Q3 2025 GRAIL Inc Earnings Call
Speaker #1: Good day, ladies and gentlemen, and welcome to the GRAIL third quarter 2025 earnings call. At this time, all participants are in listen-only mode. After the speakers' presentation, there will be a question-and-answer session.
Speaker #1: Please be advised that this conference call is being recorded. GRAIL investor relations, please
Speaker #1: begin. Thanks,
Speaker #2: Operator. And thanks, everyone, for joining us today. On the call are Bob Ragusa, our Chief Executive Officer, Aaron Freidin, Chief Financial Officer, Josh Ofman, President, Sir Harpal Kumar, Chief Scientific Officer and President International, and Andy Partridge, Chief Commercial Officer.
Speaker #2: We'll be making forward-looking statements on this call based on current expectations. It's our intent that all statements, other than statements of historical fact, including statements regarding our anticipated financial results and commercial activity, will be covered by the safe harbor provisions for forward-looking statements, contained in Section 27A of the Securities Act of 1933, as amended, and Section 21 of the Securities Exchange Act of 1934, as amended.
Speaker #2: Forward-looking statements are subject to risks and uncertainties. Actual events or results may differ materially from those projected or discussed. All forward-looking statements are based upon currently available information and GRAIL assumes no obligation to update these statements.
Speaker #2: To better understand the risks and uncertainties that could cause actual results to differ, we refer you to the documents that GRAIL files with the SEC, including the risk factor section and GRAIL's most recent quarterly report on Form 10-Q.
Speaker #2: This call will also include a discussion of gap results and certain non-gap financial measures, including adjusted gross profit or loss, which are adjusted to exclude certain specified items.
Speaker #2: Our non-gap financial measures are intended to supplement your understanding of GRAIL's financials. Reconciliations of the non-gap measures to most directly comparable gap financial measures are available in the press release issued today, which is posted to our website and, with that, we can turn to Bob.
Speaker #3: Good afternoon, everyone, and thank you for joining us. On today's call, we will review third quarter results and discuss recent updates. These include Pathfinder 2 results shared at ESMO, updated simplified data shared at EDCC, and recent strategic and financing activities.
Speaker #3: We remain very pleased with our commercial progress. Growth in gallery volumes and revenue in the third quarter of 2025 were 39% and 29%, respectively, as uptake continues to grow.
Speaker #3: From the loss of gallery through September 30th, approximately 420,000 gallery commercial tests have been sold by more than 16,000 healthcare providers. We are continuing to progress our activities beyond the United States as well, recently announcing a strategic collaboration with Samsung to bring the gallery test to key Asian markets.
Speaker #3: Subject to execution of definitive agreements, we and Samsung will work as exclusive partners to commercialize gallery in South Korea, and potentially other Asian markets, including Japan and Singapore.
Speaker #3: In addition, we plan to explore other strategic and operational collaborations. Samsung has also agreed to make an equity investment of $110 million in GRAIL, subject to closing conditions.
Speaker #3: In October, we also introduced gallery commercially in Canada, in partnership with MedCan, a global leader in proactive health and wellness services. Eligible adults in Canada may now access the gallery test at MedCan's clinics.
Speaker #3: In addition to these operational updates, we recently completed a $325 million private placement. This transaction strengthens our balance sheet as we progress through additional milestones.
Speaker #3: Gallery is the only MSET available which has demonstrated performance in people being screened in the intended use population. This includes data from our registrational Pathfinder 2 study, where a pre-stuff specified analysis was presented at ESMO last month.
Speaker #3: I'll ask Josh, then Harpal, to discuss recent results from gallery's clinical program.
Speaker #4: Thank you, Bob, and hi, everybody. We were really pleased last month to share very positive performance and safety results from the pre-specified analysis of the first 25,000 participants in our registrational Pathfinder 2 study.
Speaker #4: This study started in 2021, and Pathfinder 2 is a large prospective trial in a very broad and diverse enrolled group, representative of gallery's screening-eligible intended use population.
Speaker #4: Releasing the first results of this study at ESMO was so exciting and a big milestone for our company and all of our partners and investigators.
