged but you know it's kind of a lagging a formation, but we are gonna have.
This information updated by the time that we <unk>, we need to include that information or PM a package so but in order to have the all the staging for everybody that could take some time.
[noise]. Thank you.
Right now.
Thank you next question comes from <unk> from Cowan Max Your line is open.
Hey, Thanks for taking my questions.
So first one that.
Yea detection sensitivity range and the <unk> data releases, Additionally, wide and 11% to 32% based on 51 cases, and you are able to incorporate the proteomics and <unk> components into the <unk> Ah clips asset for locking it down so number one.
It'd be great to hear just generally yeah, how many total sure. She cases, you're able to train them that final optimized assay on before locking it down and then.
Number two there can be heterogeneity size differences or advanced adenomas. So if you could offer any detail around the profile of the types of day 18 says that you've training <unk> any steps you've taken it better addressed.
Address the diversity that does exist even in the population.
Yes, I did I in terms of training, it's like how <unk> is kind of now relatively pretty old now. So we included thousands of cases like.
I think.
Over 506000 cases, I found a healthy normal size.
On the <unk> site I think it was like more than 2000 2500 cases I believe.
CRC that cross different stages with the heavy focus around stage one stage too.
An adverb Saturday now my side, you know getting Admass I didn't know my cases for really screening patient population <unk> colonoscopy. If you have the limitations on that's why.
We you know an hour training said, we had a few hundred cases I'm you know far L. D. T. Validation, we just had 50 cases as part of that validation.
So and there are four months, we saw was about that 20 per cent in L. D. T. A validation, it's really gotta get characterize very nicely as part of a clubs.
A high percentage of the cases of advance I didn't know what to expect based on three overall is add mindset and alright, So it's gonna get very accurately actually quantified.
But as I mentioned always from my perspective, the most important thing is ready to CRC sensitivity and that's the pattern mature at that.
I'm gonna pay a lot more attention when we get today clubs trial or without that's what period hearing from our physician that'd be friends surveys.
That's really that's the center point of the performance when we report that clubs.
Yeah. It makes sense final on for me and I think there were some revealed data presented at an International conference late last month's and we've received some imbalance on the on the data.
Asking <unk>.
Questions about the Kaplan Meier survival curve that was presented so I just wanted to ask an open ended question and just get your your perspective and sort of keough durations from that recent data right out just so we can round out our perspective.
Which which data reader I missed the first <unk> mmm.
Was it.
In late October at digits, Yeah at the Japan Society of clinical oncology.
In late October .
Yeah and that.
Exactly which one you know that was but database when the cosmos.
Cosmos, Yeah, we had you know.
Study that we've been doing you know for some time and.
CRC and.
I think that study I think we're very pleased with the output and data I think there was some confusion around.
Some of the numbers and the extra expresses what was presented but it was <unk>.
Pretty much it I think in line with data, we had seen before and.
I think one of the.
Challenges of any new datasets are just the time it takes to mature in terms of really waiting for some of those patients too.
You know.
Really detect a recurrence in the sort of clinical setting, but it's it's relatively in line with I think some of the data with it see previous one.
Great.
Figured it was worth getting some some additional perspective, but.
Thanks for taking my questions.
Thank you next question comes from Andrew <unk>, Andrew Your line is open.
Good afternoon. This is Chris and offer an intersection of questions.
Just for some lingering access restrictions I think last time are you pregnant about 60 per cent pre pandemic February are today and you kind of see this is the new normal I'm just curious what you didn't get a garage improvements from here.
Yeah, that's part of it but you know I think another aspect of it or the the sort of shortages or we're seeing in step levels you know the whole.
Travel nurse kind of issues and.
The difficulty in terms of staffing some of these hospitals and these practices and that just leading to a sort of.
Cap on the sort of growth rate and acceleration that we can see in the near term, but we know that these.
Issue, they're gonna resolve eventually until we see them as very much kind of short term issues and not a reflection and sort of any intrinsic.
Element of our business in fact, as I mentioned before our business is really fun.
Oh cylinders from the number of physicians that are engaged number physicians that are ordering the depth of ordering. So we're we're very pleased in terms of the progression of the underlying metrics.
