Q1 2023 Guardant Health Inc Earnings Call
Hello, and welcome to the golfing, how first quarter 'twenty 'twenty tree find out sure about scope.
My name is Lauren and I'll be towards next Youku today.
That'll be an opportunity for questions at the end of the presentation.
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I will now hand, you a choice of its coupon Vice President Investor Relations to begin Alex. Please go ahead.
Thank you earlier today Guardant health released financial results for the quarter ended March 31, 2023, joining me today from garden or help me out <unk> co CEO immediately <unk> co CEO and Mike Bell Chief Financial Officer.
Greg Eagle Gardner, Chief Medical Officer will join for Q&A.
Before we begin I'd like to remind you that during this call management will make forward looking statements within the meeting Federal Securities Law.
These statements involve material risks and uncertainties that could cause actual results or events to materially differ from those anticipated.
This call will also include a discussion of non-GAAP financial measures, which are adjusted to exclude certain specified items additional information regarding material risks and uncertainties as well as reconciliations to the most directly comparable GAAP financial measures are available in the press release guardant issued today as well as in our Form 10-K filings with SEC.
Guardant disclaims any intention or obligation to update or revise financial projections and forward looking statements, whether because of new information future events or otherwise information in this conference call is accurate only as of the live broadcasting with that I would like to turn the call over to him.
Thanks, Alex Good afternoon, and thank you for joining our first quarter 2023 earnings call.
I will start off today's call today, we're providing an update on our progress so far in 2023 and go into more detail on our progress in therapy selection and then R&D.
I will then turn the call over to Amir Ali for an update on screening and finally, Mike will provide a more detailed look at our financials and outlook for 2023.
Ed Garden, we have built one of the fastest growing platforms in diagnostics, coupled with what we believe is the most exciting pipeline in the industry to fuel long term growth.
Today, we are the market leader in therapy selection and technology innovators at the forefront of MRV in cancer screening.
All of this enabled us to help patients at all stages of cancer live longer and healthier lives.
In line with this I would like to start off with a patient story.
A 43 year old woman with no history of smoking winter physician with chest pain.
A C T scan rollout of pulmonary embolism, but.
The $3 five centimeter mass.
Following additional tests he was diagnosed with stage III lung adenocarcinoma.
Further testing from other modality has indicated the tumor was negative for Egfr and Ross one.
However, our gardens <unk> liquid biopsy revealed several somatic mutations, including <unk> fusion, making drug candidate with a targeted therapy and tracking that.
Following treatment for oncologist ordered imaging to confirm whether or not you with responding to therapy, which came back and conclusive.
Hey Garden response tests ordered and detected no Cte DNA, indicating she was responding to therapy.
One year into treatment. She continues to do well with an over 50% reduction in the primary tumor mass and complete resolution of other nodules. Her story illustrates the power of the combined Garden 16 response testing regimen.
Doctors, making these crucial decisions to deliver better patient outcomes.
Turning to slide four we started the year off strong with our first quarter revenue growing 34% to $128 $7 million.
Garden's based safety continues to be the main growth driver with increasing contributions from reveal and tissue next our team continues to focus on delivering superior execution operations and customer service.
All in all we accelerated our growth in the quarter and the stable market conditions driving market expansion and a backdrop of notable retrenchment by competitors.
Turning to slide five.
We are pleased to report that in mid April we received Medicare reimbursement for Garden response. This is our fifth assay to receive Medicare reimbursement.
It is the first blood only liquid biopsy for immunotherapy response monitoring representing a major step forward for patients.
The overall testing program will consist of a garden three or six months after treatment initiation followed by response test in the appropriate timeframe.
Our rate for response has been finalized at $1943 and we are exploring <unk> pathway for this test in the medium term, which should increase pricing further.
Turning to slide six after another record quarter in which we continued to significantly grow market share. We wanted to take a moment to spotlight our core therapy selection business over the years, we have built on the foundation of the first FDA approved comprehensive liquid biopsy to create what we believe is the strongest platform in oncology diagnostics our entire therapies.
<unk> portfolio is now reimbursed by Medicare with reached over 300 million covered lives. When they include commercial payers, we have established ourselves as technology and market leaders with greater than 300 person commercial team across clinical and Biopharma over 12000 ordering oncologists more than 150 Biopharma customers also.
Ordered by hundreds of patents and clinical publications.
Achieving the scale is not a long term vision, but at our doorstep for therapy selection, which represents more than 95% of our total revenue, we expect to generate more than $500 million in sales. This year with clinical revenue growth of greater than 25% gross margins above 60% and reach cash flow breakeven in six to nine months.
<unk>.
Moving on to slide seven.
Clinical test volume reached over 39100 tests in the first quarter up 45% compared to the prior year quarter.
Carbon 360 continues to be the main driver with continued strong growth in lung cancer with a significant uptake in breast cancer. Following our <unk> approval for ESR wouldn't get patients early in the quarter.
