Guardant Health, Inc.

hello everyone and welcome to the garden health second quarter 2023 earnings call my name is emily and i'll be coordinating your call today after the presentation there will be the opportunity for any questions which you can ask by pressing start followed by the number one on your telephone keypads i'll now turn the call over to investor relations please go ahead thank you earlier today garden health released financial results for the quarter into june 30th 2023

Joining me today from GARDEN are Helmi Altuke, co-CEO, Amir Ali Talaza, co-CEO, and Mike Bell, Chief Financial Officer. Before we begin, I'd like to remind you that during this call, management will make forward-looking statements within the meaning of federal securities laws. These statements involve material risks and uncertainties that could cause actual results or event 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 reconciliation to most directly comparable GAAP financial measures, are available in the press release GARDEN issued today, as well as in our Form 10-K and other filings of the SEC. GARDEN disclaims any intention or obligation to update or revise financial projections and forward-looking statements, whether because of new information, future events, or otherwise. The information in this conference call is accurate only as of the live broadcast. With that, I'd like to turn the call over to Helmi.

Thanks, Carrie. Good afternoon and thank you for joining our second quarter 2023 earnings call. I will start off our call today with our top line results for the second quarter and go into more detail on our progress in therapy selection and MRD. 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 the remainder of 2023. Starting on slide three, At GARDEN, we are singularly focused on our mission to help patients across all stages of cancer live longer and healthier lives with the data provided from our powerful blood tests. In line with this priority, we will start our call off by sharing a patient story. In September 2021, a 56-year-old woman had a colonoscopy that revealed colon cancer. She then had curative intense surgery, which removed 32 lymph nodes. Pathology indicated a diagnosis of stage 2 colorectal cancer with no evidence of disease in the removed lymph nodes as well as negative margins on the resection. With this information, her oncologist determined there was a low risk of recurrence and chose not to administer adjuvant chemotherapy. At a checkup three months post-surgery, a CEA test was drawn and showed normal results. At her next three-month check-in, her CEA doubled but was still within normal limits. the patient requested that her oncologist order a garden reveal test. The results were positive for ctDNA, and as a result, her oncologist put her back on chemotherapy. Since then, she has had two consecutive follow-up reveal tests showing her to be ctDNA negative. And today, she is fortunately showing no evidence of disease. This story highlights the power of our tests to provide meaningful decision support to oncologists and patients earlier in the cancer journey in the MRD setting. GARDENED is the liquid biopsy industry leader in therapy selection, giving us a strong foundation in cancer patient care. From this foundation, we are building out our pipeline of multi-billion dollar opportunities in MRD and screening, which we believe will lead to a step change in the magnitude of impact we can have in patients' lives. Turning to top line performance in slide four, We had another very strong quarter with revenue growing 26% to $137.2 million. This robust growth was driven by precision oncology revenue, which increased 36% in the quarter. I am really pleased by the great progress that we continue to make in our therapy selection business that illustrates we are still in the early innings of this uptake with much more growth ahead. Turning to slide five. Indeed, our team delivered strong growth across precision oncology, surpassing 50,000 combined tests during the quarter. Clinical test volume during the second quarter reached 43,500 tests, an increase of 49% from the prior year quarter. Clinical growth was driven by strong contributions from our key products, supported by a robust commercial platform. For biopharma, we delivered 6,700 tests, increasing 12% year over year. Turning to slide six. Looking more closely at the growth drivers for our therapy selection clinical volume. We continue to benefit from the tailwinds we saw at the beginning of the year with strong growth. And along with continued strength of our high performance and rapid turnaround GARDEN360 tests. In breast fueled by a recent GARDEN360 CDX approval for ESR1 mutation positive patients, and in tissue aided by our AI-powered Galaxy Suite. As a reminder, we introduced the GARDEN Galaxy Suite of advanced AI analytics for digital pathology applications in partnership with Lunit to enhance our portfolio of cancer tests, starting with the TissueNext PD-L1 test shown to improve biomarker detection by more than 20% in non-small cell lung cancer. For MRD, Reveal continued to do well and we again saw strong volume growth of greater than 100% year over year. We are also making excellent progress in our clinical data pipeline for reveal and look forward to sharing more about this at our upcoming investor day. Our team has worked incredibly hard to establish Gardens as the leader in liquid biopsy. We have made critical investments into our commercial infrastructure that are now paying dividends. We lead the market in share of voice and overall satisfaction with customer experience. To that end, we have finished development and begun integration with the top three oncology EMR providers in the United States. These providers collectively covered nearly two-thirds of all oncology practices in the country. As expected, we see strong increases in ordering volumes once a particular account is able to order our tests through their EMR system. As we continue to broaden our customer base, We look forward to driving further increases in volumes across our product portfolio within such accounts. Moving on to slide seven, we had some big breakthroughs in payer coverage during the past quarter that will provide tailwinds for our clinical business in the near term. Since our last earnings call, we secured coverage from Anthem, Blue Cross Blue Shield, Aetna, and Humana for our Garden360 test. These tests are now covered for comprehensive genomic profiling by all major U.S. commercial health insurers with over 300 million covered lives. We are also making good progress on increasing covered lives for newer products in our portfolio. For example, with tissue nets, we are approaching 200 million covered lives and hope to cross this threshold later this year. We also recently received our first commercial coverage for garden reveal. Blue Cross and Blue Shield of Louisiana is providing coverage for garden reveal for individuals with stage 2 or stage 3 colorectal cancer after curative treatment, including surgery. This is a major milestone for patients. This is the first time a liquid-only MRD test has been granted reimbursement coverage by a private payer to inform physician decisions about post-treatment therapy and to monitor for disease progression, recurrence, or relapse. Importantly, this coverage provides broad access for CRC patients at stage two or three, which amounts to a significant number of tests for patients across the adjuvant and surveillance settings, in line with NCCN monitoring guidelines. On to slide eight. Outside of the United States, we are continuing to make progress on our strategy of achieving global scale with a focus on large core markets. Most notably, we recently received national reimbursement approval from the Japanese Ministry of Health, Labor, and Welfare for Garden360 CDX, which became effective at the end of July. Japan currently represents the largest expansion opportunity for a portfolio of products outside of the United States. There are more than 390,000 deaths from cancer each year in Japan and more than 1 million new cancer cases annually. And despite this large population, CGP testing is still in its very early endings of adoption, with currently about 25,000 CGP tests performed annually, and only 15 to 20% of that in blood-based testing. In addition, Japan has focused centralized care with about 260 core genomic hospitals. Importantly, Japan is a single-payer healthcare system, and we receive pricing that is in line with our US ASB of $2,600 to $2,700. With this pricing, we expect our clinical testing for Japan to have positive margins and contribute to our therapy selection business reaching breakeven by the end of the year. This reimbursement decision represents a significant milestone for our international business. We are encouraged by the strong support we have received from oncologists in Japan, and we look forward to furthering these partnerships as we continue our commitment to democratize access to precision oncology and bring blood-based comprehensive genomic profiling to patients and care teams across the region. Beyond Japan, we are also very excited about our opportunities in the UK and China, and we look forward to providing updates on our progress across our international business in the future. With that, I will now turn the call over to Amir Ali to provide an update on our screening business.