We see this as resulting eventually in we do think.
That that sort of 60, 70%.
Access will will probably be there for some time, but we think the staffing shortages should certainly resolve.
Okay, and what on the Oh, you less opportunities can you just talk about how you're thinking about incremental revenue set those can drive.
Between Japan, Celiacs reimbursement coming soon you brought out the rest of the immune J a.
Partnership lagging spending and one coming in the UK I mean is it right to think about all these opportunities sort of swimming is meaningful incremental revenues here in the short term.
Yeah, maybe it would make you know talk about the specifics, but I'll just give you a kind of overview of how excited we are about the Japan opportunity I mean, it's it's and it's a country that we've really built some very deep partnerships with and hundreds of practices over the last.
Five years and.
We have a lab that's open there were one of the few international company that has a physical laboratory presence.
Space.
And comprehensive genomic profiling in Japan.
And we're really hoping to get a reimbursement very soon there for a regulatory approved garden 360 test.
So it's you know obviously that's been delayed from where we thought it would initially happened one of the challenges in Japan that you can't actually so and disorder than term period between regulatory approval and reimbursement and so we're sort of in this limbo, there and but once again once we.
Good reimbursement, that's a market that it's about 40% as large as the U S population with reimbursement rates that are as good and better than a single payer system. So it's a fantastic opportunity. We obviously just announced a partnership in China with Edicom, that's a very big opportunity as well and then we're also.
Making good progress in Europe as you mentioned, we think this will increase in the larger percentages with a ribbon.
Yeah, maybe to watch [noise].
Obviously.
Q S revenue is below 10% of our total revenue at the moment, so relatively small, but you know how many how many mentioned the opportunities ahead of us and we'll.
Start to see the Japan revenue come through next year in China that will start to add to answer the Biopharma revenue line.
Then we've got the labs coming on line in Europe , starting to generate revenue so without breaking out the the specifics we feel excited and that maybe you can start to contribute next year.
Okay.
Thank you next question comes from Patrick is Emily of Fishy, Patrick to your line is open.
Hey, guys. Thank you for taking the questions lots of them cover maybe just a quick follow up for you helped me just on the staffing shortages.
It seems like you're pretty confident those will be relatively near term did you see improvement kinda throughout the quarter and even into October just wandering in terms of kind of that volume progression trying to think through the trajectory as we work our way towards twenty-three if that's easing at all or we're kind of still pretty.
Heavy and you just kind of looking forward in assuming it could easily get into twenty-three. Thanks.
Yeah, No I mean, we definitely thumb continued improvement that's why I think despite.
Where we are on some of the guidance we.
Are very pleased with the sort of underlying metrics. We obviously unexpected you know kind of a much greater snapped back and resolution of some of these effects that are continuing to to linger, but that being said.
Yeah, we we continue to see very good growth on almost every.
<unk> business in terms of the core business is growing solidly.
Certainly reveal and tissue products.
Okay.
<unk> final question for steak comes from my <unk> from Bank of America.
Caroline that's open.
Hi, guys. This is nuclear gone for Derek. Thank you for the question just a quick one here for me. So I wanted to start start off on you know the delay another competitor I called out farm a sample delays in trials will it can you talk a little bit about how much of an impact it wasn't a quarter and how <unk> has been so far in for Ya.
Yeah [noise] on the <unk> on the Biopharma.
I don't know if we saw any specific delays two samples.
In the quarter and again, we reported really strong.
Year over year growth on Biopharma samples I think.
Collecting the prepared remarks.
One of the swing items is gonna be.
The biopharma samples that we get them by the year end and we need to get those in time to process them and recognize the revenue and I think some of those delays, whereas we're anticipating and so.
We were looking at that as a sort of a swing item in this sort of $2 million to $3 million level.
But you know if the samples don't come in by the end of the year, we're expecting them a little bit later in 2023. So far is it yeah. It's just the timing rather than a reduction in overall volume on the Biopharma business.
Got it thank.
Thank you.
Thank you. This concludes the conference call for today, you may now disconnect your lines.
[noise].