Garden reveal in tissue, that's added to the growth as we rapidly onboarding patients in MRV and also gain market share driven by the recent launch of our AI powered barden your galaxy tissue offerings.
We continue to execute and building account depth with more oncologists ordering more garden test again in the quarter. This is due in large part to the leverage we are gaining from past investments in EMR integration processes and systems we.
We saw a nice upward move in our gardens 60, asp's supported by mix and positive momentum from commercial payers. We are closing in on coverage from all major commercial payers in the U S for gardens and 360, given the addition of United During Q1, Aetna Humana expected in Q2 and others that are in advanced discussions how.
<unk> has been a major driver and it is helping us to address the remaining coverage limitations.
All of this providing a tailwind for ASB.
Turning to slide eight we had another solid quarter of Biopharma growth with volumes up 21%. Our partnerships continue to rise and we have now converted more than 20% of our mix to garden Infinity, our epigenomics or smart liquid biopsy based panel and also continued to see strong utilization of garden 360, Cvs and.
We announced another ESR one collaboration and are on target to start seeing China sales ramp up later in 2023.
Turning to slide nine with our strongest quarter, yet in breast cancer I would like to highlight the transformational potential of better CTX can have for breast cancers that develop and yet SAR one mutation.
Between 65% and 80% of breast cancers, and women are estrogen receptor or ER positive and up to 40% of patients with ER positive <unk> negative cases will develop an ESR when mutation, which qualifies them for a new classic trial did therapy <unk>.
Yes, Sir one mutation can emerge months or years after initial tissue or liquid biopsy, demonstrating a real need for liquid biopsy testing with six biopharma partnerships focus on ESR. One already this will be a key focus area for CTX programs, where our partners can leverage garden technical and regulatory capabilities.
I'd like to take a moment to thank our team who worked tirelessly to ensure we live up to our most important value to put the patient first.
Everything we do is led by that Northstar.
At Guardant, we have built one of the most transformative platforms and diagnostics and we think extensively about how we get our work done more efficiently from development through delivery to fulfill our primary mission of helping patients in.
In line with that goal. We recently made some key additions to our leadership team in an effort to further improve our ability to operate effectively while balancing our need to innovate quickly.
And that is done suber joined garden as our new Chief operating officer and brings more than two decades of broad diagnostics experience, including overseeing operations for labs running millions of tests per year under her leadership, we will bring further efficiency leverage and scale to the way we operate as a company.
<unk> was promoted to Chief Technology Officer.
This newly created role we are bringing together our research and development efforts for oncology and screening to leverage our products across a single platform and allow us to scale more quickly and efficiently.
I look forward to their contributions and strategic leadership to help gardens continued just scale for this next exciting chapter of our journey.
I am very proud of our team and our products and look forward to the opportunities ahead.
With that I will now turn the call over to Amir Ali to provide an update on our screening business.
And can you help me.
Turning to slide 10.
We continue to make good progress in our screening business as we head that new patient preferred category in the screening market.
Our PMA for shield for its first clinical indication CRC screening is now filed with FDA and the review process is underway.
Shelter in Australia at 83% sensitivity at 90% specificity and eclipse trial.
<unk> with other guideline I would comment that noninvasive CRC screening pad, where performance ranges from 74% to 92%.
We believe this test fair formats, not only is above the bar for FDA approval and Medicare coverage, but also meets the requirements for a robust Chicago shell success post FDA approval.
In addition, the rearward customer feedback from our LDC ordering physicians continue to exceed our expectations.
Validates the value of incorporating shale test into screening menus.
Moving to slightly light, but.
Just this morning at digestive disease week.
Investigators presented additional details and insights from our pivotal study.
Fortunate to host a call with the trial investigators and other cancer screening experience to share their perspective on these results.
The performance of a screening test same detecting early stage CRC is that important parameter CRC as with stage 123 have a very high survival rate with 72% to 91% outpatient surviving five years post treatment.
For advanced stage for CRC five year survival rate is only 14%.
The sensitivity of shale and detecting stage, one two or three was 81%.
For localized crc's, meaning no sign of spread beyond the battle of the wall, which would likely be cure through surgical procedures schielke sensitivity was 72%.
For regional and dispense cancers, where cash had spreads in the <unk> or two this that's part of the body shelf sensitivity was 100%.
Taking a closer look by cancer stage shale detected 65% of stage, one crc's, 100% of all Crc's with stage two.
<unk> herself crc's with stage, III and hundreds airsoft crc's with stage four.
Based on this performance we have.
Believes that as a longitudinal screening test pay 10 every three years shale will detect nearly all crc's added curable stage and will save many lives.
I want to take a moment to highlight a few notable details.
<unk> lost through clinical follow up and could not be stage as a result, they were excluded from the staging that analysis shale.
I took that treat exquisite CRC.
In addition, the study had five small tier one valiquette polyps, which very excited they ranked colonoscopy procedure.
Fully treated by their doctor, hence they had no further staging.