Speaker #4: And it was a meaningful contribution to the evidence base for the effectiveness of multi-cancer early detection. As you'll recall, we found that adding gallery to recommended screening for breast, cervical, colorectal, and lung cancer yielded a more than seven-fold increase in the overall cancer detection rate.
Speaker #4: Approximately three-quarters of the cancers detected by gallery have no recommended screening options. And more than half of the new cancers detected by gallery were in stage one or two.
Speaker #4: And more than two-thirds were detected at stages one, two, or three. One of the most important clinical metrics, the positive predictive value, or PPV, which is the likelihood of receiving a cancer diagnosis following a positive test result, gallery's PPV was 61.6%.
Speaker #4: Specificity was 99.6%, translating to a false positive rate of 0.4%. A critical safety metric. Galleries' ability to accurately identify where in the body the cancer is located also helped guide an efficient and effective diagnostic evaluation.
Speaker #4: Importantly, there were no serious study-related adverse events reported thus far. Diagnostic resolution and important economic and patient-centered outcome measures took a median of 46 days.
Speaker #4: And only 0.6% of all participants had an invasive procedure. And again, no serious study-related adverse events were reported. Invasive procedures were two times more common in participants ultimately diagnosed with cancer than in those who were ultimately not diagnosed with cancer.
Speaker #4: Pathfinder 2 and NHS Gallery make up our registrational clinical program for gallery. Our PMA submission will include these data from the first 25,000 enrolled in Pathfinder 2 to complete 12 months of follow-up.
Speaker #4: Plus findings from the prevalent round of screening from the NHS Gallery Randomized Clinical Trial as well as the results of a bridging study between the version of gallery used in the two registrational trials to the updated version that we plan to submit to the FDA for pre-market approval.
Speaker #4: As a reminder, we announced positive top-line results from the prevalent round of screening in the NHS Gallery trial in May of this year. Namely, that data from the prevalent screening round showed a substantially higher positive predictive value than that was observed in the first Pathfinder study.
Speaker #4: Now to review important new findings from our simplified study I'll hand it off to
Speaker #4: Now to review important new findings from our simplified study I'll hand it off to Harpal. Thanks, Josh, and good afternoon,
Speaker #5: the University of Oxford, we recently everyone. Working with shared positive long-term results from an extended follow-up of the simplified study at the early detection of cancer conference, or EDCC, in October.
Speaker #5: As a reminder, we conducted the observational simplified study in symptomatic participants in the UK to understand whether our technology could play a role helping clinicians guide investigation and accelerate time to diagnosis when patients present with concerning but nonspecific symptoms.
Speaker #5: Examples of these symptoms could include unexplained weight loss, fatigue, persistent abdominal pain, and others. The previous primary analysis from simplify published in the Lancet Oncology in 2023 followed participants until diagnostic resolution or up to nine months.
Speaker #5: And demonstrated gallery's PPV in this population was approximately 75%. Patients determined to have a false positive gallery result were followed for an additional 15 months in the National Cancer Registry for England and Wales.
Speaker #5: The updated analysis presented at EDCC includes the subsequent registry follow-up period for all 79 of the patients who were originally classified as false positives.
Speaker #5: And the data contained a number of important learnings. First, approximately one-third of the participants initially believed to be false positives were diagnosed with cancer during the full follow-up period.
Speaker #5: Second, of that group, a cancer signal of origin or CSO prediction from the gallery test was correct in all but one patient. And finally, with the reduction in false positives in simplify, from 79 to 51, the updated PPV for gallery in this symptomatic population increased to 84.2%.
Speaker #5: These findings reinforce the importance of proactive follow-up after a positive MSED test result and the value of the gallery test's accurate CSO capability. Now to Aaron for a review of our financials.
Speaker #6: Thanks, Harpal, and good afternoon, everyone. I'm pleased to present our results for the third quarter. Revenue for the quarter was 36.2 million dollars, up 7.5 million dollars, or 26%, as compared to the third quarter of 2024.
Speaker #6: Total revenue for the quarter is composed of 32.8 million dollars of screening revenue and 3.4 million dollars of development service revenue. Development services revenue includes services we provide to biopharmaceutical and clinical customers, including support of our clinical studies, pilot testing, research, and therapy development.
