Guardant Health, Inc.

Good afternoon. Thank you for standing by. Welcome to the Gardent Health Second Quarter 2021 Earnings Conference Call. At this time, all participant lines are in a listen-only mode. After the speaker's presentation, we will have a question and answer session. To ask a question during the session, you will need to press star 1 on your telephone keypad. Please be advised today's conference is being recorded. If you require operator assistance, just press star 0. I would now like to turn today's conference over to Carrie Mendeville, Investor Relations.

Thank you. Earlier today, Garden Health released financial results for the quarter ended June 30th, 2021. If you have not received this news release, or if you'd like to be added to the company's distribution list, please send an email to investors at gardenhealth.com. Joining me today from Garden are Helmi Altuke, Amiralee Talazov, and Mike Fell. Before we begin, I'd like to remind you that management will make statements during this call that are forward-looking statements within the meaning of federal securities laws. These statements involve material risks and uncertainties that could cause actual results or events to materially differ from those anticipated. Additional information regarding these risks and uncertainties appears in the section entitled Forward-Looking Statements in the Press Release Garden Issue today. For a more complete list and description, please see the Risk Factors section of the company's annual report on Form 10-K for the year ended December 31, 2020, and its other filings with the Securities and Exchange Commission. This call will also discuss certain financial measures that are not calculated in accordance with generally accepted accounting principles. Reconciliation to the most directly comparable GAAP financial measure may be found in today's earnings release submitted to the SEC. Except as required by law, GARDEN disclaims any intention or obligation to update or revise any financial projections or forward-looking statements, whether because of new information, future events, or otherwise. This conference call contains time-sensitive information and is accurate only as of the live broadcast, August 5, 2021. With that, I would like to turn the call over to Helmy.