Alright, the purpose of this staging analysis they were all kind of see there at stage one.
This one was detected by shield.
Now going back to the overall performance.
We are confident the first generation of our shield has everything needed to drive a major step change in lives saved and be the first commercially successful blood based screening test for CRC.
We believe the detection performance up 83% at 90% specificity exceeds the requirement for FDA approval and Medicare coverage two critical hurdles for any tests.
This is a major victory for creating this meal patient preferred screening category.
With Shield Gordon has now set the performance bar for the future computing blood based screening test.
We are excited to bring the first generation of shield to market.
We have a clear time advantage relative to our competitors and blood based screening and this first mover advantage in this new patient preferred category will result in cost effective commercialization activities post FDA approval.
The second major wind provided by our first mover advantage is the learnings we have already been able to gain from running our eclipse households buy.
By completing our pivotal study well ahead of our competitors, we have a significant lead on further innovation and technology platform upgrades that we can incorporate into future generations of shield.
For eclipse, the mist stage, one cancers, where predominately malignant polyps <unk>.
During colonoscopy procedures that were not well represented in our development cohorts and have lower level of signals in blood.
Since launching our PMA device last year, we captured more data through both commercial testing, which showed that BT and analyzing more screening relevant cohorts.
I am very pleased with the progress we have already made in upgrading our platform technology performance powered by this additional data and insights.
Based on this progress we are working on developing the second generation shield with the aim of improving very early stage sensitivity.
Gordon has set the bar for that future test, we will need to compete with.
That bar is already moving.
Just like with Garden entry 60, we will continue to improve test performance to lead this new patient preferred category.
Turning to slide 12.
The unmet need in CRC screening is a test that gets completed.
Blood test in clinical practice has been Australia that adherence rates of 85% to 96%.
For shield in the real world experience with our LDC over the last 12 months, we continue to show adherence rates of more than 90%.
The effective sensitivity of clinical tests is a function of both the test sensitivity and the patient adherence rate.
Okay came together with 83% and 90% adherence we are confident that shield will contribute to detecting many more crc's added curable stage.
Turning to slide 13.
Going beyond the first indication of shield platforming CRC, we are making good progress with our lung cancer screening trial.
Mind will pave the path for shale to potentially be the first FDA approved multi cancer screening blood tests.
Now I would like to take a moment to talk about our milestone driven investments and resource allocation are screening program.
We anticipate that the contributing operating loss from our screening pipeline will be less than $200 million before the next 12 months.
With this level of investment we will be ready for shield IBD launch successful FDA approval.
Delivery of the second generation I've shared with even better earliest stage performance and make significant progress on indication expansion to lung cancer.
Future investments would be contingent on receiving FDA approval, and then gated by ongoing commercial success and revenue milestones.
I will now turn the call over to Mike for a more detail on our financials.
Thanks, Tony already.
Turning to slide 14 to review our financial results total.
Total revenue for the first quarter of 2023, 34% to $128 7 million compared to $96 1 million in the prior year quarter.
Total precision oncology similarly for the first quarter was $113 2 million, increasing 35% compared to $84 1 million in the prior year quarter.
This increase was driven by strong year over year growth across both our clinical and Biopharma businesses.
Precision oncology revenue from clinical tests in the first quarter totaled $91 6 million or 39% from $6 million to $6.0 million for the prior year quarter.
First quarter clinical consult.
9100, an increase of 45% from the same period of the prior year and an increase of 9% or 3100 tests from Q4 2022.
Well government 360 continues to be the main revenue driver with continued strong growth in lung cancer and a significant uptick in breast cancer. We also saw more than 100% year over year volume growth in both reveal and tissue.
First close to 360 ISP looked towards the top end of our expected range of 2600, $2700 supported by mix and positive momentum from commercial payers.
Leslie clinical ASP was approximately $2340.
Which was slightly above the blended ASP in Q4 2022 as.
As a reminder, lenders claim clinical ASP will continue to be influenced by both the volume and mix between down 360 <unk> in response.
Well as the mix of overall clinical volume between U S and internationally.
Precision oncology revenue from Biopharma test in the first quarter fiscal 'twenty, one pumps 8 million up 20% from $18 1 million for the prior year quarter.
<unk> volume was strong with first quarter totaling approximately 6150.
21% from the prior year quarter.
Biopharma ISP in the first quarter was approximately $3550, which was in line with our expectation.
Development services and other revenue in the first quarter totaled $15 3 million of $3 4 million or 28% from the prior year quarter, primarily driven by higher revenue.
Partnership agreements in the first quarter of 2023.
Gross profit for the first quarter of 2023 with $75 6 million compared to a gross profit of $64 1 million in the same period at the point of view.
Gross margin was 59%.
67% in the 2008 quarter.
The change in the gross margin was driven by a number of factors for precision oncology gross margin was 60% in the first quarter of 2023 compared to 64% in Q1 2022.
This reduction was due to the change in mix between clinical and Biopharma revenue with clinical revenue growing faster than by Osama.