Speaker #6: We continue to see demand for our gallery tests and sold more than 45,000 tests in the third quarter. We have historically observed seasonal fluctuations over the course of the year in particular relatively high volume in the second and fourth quarters and lower in the first and third.
Speaker #6: And we would expect these seasonal trends to continue. Screening revenue of 32.8 million dollars in the third quarter was up 29% as compared with the third quarter of 2024.
Speaker #6: U.S. gallery revenue was 32.6 million dollars, up 28% compared to the third quarter last year. At the beginning of the year, we guided full year 2025 U.S.
Speaker #6: gallery revenue growth between 20 to 30%. We were refining this growth guidance today to the middle of that range. Cost of screening revenue exclusive of amortization of intangible assets as a percent of screening revenue decreased mainly due to lower variable costs of gallery testing performed on our automated platform, partially offset by a decrease in ASP and higher sample reprocessing costs.
Speaker #6: Net loss for the quarter was 89 million dollars, an improvement of 29% as compared to the third quarter of 2024. Gross loss for the third quarter 2025 and 2024 were 13.7 million dollars and 22.2 million dollars respectively.
Speaker #6: Non-GAAP adjusted gross profit for the third quarter of 2025 was 20 million dollars, an increase of 8.2 million dollars or 69% as compared with the third quarter of 2024.
Speaker #6: In Q3, we achieved a non-GAAP adjusted gross margin of 55% compared to 41% in the third quarter of 2024. This change was largely driven by improvements in variable costs on our updated gallery platform that launched last year and by an increase in sample volume for the quarter.
Speaker #6: As we ran a one-time batch of research and development samples for clinical validation, resulting in reduced fixed cost per sample related to higher lab efficiency at higher volumes.
Speaker #6: We do not expect similar clinical validation sample volume in future quarters, but the higher number of samples processed demonstrates the benefits we expect to see in lab efficiency as the sample volume grows.
Speaker #6: We ended the quarter with cash and investment position of 547.1 million dollars. Including net proceeds from the 325 million dollar private placement in October, we have approximately 850 million dollars of cash and investments.
Speaker #6: This does not include the recently agreed-upon investment in GRAIL by Samsung, which is subject to closing conditions. In August, we drew down our cash burn guidance for the full year 2025 to be no more than $310 million, from no more than $320 million.
Speaker #6: Today, we are updating our cash burn guidance to no more than $290 million for the full year of 2025, net of $13 million in placement fees from our recently completed financing.
Speaker #6: Expected full year burn represents a significant decrease of approximately 50% compared to 2024 as we remain focused on cost management. We believe our cash runway extends into 2030, enabling us to achieve major planned clinical and regulatory milestones.
Speaker #6: I'll hand it back to Bob for concluding
Speaker #6: I'll hand it back to Bob for concluding remarks. Thanks, Aaron.
Speaker #7: Our strategic priorities are seeking FDA approval of gallery and pursuing broad reimbursement. We are advancing gallery in the near and mid-term towards key clinical and regulatory catalysts to achieve broad access while maintaining our disciplined cost management.
Speaker #7: As we move into 2026, our key milestones are the completion of our modular PMA submissions to the FDA and full clinical utility results from our 140,000 participant NHS gallery study, which we expect to read out mid-year.
Speaker #7: This longitudinal data set will be reviewed by the NHS to determine gallery's potential deployment within the UK population. Lastly, we look forward to welcoming many of you on site tomorrow at our centralized labs and research triangle park, North Carolina.
Speaker #7: A live webcast of our Analyst Day will begin at 11:00 a.m. Eastern Time and will also be available in the Investor Relations section of our website.
Speaker #7: Let's now go to Q&A. Operator, please go ahead.
Speaker #8: Thank you. At this time, if you would like to ask a question, please click on the raise hand button, which can be found in the black bar at the bottom of your screen.
Speaker #8: You may remove yourself from the queue at any time by lowering your hand. When it is your turn, you will hear your name called and receive a prompt to unmute.