Thanks, Keri. Good afternoon, and thank you for joining our second quarter 2021 earnings call. Our mission at GARDI has always been to ensure patients have access to innovative oncology products. Today, the vision is clearer than ever, and I have never been more excited about the opportunity ahead of us. This afternoon, we announced a new leadership structure which will allow us to aggressively move and scale into new areas of growth across the continuum of cancer care. We have created two focused areas within Garten, oncology and screening. Amir Ali and I will serve as co-CEOs, with Amir Ali leading our screening efforts and me leading oncology. We believe this leadership structure will provide the focus and strategic attention required to continue as the liquid biopsy leader in oncology while aggressively pursuing the massive opportunity in cancer screening. This structure will also allow for scalability to address new areas across healthcare beyond screening and oncology. Everything we do at Barton is motivated by our commitment to serve patients. We are dedicated to bring the absolute best products to market that will provide clinically actionable information to inform patient care. We believe that This new focused leadership structure will allow us to more rapidly address the unmet need to serve patients. And in line with these commitments, I will start off today with a patient story. Last March, a 68-year-old woman was diagnosed with colorectal cancer. Shortly after her diagnosis, surgery was performed, followed by adjuvant therapy. In follow-up, her oncologist detected elevated levels of CEA, but she scanned negative for evidence of disease. At another follow-up, just over a year after the initial diagnosis, her oncologist ordered a garden reveal test, which showed she was CT DNA negative. Garden reveal directly measures tumor-derived DNA in the blood, while CEA is a nonspecific biomarker and can be elevated in multiple cancer types, for example, in smokers and in patients with various benign diseases. Garden reveal has a sensitivity of 91% compared to the CEA test with a sensitivity of 69%. With a higher sensitivity than CA in the surveillance setting, Gardner Reveal showed the patient was not actively progressing. This story highlights how Gardner Reveal can provide confidence and reliability in recurrence testing for cancer. Now, turning to our second quarter performance. Revenue grew 39% to a profit of $92 million. Second quarter clinical volume grew to 20,830 tests, representing 52% growth over the prior year period, and up 13% from the first quarter of this year. While patient visits and office access are still not fully back to pre-COVID levels, we are pleased with how well our commercial team is continuing to execute in this environment and still achieve healthy volumes. International clinical volumes were impacted by the resurgence of COVID cases, especially in countries where the vaccination rates remain low. During the second quarter, we saw strong growth in U.S. clinical volumes as oncology offices gradually reopened throughout the quarter. However, in recent weeks, we have seen a reduction in oncology office visits and sales force access in the United States and across our global business, which may have an adverse impact for the remainder of the year. Although we have started to see some impact globally, we have not seen much yet in the United States. We are monitoring the situation closely as it evolves. Our portfolio is growing quickly, and we have launched a record number of new products and product upgrades in the last year alone, but we are nowhere close to done. Two of these new product launches were announced in the second quarter, Garden360 TissueNets and Garden360 Response. Both products expand the trusted Garden360 portfolio to offer oncologists end-to-end testing solutions. TissueNets supplements our blood-first approach. Our TissueNext test provides an integrated solution for oncologists to use liquid first ahead of tissue, ensuring patients receive guideline-complete testing with the fastest turnaround time. An oncologist orders an integrated product and begins with a GARDEN360 liquid biopsy test. If there is no biomarker detected, he or she is able to quickly reflex the tissue with TissueNext. This integrated approach has a significantly higher biomarker detection rate than tissue alone. In this flipped study in non-small cell lung cancer, CGP liquid testing using GARDEN360 identified 81% of patients with an informative test result, and tissue testing found informative biomarkers in the remaining 19% of patients. On the other hand, standard of care tissue testing alone identified just 57% of the patients with an informative test result in this study. This study is one of many that highlight the blood-first, tissue-next approach offers a clinically superior paradigm. The early response to tissue-next has been very encouraging. The reimbursement path for tissue is well-defined, and we expect to submit the technical assessment application to MOL-DX this year. We believe this offering will serve as a stepping stone for those who continue to rely solely on tissue testing to move towards the blood-first testing paradigm. Garden 360 Response is the first commercially available blood-only liquid biopsy test that detects changes in ctDNA levels to provide oncologists an early indication of a patient's response to treatment, such as targeted immunotherapies. Our comprehensive product portfolio essentially enables oncologists to perform profiling for treatment selection in both blood and tissue, as well as response monitoring. Feedback for both new products is very positive. We do not expect either product to be a significant revenue contributor in the near term as we work to establish reimbursement. Turning to our occurrence monitoring opportunity with GardenReveal. We are pleased by the encouraging feedback and reception from oncologists. Based on the early success we are seeing in the market around Reveal, we have expanded this dedicated commercial team. More than 9,000 oncologists have ordered a Garden360 test, And we are leveraging these existing customers as well as our relationship with KOL for their launch of Reveal. Beyond CRC, we're also making great advances in other cancer types with compelling data on bladder, lung, and now breast as well. Moving on to biopharma. Biopharma volumes grew to 3,653 tests, up 30% year over year, and up 4% from the first quarter. We continue to experience some pressure in biopharma sample volumes, given the lag in many of the samples coming to us for analysis due to slower enrollment during COVID peaks. Q2 development services and other revenue was approximately $19.5 million, up 27% year over year. We are pleased by the growth of our overall pharma business and continue to serve an increasing number of biopharma customers with more than 80 active partnerships. As our biopharma business matures, we expect growth to be underpinned by sample volume, including new product introductions, for example, multi-indication reveal, as well as companion diagnostics. This quarter, we announced two new companion diagnostic approvals with Janssen and Amgen, both for use in advanced small cell lung cancer. The FDA has approved the GARDEN360 CDF test as the first and only liquid biopsy companion diagnostic for comprehensive genomic profiling to identify patients with locally advanced or metastatic non-small cell lung cancer who harbor the KRAS G12C mutation and who may benefit from Amgen's Lamacris or who harbor an EGFR exon 20 insertion mutation who may benefit from Janssen's ribavent. Moving on to Gardner and Forbes. a real-world evidence platform featuring an extensive clinical genomic liquid biopsy data set of advanced cancer patients. We have signed more than a dozen biopharma collaborations for GARDEN Informed since its launch just over a year ago. We are pleased with the success and growing interest from our biopharma partners in this offering. At GARDEN, our sites are set not only in providing solutions for patients with advanced and early-stage cancer, but early cancer detection as well. We are focused on establishing ourselves as a best-in-class company in these large markets while maintaining a culture of fast execution as the organization continues to scale. Since founding Garden, Amir Ali and I have always had a strong partnership and we've been laying the groundwork for these two focus areas of oncology and screening for quite some time. This co-CEO leadership structure is a continuation of our current strategy and supports the evolution of our business. We are scaling the team to support the growth of both businesses and recently brought on Chris Freeman as our new Chief Commercial Officer of Oncology. We expect to bring on several more key leaders in the near future and have started building a dedicated commercial organization for us creating business. Having leadership teams dedicated to each opportunity will give us the focus and velocity to rapidly scale in each of these areas to drive both near-term and long-term success. We have also continued to invest in our governance and made recent changes and additions to our board of directors. I will now be serving as chairman of the board and Amir Ali will continue to serve on the board as a director. We believe this rotation and responsibility adds a fresh perspective and is in line with our overall focus to scale our organization. In addition, Megan Joyce has been appointed to our board of directors. Megan is the chief operating officer and executive vice president of platform at Oscar Health a high-growth health tech and health insurance company, where she leads operations, technology, clinical, marketing, and new business lines. Prior to joining Oscar Health, Megan had several leadership roles at Uber, most recently as regional general manager of the United States and Canada. Her expertise in scaling high-growth organizations will be invaluable to our next phase of growth. We look forward to her contributions and guidance. We are committed to continue to develop a portfolio of breakthrough products across all stages of cancer and ensure these innovations are not only available but readily accessible for all patients. We look forward to continuing to expand our product portfolio, attract and develop top talent, and improve patient outcomes as we conquer cancer with data across the continuum of care. I will now turn the call over to Amir Ali.