As well as the year over year changes when there's plenty to ISP 2015.
$2040 due to the increased proportion of volume coming from mobile tissue next when these pumps.
Development services and other gross margin was 48% in the first quarter of 2023.
Hard to 89% in Q1 2022.
Roughly one third of the decline in margin is due to a onetime costs incurred in Q1 2023 related to one of our partnership agreements.
The remainder of the decline due to the cost of processing shield LDC samples as part of our market development activities for which we are currently booking minimal revenue.
Despite these factors influencing gross margin, we still continue to expect overall gross margins to be approximately 60% for the remainder of the year.
Operating expenses for the first quarter of 2023 with $209 $7 million, increasing 12% compared to $197 5 million in Q1 2022.
Net loss was $133 5 million or $1 30 per share for the first quarter of 2023.
Compared to $123 2 million or $1 21 per share in the first quarter of 2022.
Moving on to non-GAAP financial measures on slide 15.
As a reminder, non-GAAP financial measures exclude stock based compensation and related employer payroll tax payments.
Minimization of intangible assets contingent consideration acquisition related expenses.
Gains on marketable equity securities.
No marketable equity securities.
non-GAAP operating expenses were $188 3 million for the first quarter of 2023, a 19% increase from $158 7 million in the prior year quarter.
non-GAAP net loss was $108 5 million or $1 <unk> per share for the first quarter of 2023 compared to $93 2 million or <unk> 91 per share for the first close of 2022.
Adjusted EBITDA was a loss of 101.0.
First quarter 2023.
It's about $86 6 million loss in the first quarter of 2022.
We define adjusted EBITDA non-GAAP net loss adjusted for interest income tax depreciation amortization and other income and expense.
Taking a closer look at our operating expenses and cash burn on slide 16.
We've made very good progress with respect to meeting our target of reducing both our operating expenses and cash burn for the full year 2023.
As mentioned non-GAAP operating expenses in the first quarter of 2023 were $188 million.
Include approximately $8 million of one time severance cost related to the recent workforce reduction.
Excluding severance costs.
This represents a reduction of approximately $21 million versus a non-GAAP operating expenses in Q4 2022.
Our free cash outflow in the first quarter of 2023 with $82 million, which also declined in comparison to Q4 2022.
These decreases were driven by efficiency measures implemented in the first quarter, including the workforce reduction as well as by our ability to leverage the infrastructure. We've built over the last few years.
Well, both operating expenses and cash burn levels could fluctuate up and down throughout the year, depending on the timing of certain activities and cash outflows. We will continue to diligently manage our spend with the goal of lowering our full year operating expenses compared to 2022, and reducing our free cash outflow.
The $350 million for the full year.
Turning to slide 17.
And I just mentioned, we demonstrated leverage in Q1 from infrastructure investments made in prior years and the recent workforce reduction.
As a result ended the quarter with $937 million in cash cash equivalents amongst about debt securities.
As we look ahead, we will continue our progress towards breakeven the selection, which we are targeting to achieve in the next six to nine months at the same time, we will continue investing to maximize the large market opportunities and principles.
In order to achieve this balance and fulfill our commitment to capital stewardship, we're leveraging a decade's worth of investments in scaling our cold therapy selection platform, but we actively manage our growth investments to align with key milestones.
We're also getting material leverage and therapy selection, thanks to our rapid volume growth can pay coverage expansion.
As our core business and therapy selection reaches breakeven.
Cash burn will be driven by our two major growth opportunities and marketing screening.
In 2023, and marketing spend will continue to be focused on increasing market penetration.
Technical platform upgrades and developing clinical data to support reimbursement coverage.
Does that mean I already mentioned the screening we are managing our spend very closely ahead of FDA approval, we anticipate that the operating loss from a screen pipeline will be less than $200 million over the next 12 month period with this level of investment we will be ready for the shield IBD launch upon successful FDA approval.
To deliver the next generation of shield with even better early stage performance and make significant progress on the indication expansion to lung cancer.
Investments beyond this will be contingent on receiving FDA approval, and then gateway by ongoing commercial success and revenue milestones.
Now turning to our outlook for the full year 2023 on slide 18, we are raising our full year 2023 of the guidance and now expect revenue to be in the range of $535 million to $545 million representing growth of approximately 19% to 21% compared to 2022.
This compares to our previous expectation of $525 million to $540 million.
This update reflects the very strong performance of our clinical business in the first quarter healthy market dynamics and not <unk>.
<unk> confidence in our competitive strength.
Finally, as previously discussed we expect 2023 operating expenses to be below full year 2022.
Free cash flow to improve to be approximately a negative $360 million.
In 2023 and to consistently improve in the following years.
Capital stewardship is a top priority for us and we will deploy cash in line with Q2 against such as regulatory approvals clinical and R&D milestones and achievement of commercial goes.
And finally, turning to slide 19.
Our long term vision is to transform cancer diagnostics through casino technology, our focus on high impact opportunities and consistent execution.