Speaker #8: As a reminder, we are allowing analysts one question and one related follow-up today. We will wait one moment to allow the queue to form.
Speaker #8: Our first question will come from Subunambi with Guggenheim. Please go ahead.
Speaker #9: Hey guys. Thank you for taking my question. The FDA timeline is moved to Q1 instead of first half of 2026. What
Speaker #2: Yeah, Subu, thanks for the question. So I think, you know, the main thing is just as we move forward in time, you know, we've gotten more certainty in the range of when we'd be able to deliver that.
Speaker #2: You know, so we've been saying first half for a fair amount of time, and it looks like, you know, things are on track well enough where we're more confident to be able to put it out for the first quarter.
Speaker #2: So it's really, it's really just kind of tightening the confidence intervals around the timeframe.
Speaker #9: Perfect. And you're currently running a promotion on your website offering a 150 dollars off of gallery for patients getting tested from October to year-end.
Speaker #9: What incentivized you to offer this promotion? How has the demand elasticity in response to this promotion been? And is this, are you piloting a reduction to $800 moving forward?
Speaker #9: And could this impact ASPs moving forward? Thank you for
Speaker #9: that. Yeah, maybe a couple of comments,
Speaker #2: and I'll turn it over to Andy Partridge, our CCO. You know, so we've done, you know, a fair amount of work, you know, looking at the price elasticity on the test and, you know, this is kind of a reflection of some of that work.
Speaker #2: We do know that there's, you know, significant price elasticity and, you know, going into the end of the year is a good time to exercise some of that.
Speaker #2: But maybe to answer some of the other pieces, Andy, do you want to take
Speaker #2: that? Yeah, thanks
Speaker #3: Paul. So as you saw, we have reduced the price on the website. The growth that we've seen in Q3 over the year has been predominantly driven by the provider channel, where we've seen improvements in both prescribing, bringing new prescribers onto using gallery, and also depth of prescribing.
Speaker #3: So discounting has been a component of increasing that depth and breadth of prescribing. Also, the integrations we've done with companies like Quest and Athena have also driven a lot of that breadth and depth.
Speaker #3: And then finally, repeat testing, which price is also a component of that, has also driven that depth of prescribing as well. So we're very pleased with what we've seen in the
Speaker #3: market. Your next question will come from Kyle
Speaker #8: Mixon with Canaccord.
Speaker #10: Hey guys, thanks for the question. Congrats on the progress. So you've obviously bolstered the balance sheet nicely. You should have over an additional 400 million by early '26 with the Samsung investment.
Speaker #10: I was just curious how you plan to use the additional capital, and specifically how does the commercial strategy change? Especially in light of recent upcoming competition.
Speaker #10: And I appreciate to hear Andy's thoughts on that as well. Thanks.
Speaker #2: Yeah, so I think some of it, you know, obviously gives us a lot more flexibility on the balance sheet. You know, with competition emerging, it does give us more flexibility in how we think about, you know, flexing our commercial investments.
Speaker #2: So we're looking at, you know, those things as well as any, you know, any of the other areas that we need to, you know, really fortify as we continue to scale and expand the, our test footprint on the marketplace.
Speaker #2: But, you know, I guess, Andy, do you want to also comment on that?
Speaker #3: Yeah, I think Bob and I, I really covered it. You know, I think the thing that I would emphasize is we feel like we've got a lot of momentum right now with customers for all of the reasons that I described.
Speaker #3: And definitely coming now off the back of the Pathfinder 2 data, that we presented at ESMO, there's a palpable momentum that we have in our
Speaker #3: business. Got
Speaker #10: Got it. That's helpful, guys. Thanks. And you know, also Hims & Hers made an investment in the company recently. Consequently, there's been some speculation that means GRAIL is going to take a direct-to-consumer approach to Gallery at some point.
Speaker #10: So if you could just comment on those plans or the potential to take that route over time in light of the increasing focus on longevity among ong
Speaker #10: ong consumers. Yeah, no, that's a good question.
Speaker #2: You know, we, you know, we're, you know, as we just reiterated, our timeline for our PMA, we're very committed to the PMA pathway. And so there's, you know, kind of no change in that.
