Release Date: November 06, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Guardant Health Inc (GH, Financial) reported a 34% increase in total revenue, reaching a record $191.5 million for Q3 2024.
- The company launched Shield, its first test for the asymptomatic cancer screening market, which has shown strong initial demand.
- Guardant360's ASP reached $3,000, achieving the company's long-term goal four years ahead of schedule.
- The biopharma business saw a 40% year-over-year increase in volumes, contributing to a 34% revenue growth in this segment.
- Guardant Health Inc (GH) achieved positive free cash flow in its Therapy Selection business for the third quarter.
Negative Points
- The company continues to manage volumes for Reveal to minimize cash burn until it becomes gross margin positive, anticipated in 2025.
- International growth, particularly in Japan, has been slower than expected due to structural market challenges.
- Despite strong initial demand, Shield's market share in CRC screening is not yet material.
- The company is still in the early stages of commercialization for Shield, with significant investments planned.
- Reveal's acceleration in volume growth is contingent on achieving CRC surveillance reimbursement, which is still pending.
Q & A Highlights
Q: With the initial Medicare pricing for Shield looking strong, does this change your approach to sales and marketing efforts? Also, do you need USPSTF recommendations to secure commercial reimbursement?
A: AmirAli Talasaz, Co-CEO, stated that despite the positive Medicare pricing, the company will maintain its financial discipline with a maximum investment of $200 million for Shield. They are pleased with the Medicare pricing, which allows for a reasonable gross margin as volume scales. Regarding USPSTF, while it is a major milestone for commercial accessibility, the current covered market is deep, and they will continue to pursue business opportunities there.
Q: Can you provide any metrics or feedback on how Shield is performing in the field? Also, given the Medicare price, do you see upside to your initial target for Shield revenue by 2028?
A: AmirAli Talasaz, Co-CEO, mentioned that Shield's initial volume post-launch exceeded expectations, with strong momentum continuing. They plan to report Shield's volume and revenue in Q4. Michael Bell, CFO, noted that the Medicare price of $920 and potential ADLT designation could increase ASP above the initial $500 target, suggesting upside to the 2028 revenue target.
Q: What is the total addressable market (TAM) for Guardant360, considering repeat testing opportunities?
A: Helmy Eltoukhy, Co-CEO, explained that the market for Therapy Selection is expanding beyond a single test per patient. With multiple lines of therapy, patients may receive three to five tests over their lifetime, significantly increasing the market size. Liquid biopsy is well-positioned to capture this growth due to its ease of use compared to tissue biopsies.
Q: Can you provide more details on the potential upside from Reveal surveillance coverage next year and the ASP expectations?
A: Helmy Eltoukhy, Co-CEO, stated that they expect an uptick in ASP with CRC surveillance reimbursement. While the exact increase is uncertain, they anticipate positive gross margins, allowing for accelerated growth in Reveal volumes in 2025.
Q: How do you view the market penetration for Shield CRC screening, and when do you expect to have V2 data?
A: AmirAli Talasaz, Co-CEO, expects Shield V2 data in 2025. Currently, Shield has minimal market share, but they anticipate capturing 60% of the blood-based CRC screening market long-term. They do not expect competing tests to receive FDA approval and Medicare reimbursement for at least 2 to 2.5 years.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