At this point, we will now open up the call to questions.
Okay.
Thank you.
If you just try to ask a question. Please press star one on your telephone keypad.
If you change your mind peak questions Rachel I T.
From procurement to ask a question. Please ensure that your sinus, let me take lightly.
As a reminder, we can handle it yourself to one question one follow up.
Our first question comes from Dan Arias from Stifel. Please go ahead.
Good afternoon, guys. Thanks for the questions Tom I wanted to ask about resistance monitoring overall and the response as they now that you've got the Medicare decision can you just talk about the volume contributions in the revenue contribution that we should think about near term, but also maybe a couple of quarters down the road as the assay ramps.
And then as adoption for response get going do you see that being impactful to the <unk> hundred 60 trajectory. It does seem like there's some off label 360 usage for treatment response. So just curious if you think thats meaningful going forward.
And then maybe Mike is there anything for response in the revenue got it. Thanks.
Yeah. Thanks. Thanks for the question, we're very pleased with the recent Medicare approval, we got responses for the indication of immunotherapy for all solid tumors, which as you know as I think one of the.
The largest use cases in terms of oncology in terms of a major classes therapeutics where rich.
Our response can be difficult to assess and.
It really going to fill an important need.
Responses on a test that we've been pushing very strongly ahead of reimbursement, but now that we have Medicare reimbursements, and we're going to be pushing that more aggressively.
I'd say that.
Really nice.
Sort of key off of an initial garden <unk> hundred 60 test.
The single dose requisition form there's a certain attachment rate and so the two really go hand in hand with one another and this is just the beginning will be increasing and attempting to collect more data. We have publications out there that shows this test works.
<unk> targeted for targeted therapies across multiple tumor types and so we will continue working.
With the payers and certainly with <unk> in terms of trying to expand this further.
Also be pursuing <unk> status in terms of trying to move up the price as well. So I think we are.
Both of those tailwind.
Levers ahead of us and I'll, let Mike talk about that.
Yes, just on the on the revenue guide.
At the start of the year when we guided we didnt have anything.
Our response, but now we've got the Medicare reimbursement for the remainder of the year. We've we've added.
So the guidance sorry.
Low single digit millions so minimal contribution is Jesse.
We look at that Paul.
2024, but.
Small amounts in that in this revised guidance.
Okay. Thanks, guys.
Yeah.
Thank you Keith.
Our next question comes from Jeff <unk> SVP Securities. Please go ahead.
Yes, Hi, barely held me thanks for taking the questions. So.
Hard to always be at this philosophy had continuous improvement powered by data and now this is a guy bianna their shortcake's that the first generation of shield is not be the best and the last of what can be done with blood testing in liquid biopsy.
Through running eclipse additional samples that'd be processed as I mentioned, our team figured out at specific soft class. So very early stage cases that we are missing and.
The core technology is capable of potentially detecting more of these cases is just they were not presented very nicely in our day of a low time forward before so you're pleased very excited with the progress we made still it's too early to mention a specific timeline.
And we want to make sure we take this first generation to the finish line, but shortly after we are gone operate this device of your kind of worked with agents to operate at true potential SPM as routes to upgrade the claims in terms of.
The routes I think it's clear.
As you are now in terms of upgrade the ability of the bunch of additional biobank samples that'd be have that was his strategy move that'd be took that garden that eclipse continue I'd be up many more CRC as many more samples in our freezer. It's leftover from the first cohort. So we just need to process those.
Samples, but let us make more progress I'd take this first generation to the finish line. On then we can talk to about the second cherish.
Got it in one Super quick question do you expect it to be an annual test with the current first generation. Thanks, so much.
No I think why they are looking actually.
And I think it's really like.
The biology of CRC K that Saab that literature in terms of how long it takes for CRC to go from one stage to the next stage based on some other links.
You're going to see the actually a minority upstage ones archived become like.
Very late stage add passport event like three years after so when you're looking into it that really at what danger of all is unique to run. This that we believe as long as this test is getting done every three years with high compliance.
<unk> detect almost all CRC that triple H.
That's why we are very excited with the potential of this device for CRC.
But again this doesn't mean that this would be the last performance and I would bet you over time, it's just gotten continued to get.
Hi, there I'm better it cannot get hoarse, the only way to make it better [laughter].
Got it Super Thanks, guys.
Thank you.
Next question comes from <unk>.
Thank you good afternoon.
My first question is on the G 360, Asp's, So high and the 2600 2700 range.
Recently, you've had a big acceleration in terms of the covered lives in Pierre wins.
I'm just curious as you get better claims experience with some of these new players do you think it's possible to outperform that range for the remainder of the your can you talk about what kinds of consumers in terms of 368.
Okay.
I can take this one yeah, you know I mean I paid.
The the main drive of this improved ISP that this Pulitzer is is really <unk>.