Speaker #2: In fact, you saw a slight, you know, acceleration in the actual timeframe. But beyond that, you know, we do also recognize that, you know, the digital health channel is an important channel out there, you know, more broadly in this sector as well as many others.
Speaker #2: And so we want to make sure that we're able to utilize all the channels that are available to bring, you know, we've talked from the very beginning about how do we get broad access for gallery, and that would be one other element to enable broad access.
Speaker #2: But that also would not diminish our, you know, again, our push towards a PMA and broad access through that.
Speaker #8: Your next question will come from Doug Schenkel with.
Speaker #8: Wolf Research. Hi,
Speaker #11: good afternoon, and thank you for taking my questions. So I want to actually talk about NHS England a little bit more, and then I have a COGS-specific question.
Speaker #11: So, starting on NHS England, looking back to May 2024, when the statement was issued saying that early results were not compelling enough to justify a large-scale pilot, were they referring to any clinical utility data from year one, or to test-level performance metrics such as PPV, sensitivity, and/or specificity?
Speaker #11: Can you share a little bit more on what prompted that decision? And then on the same topic, has anyone besides GRAIL and the NHS evaluation team seen the year one NHS gallery data?
Speaker #11: I'm just curious, you know, if anyone else has seen it, and then if not, at what venue do you anticipate releasing that data more broadly?
Speaker #11: You know, keeping in mind that you've said the FDA module submission is expected to be, I think, completed in Q1. So it would seem like that data would need to be released
Speaker #11: soon. Yeah, Paul, do you want to take that one
Speaker #2: on?
Speaker #3: Sure. Thanks, Doug. So on NHS England's decision last year, important to reiterate that what they would have wanted to see in order to initiate a pilot at that stage was very exceptional data.
Speaker #3: And they looked at a few specific metrics of which PPV was definitely one. To remind everyone it isn't possible to look at the sort of broad utility measure of stage three and four reduction with only one year of data.
Speaker #3: That has to come with three years of data. But PPV was certainly one, and you'll have seen our announcements earlier this year that the PPV in that first round was substantially greater than we saw in our first Pathfinder study.
Speaker #3: Which to remind everyone was 43%. So it gives you a sense of some of the information that was seen at the time. But again, to reiterate, what the NHS would have wanted to see was truly exceptional data in order to accelerate and the point is they were looking about an acceleration of an implementation rather than waiting until the final study results.
Speaker #3: And what they said at the time was it wasn't exceptional enough to accelerate that implementation. And so that they wanted to wait for the final study results.
Speaker #3: In answer to your second question, no, only the NHS evaluation team have seen that data so far. To the third question, yes, it will be the data from the prevalent round only from the intervention arm will be part of our FDA PMA submission package in Q1 next year.
Speaker #3: But that does not mean it will be in the public domain at that point. There won't be any data in the public domain from NHS gallery until we have the final study results.
Speaker #2: Yeah, and then we're expecting that full readout in the mid part of
Speaker #2: 2026. Your next
Speaker #8: question is your final question and will come from Bradley Bowers with Mizuho.
Speaker #12: Hey there, thanks for getting me in here. Just one on volumes and then maybe one a little high level. But just on volumes, you know, pretty, you know, acceleration here at GRAIL some seasonality.
Speaker #12: I just wanted to hear, you know, what's kind of driving volumes here, what cohorts, and then, you know, how we should think about that into next year. And, you know, if international will have a tangible contribution next year.
Speaker #2: To pick the volume question and maybe dish it off to Andy as.
Speaker #2: well. Yeah, I mean, I think Andy and I can tag team
Speaker #3: So, yeah, you're right. I think volumes were about 39% for the quarter year over year. Andy's kind of touched on already, where we're seeing, you know, more provider pull-through and so on for the reasons that you stated.
Speaker #3: As far as international goes, there's very minimal international volumes today. You know, it's an area that we're focusing on. And as you see through the Samsung engagement and so on, we're being opportunistic there and we're excited about what could be.
Speaker #3: Today, it's probably a little too early right now to say what the volumes will be next year. But, you know, we're getting, as Andy said earlier, momentum internationally and lots of momentum domestically.