Between the the Cvs in the D. C versions of the of the tests then Cvs is from many times I was reading about that 5000, so they'll lead to 35 minutes. So we gotta Pee.
The on the CD exposure to know some of that is being driven by some of that.
Mix towards the Cvs is being driven by the F. D. A approved that we've been getting over the last.
So I think that can continue positively.
And then from the the pay headwinds Yeah, you know I think as we start to see the claim to come through.
You know hopefully, we'll see positive momentum and it could lead to that going higher than 2700 hours.
Guidance at the moment.
<unk> 20th 700 level.
And so we will see you again, we've had really positive news over the last few months and so that really bodes well for the remainder will be it.
Right, Okay, and then sticking with oncology, which reveal just on guidance I think previously retargeting a low double digit.
<unk> contribution to sales you can talk about how you're tracking relative to that and just how are the volumes building for real any updates would be helpful. Thank you.
Maybe it was Jordan Miller, Mike and then you know as you know we've been.
Sort of engineering overall volume such that we focus on the reimbursed products and yeah. That's that's spelled G. As in working extremely well and so we seem growth and categories with those products that are are best reimburse that being said, though.
Continued to see very strong growth in the reveal.
Mention does over 100 per cent you over a year and so I think we're very much on truck.
Yeah no.
We're on track I think that that number when you mentioned the Ah load to move to <unk>, we're still out with them on track for that and that those things in the in the current guide.
Mhm.
Thank you.
Next question comes from <unk>.
Hey, guys. Thanks for taking the questions. Congrats on the quarter I didn't want to start on revealed as well maybe helped me how sticky has revealed been with clinicians and patients are you seeing a shift in more tests performed in that recurrence monitoring selling like bring you don't have a right right now and it also if you could comment on timing of private or commercial payors and the other reimbursement for <unk>.
<unk> what would be helpful. Thanks.
Yeah. So.
We're seeing I think very similar mix too.
Been saying, we've been focusing more on reimburse swelling.
CRC indication in the adjuvant setting.
So if anything we've seen utilization and the.
Kind of the sort of the existing indications.
Continue to be strong.
We're making excellent progress in terms of additional clinical data sets, we're hopeful that there'll be on track too.
Some of those released.
Later in the year and once those goods publish assuming they're they're positive Ah will submit that for breast cancer or the additional surveillance studying <unk>.
Darcy.
Okay. That's perfect. Thanks for that and I'm really just went on the kind of quick fan from earlier. This morning, thanks for doing that that call guys.
In the D D. W data on the stage one sensitivity included those five and completely stage Crc's. If those were more advantage to contact those can move into stage.
I guess they were picked up more cancers, I know, you're reading conservative here, but would F D. A and U S. P. S. T F take that kind of a nuanced into account cause if you're that goes out tentatively.
<unk> said you wanted to activity would be much higher so I'm just curious how they would sort of treat that aspect.
Okay, just a few more Santa I asked Craig to provide more details dose Malik polyps are in Alexandria, crc's, but.
But they are like so early stage it looks like that you know.
Patients are not going through the next step in terms of staging and the Doctor thinks they've got all the treatment required by law correct to provide that additional details.
[noise], Thanks Marley it's Craig.
One of the things to think through and when you get to assessing the date or it's about everyone's going to have a different perspective on these cases.
And what we are providing is to the FDA analogies of transparency around how that was staged and then how the bleeding pullups with managed.
Not staged if you use traditional criteria HAC or.
Mortgage to logical places.
How are we going to deal with that.
Something obviously, we're going to work with them on in and talk to them about and we'll just have to see how that stands out but it's quite clear that you know.
Differences in the way that was staged difference in the protocol and these are things if the I know that will Wanna talk about.
Got it okay. Thanks, correct. Thanks, guys.
Thank you.
Next question comes from <unk> J P. Morgan J D. Please correct.
Alright, the afternoon, so clearly regarding b.
<unk> what are the next 12 months.
<unk> between commercial and R&D, including 19th 19, and then the next generation Tech developments and does that include the potential.
Once you receive at the approval, which shy and is now within the next 12 months window.
And how would you characterize.
This efficiency and commercial and last night.
200, marine budget, especially given that we know sounds pretty.
Pretty important in driving adoption.
Yeah. Thank you so we fill it with this level of investment actually it's.
Adequately resource to really have a successful IBD launched at the FFT includes the sales and marketing resources to launch this product it's not that right. After we are going to increase our spent significantly onto S.
<unk> actually it's all embedded in that number as cannot be around that totally makes more progress actually that's sort.
R&D kind of activities. So it kind of tapered down in terms of softness that Eastwood and so forth. So in terms of this split off that $200 million in a steel.
We are kind of.
Heavy on there are any side just based on the trials that appeared thanks off that technology improvements that I talked about.
Some of the infrastructure that'd be <unk> to be able to really be able to handle the sample of that scale of it low cost and so forth. So it's demonstrated Ah ah or at the heavy.
But a reasonable amount of actually sales and marketing very reasonable amount that we believe is adequate.