Speaker #3: So Andy,
Speaker #3: Anything you want to add? Nothing.
Speaker #4: I think we covered it.
Speaker #12: Thanks. And then if I could just double-click on the simplified study, you know, I think that's actually an interesting data point. You know, that going back and following up patients who were previously identified as false positives, I mean, does this or these patients, I guess, that went under, you know, typical protocols, you know, why were these cancers, I guess, kind of missed in follow-up?
Speaker #12: And then also, you know, there's, I guess, some serious implications about, you know, the possibility to detect cancers even earlier than, you know, the current paradigm or, you know, what follow-up testing would be.
Speaker #12: So just wanted to hear your thoughts on
Speaker #12: that. Yeah, Harpal,
Speaker #2: why don't you go through that?
Speaker #4: Yeah, I mean, look, first of all, it is, as you say, a really interesting set of data. And it's relatively recent. So we're still examining some of the detailed information.
Speaker #4: I think one of the most significant points is that, you know, many of these patients are presenting with very non-specific symptoms. And these are the types of symptoms that could be indicative of cancer and often they are, but they could also be indicative of many other conditions.
Speaker #4: And so primary care physicians, when they see patients like this, and they suspect cancer, will typically refer them to where they think that cancer is likely to be in the body.
Speaker #4: But given these non-specific symptoms, many of them could be several different sites. And so then what happens is a patient gets referred to a particular type of clinic, and they get worked up in that clinic.
Speaker #4: So that type of cancer but if nothing is found at that point, they may not be worked up any further. And because this was an observational study, we didn't provide the CSO prediction to the clinician at the time.
Speaker #4: But what we've subsequently determined from this further follow-up is had we done so, it would have provided a directional investigation in all but one of the patients.
Speaker #4: Which we think is a really encouraging development in terms of that CSO prediction capability. Yeah, and I would just add to Harpal's point the value of the CSO.
Speaker #4: Because what we've also seen in centers that have adopted Gallery in the U.S. is physician confidence growing in the value of that CSO. We've seen real-world publications from both Mayo and Dana-Farber where their PPVs have been in excess of 70%.
Speaker #4: So that physician confidence in the value of the CSO really means they really work that diagnostic workup to a final resolution. And what we've seen there, therefore, there is more cancers being diagnosed due to that guided diagnostic follow-up from the CSO.
Speaker #8: We have time for one more question. So we'll return to Doug Schenkel with WOLF Research. You may unmute.
Speaker #13: Okay, thank you guys for taking me back in the queue. So I think it's an Aaron question. Cost of screening revenue, I think in dollar terms, it was down $3 million relative to Q2.
Speaker #13: You know, that's kind of a mid-teens percent decline, sequentially on a per-test basis. I think it was down 28% on a per-test basis year over year.
Speaker #13: So I just want to make sure at least I'm in the right ballpark in doing the math. And you know, if so, that's pretty impressive and remarkable.
Speaker #13: Can you just share how you're getting there and the durability and the trajectory from here? Thank
Speaker #13: you.
Speaker #13: you.
Speaker #3: Yeah,
Speaker #2: Yeah, I'm sorry to jump up. that was funny. You know, Aaron talked a little bit about that in the prepared remarks. But yeah, Aaron, why don't you go into a little more detail on that?
Speaker #3: Yeah, I mean, Doug, I guess it's really an example of what we've been saying for a year now about the platform that we've built for high throughput, the capacity that we have to, you know, run a million samples a year.
Speaker #3: And just what you know, higher volumes will show from a fixed cost leverage perspective. Comparing year over year, you've also got the variable cost impact that we've been talking about.
Speaker #3: We've kind of talked about that as four to five times more samples per flow cell compared to the older version. So, it's really a demonstration of what more volume will do to our fixed cost leverage.
Speaker #3: And why we're really focused on driving, you know, more volume, getting more access out there because we've got the infrastructure to handle it. And the margins are there for the take.
Speaker #8: And there are no further questions at this time. I will now turn the call back to GRAIL for closing
Speaker #8: remarks. So thank you, everyone, for joining
Speaker #2: today's call.