Adequate enough to have a successful FDA and launch for this product.
And as we manufacturing more revenue that may make the milestones on increasing the ASB at getting to arrive on your comment with kind of the volume's IPA expect.
We are gonna manage our operating expense keeping in mind as I mentioned in a prior calls.
We believe you can't have much higher efficiency running the at sign M for a blood based screening test specially for us that'd be would be.
Sure some over in a composite immune category.
Frankly in this new category, it's not that we are compensating with either players based on what we are saying <unk>.
Kind of have that first mover advantage in terms of market penetration and already reshaped the market a little bit too based on that counts that'd be that'd be feel confident to actually post FTF rove-over, you're gonna have a successful launch with this level of investment that I mentioned earlier.
Thank you.
Question comes from <unk>.
[noise], Hey, guys. Thanks for the additional color on the data earlier today and.
Julia actually took part of my question on the sales and marketing and if you guys could give us a little bit more [laughter] more color on the first ramp and the strategy for calling.
On all the P C p's across the country for thinking about any other types of media campaigns or anything to.
But you didn't touch with these P C P as in get filled out there in there.
Patients.
Yeah, I again actually I at the time of FTA approval that shortly after that for a few requires after everyone asks the actual quote we are not expecting that we're gonna have.
Very large salesforce at in terms of what we need to have for a national coverage.
At the end like asset as we are getting through USPS timeline and a commercial came as I talked about before potentially with scrappy about 700 800 people bought the time up Afghan launch that in a few quarters after that it's Skype yet.
Tiny fraction often not heard that I met shaq and we believe in our strategy based actually what we are seeing in a market right now in the desktop ordering it I fear sang for the blood based cancer screening.
So when you look at the desktop ordinary when you look at actually a higher efficiency selling that because of patient adhere asked more down 90 per cent of salt.
Past would get coverage to be level of case viruses or other modalities.
A very lychee process frankly, this gives us confidence that in order to meet their revenue milestones that'd be having my redone need to go to hundreds and hundreds of people in the commercial team, we can't really do it very efficiently and we were like thank you that'd be will show that this is possible, but the finance <unk>.
It's not that we get at the after a while I'm here I got a wrap it up soon.
You're kind of made software revenue milestones step by step miles sorcery bad.
Increase our investment justified by their revenues that'd be are saying and we were manage are contributing operating loss.
Very close to that number I met Saturday.
Okay. Thank you.
Thank you.
Our next question comes from <unk> B T I T.
Hey, guys. Thanks for taking the questions and congrats on the strong quarter. My first question is for you help me when we think about the portfolio of therapy selection. Obviously, you guys are the strong market leader in blood as.
As you're gaining additional traction with garden response and tissue next 360, and then reveal now to what extent do you think you can start moving perhaps some other competitive assays onto the platform by through bundling and then I wanted to get a sense. If you have.
Ballpark of what the attachment rate is between 360 and some of the other tests.
So we have this.
Essentially.
Ecosystem of tests now.
There, we can really manage the complete interaction.
From a precision oncology a point of view that oncologist as where their patients and a lot of this whole bone the place further as we move to the smart liquid biopsy platform, where it would really make the sort of <unk>.
Data connection between the different pieces much more powerful than the increase the utility, but we're already seeing that right now we're going through this evolution, we call those garden complete.
Whereas essentially a physician push one button.
And really get a sort of testing workflow that they request in place.
There are further.
Patients and so they wanted to starwood liquid pretty Bucks is issue.
If they wanted to respond.
After the patients put on immunotherapy all of that can be managed seamlessly now and so we're early turning a lot of those future zone.
I don't think we've broken up.
That's been raped, but we've seen.
Very strong I would say connectivity between our tissue tests and or a blood test in terms of the initial garden 360.
As well as a response to it so it's it's working its way you know I think one of the strongest leverage points of is the fact that our garden 360 businesses. So which is the first test is growing very very rapidly. We're actually we believe taking market share.
Sure not just growing but taking market share from other companies and everything else is a function.
Get the tests are connected to that initial time points. So it's.
Feeling very good going forward and it's a it's a it's an exciting time sir.
Great and maybe one for a merely you know obviously the stage one through three sensitivity at 81% certainly exceeds the fit test and but I wanted to get a sense, obviously stages two through four were excellent at 100%.
To what extent should we look at the 55% and and just wonder what the uptake of the test will be in light of you know the.
The incredible sensitivity at stage to where it is surgically resectable just give us a sense for how to think about the numbers overall.
Sorry, maybe make a few points about this so number one.
Bear in mind, we are talking about in new market category here towards people who are.
The language refusing to get any kind of screening done at this time.
So four dose patient population, who are not participating in any modality of screening.
Think we need to have it right perspective in terms of like they are not getting fit down there and not getting out there is still test on there are not getting a colonoscopy done then.
The most important thing I'd actually what we heard all saying the call that'd be coordinated expert opinion leaders in this field is the most important factor is making sure. The uptake of the test is proper and patient participation is adequate.
And blood test has that kind of advantage.
So that's why I don't think necessarily like kind of comparative numbers is the most important factor here in terms of adoption number two and chapter what day to actually which day there should be look at I look at at what level, we're not gonna stab proof all we're gonna get married.
Care coverage, we are kind of generic access for all patients.
Who are eligible for this task and those numbers are clear right. Now you know it's like you know our test performance is what we've reported is way over those minimum requirements.
When we go to early stage I think react to keep in mind when you cut the data into smaller pieces like there are some statistical variation associated with it just from scientific mentality, but if you just look at these numbers at face value.
It's exciting to see you are at detecting all cancers at stage two stage tree.
Let's say half of stage one.
For their patients who are not getting screen that they don't have any same town.
What fraction of missed stage lines are guy become stage four three years. After when you look at it it's a minority so in a longitudinal task for a test that patient adhere to which is not applicable to other modalities.
This kind of test performance science face value, it's kind of exciting and that's why we believe it's food.
Do you take me are you off CRC is that charitable stage ammoed saved many lives.
Excellent. Thank you.
Thank you.
Next question comes from <unk> Bank of America.
<unk>.
Good afternoon. This is John on for Derek.
So last quarter and Biopharma you guys, we're seeing some headwinds with with that with some clients. So I can get decisions has there been any improvement.
And obviously you spoke up your strong back strong order book. So I was wondering how about balancing out with with your order book.
In terms of in Japan, how are the conversations going in terms of getting that'd be embarrasment finally.
Yeah. That's you know I think when you mentioned that.
The Biopharma is.
I think there.
Potential potential for some headwind.
I haven't necessarily seen.
Then that's it.
Business considerably then.
Sure.
Obviously doing extremely well in terms of Biopharma volume, we're happy where things are happy with the pipeline looks like.
We do think that you know it.
You said that some of that will resolve the uncertainty around budget and someone will result, so.
So they can have a visitor and we're seeing a lot of very encouraging conversations where I think it was a form of companies across multiple programs. So we think this is going to continue to be an important.
Growth driver for a business.
In terms of Japan were having good conversation bear and yeah, we still have been grown drug for this year.
Reimbursement, there and that'll be a big big business Burrows.
You know what I think we're making good progress in China as well.
Let me think that will also be a similar similarly strong business for us one that gets going.
[noise]. Thank you.
Thank you.
Final question comes from <unk>. Please go ahead.
Hey, guys. Good evening and thanks for that I'm here Uhm, one for you how me on the Garden responds testing protocol can you just lay out in your mind like what do you think are the advantages of measuring just those two time points over the course of Io treatment versus tracking the patient over a longer period of time, we have multiple follow up desk.
For example, if a physician wants to look at that continue discontinued decision a little bit later, how would that work or does it relatively rare to use an assay in that fashion right now.
Yeah, I mean, you look at the literature, including.
You know other tests that are out there.
The clinical utility almost all of them all of that early derives from the initial time point boost.
Treatment initiation.
And so that's really the benefit if you wait out longer than you're essentially you can start relying on other approaches radiographic imaging and so on so it's.
You know we we.
Don't think that you know you're missing out by using kind of that that time going and it's really focusing on what the data shows and where the clinical utility is.
That doesn't mean that there may be.
The use cases in the future where Ah monitoring maybe beneficial obviously, that's where the seal is going is extensive monitoring, but we don't see much sort of you know.
Almost almost any laws and several utility rebellious.
It's you know it's it's nicer.
With a single dose.
You can help make a decision.
Got it that's helpful. And then one quick one for earlier.
With a clip sort of food staging now available how does the CRC mixed by stage compared with your previous a priori expectations. If you will you know we had a few in mountains on more stage for patients in the clips forces deep sea et cetera, what are there any differences in trial design in retrospect that that may have contribute.
To the differences in the mix for the population enrolled.
So maybe it makes you.
Statements and I asked correct to chime in here.
So yeah in fact plenty of the cats pop.
Public databases on like the staging distributors shop recently diagnosed CRC patience is actually pretty close like I think if I recall right for a stage for.
About 20% of the patients are getting diagnosed at stage four at 65 patients in this or.
We attack so it's kind of pretty close to the correct you run out.
My Dad I mean.
Yeah, we're talking about small numbers when you can <unk> number one also Tom difference for those trials you talked about announced study collected a diverse population. So it's really at that point in time and you know you can start to get into theories about what's different Trina population from 20 to 2022.
This is 2012 to 2014, and obviously one thing that would make a nice story is COVID-19 and people talk about the delay in screening and other things, but it is merely mentioned when you look at the actual stage full breakdown, it's actually pretty much spot on the way things would expect from our other databases in the population.
Got it and that's helpful. Thanks, guys I appreciate the time.
Thank you.
Oh, just the Q&A session and makes complete today's call. Thank you everyone joining us today you've been out.
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