Guardant Health, Inc.

Hello everyone and welcome to the Gardend Health Q3 2023 earnings call. My name is Felicia and I'll be your operator today. Please make sure you... Your lines will be muted for the presentation part of the call. So if you want to ask a question, please make sure you press star followed by one on your telephone keypad. I will now hand you over to your host, Kari Mendeville, Investor Relations from Garden Health. Please go ahead, Kari.

Thank you. Earlier today, Garden Health released financial results for the quarter ended September 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 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 the reconciliation to most directly comparable GAAP financial measures, are available in the press release GARDEN Issue 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 third quarter 2023 earnings call. I will start off our call today with our top line results for the third quarter and then 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, Garden is a liquid biopsy leader in therapy selection with a strong pipeline of opportunities in MRD and screening. With our comprehensive suite of tests, we are transforming patient lives across the continuum of care. In early September, we hosted our inaugural Investor Day, where we shared our long-term vision for gardens. I encourage anyone who wasn't able to attend our Investor Day to access the replay on the investor section of our website. It was a great opportunity to reflect on how far we have come over the past decade and look ahead to where we are going. We are just scratching the surface of what we believe is a massive opportunity in front of us. Our commitment to patients has always been at the heart of what we do. We look forward to continuing to grow our reach to impact more patient lives across the globe. To demonstrate the impact of our test, I will start our call off today by sharing a patient story for our newest product, Shield. Earlier this year, a woman in her late 50s visited her primary care physician. She was unscreened for colorectal cancer and was resistant to receiving a colonoscopy. Her physician proposed a SHIELD LVT test, which was added to her annual blood work. The SHIELD test results reflected an abnormality, which led her physician to order a colonoscopy. Though she had been hesitant of a colonoscopy at her initial visit, with this result from SHIELD, she prioritized getting the procedure done. The colonoscopy determined that she had stage two colorectal cancer, She started receiving chemotherapy right away, followed by surgery to remove a portion of her colon. After surgery and just a few months of treatment, she was healthy again. With her cancer caught early, she was able to participate in her son's wedding this past fall. This story is a powerful example of delivering on our commitment to increase colorectal screening compliance through the preference and ease of use in the physician's workflow. Serving this patient and the millions of others just like her who will face cancer this year is why we exist. The results we share today reflect the positive progress we are making in our mission to help as many of these patients as we can. Turning to top line performance in slide four, we are pleased with our third quarter results with revenue growing another 22% this year to $143 million. This solid growth was driven by precision oncology revenue which increased 31% in the quarter. We continue to see strength in our core therapy selection business with a number of tailwinds to drive growth over the long term. Turning to slide five, we delivered strong growth across Precision Oncology with a record number of combined tests during the quarter. Clinical test volume during the third quarter reached 43,900 tests, an increase of 35% 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 7,500 tests, increasing 11% year-over-year. Turning to slide six. Looking more closely at some of the highlights from the third quarter, we continue to benefit from tailwind seen earlier in the year with another quarter of solid year-over-year clinical volume growth across Garden360 and TissueNext. Notably, nearly half of oncologists in the United States are now ordering a GARDEN360 test every month, which highlights the strength of our core therapy selection business. As is typical with new approvals following the GARDEN360 CDX approval for ESR1 mutation-positive patients, we saw a spike in breast volumes in Q1 and Q2 fueled by pent-up demand. In Q3, we had worked through this backlog and therefore had sequentially less breast cancer tests in Q3 than in Q2. That said, we still had strong contributions from breast volume in the quarter, which increased significantly year over year, and we expect to see continued growth in this indication. Our team remains focused on investing in our commercial infrastructure and providing the best customer experience. Last week, we announced the integration of our CGP test within Flatiron's OncoEMR. With this underway, we are in the process of integrating the top three oncology EMR providers in the United States. These providers collectively represent approximately two-thirds of all oncology practices in the country, and these integrations are expected to reduce oncologist ordering time by 75%. Notably, by the end of the year, we expect to be fully integrated in over 400 accounts. In addition to the customer experience benefits and efficiencies gained, we expect these partnerships to contribute to an uplift in ordering volume in 2024. We are also seeing growing contribution from MRD with another quarter of record volumes for garden reveal. We are on track to upgrade reveal with smart liquid biopsy by end of this year. As we shared at our investor day, we are expanding into other geographies and are seeing an increasing contribution from labs globally. This quarter, we saw good momentum, particularly in Europe, as the Royal Marsden's garden-powered laboratory was awarded an expression of interest by the NHS to launch CGP for non-small-cell lung cancer in England, potentially making this technology accessible to thousands of patients across the country. We are also making good progress in Asia with the recent launches of our assays for biopharma use in China and of GARDEN360 for clinical use in Japan. In early September, GARDEN360 CDX received regulatory approval in Japan as a companion diagnostic to HER2 for treatment of non-small-cell lung cancer patients with HER2 mutations. This follows the recent national reimbursement approval for Garden360 CDX in Japan, which became effective at the end of July. We are really excited about the opportunity in this market as Japan currently represents the largest expansion opportunity within our portfolio. While international revenue has historically been a relatively small portion of volume, we expect significant growth from these core markets over the next year. Moving on to slide seven. In the third quarter, we continue to see breakthroughs in payer coverage that provide tailwinds for our clinical business in the near term, starting with therapy selection. We are starting to see the impact of the recent coverage wins for Garden360 with ASPs now towards the upper end of the $2,650 to $2,700 range. While this marks significant progress so far this year, our ASPs will increase meaningfully more throughout the next few months. In late September, CMS proposed to crosswalk Garden 360 LBT to a price of $5,000 as part of a rate-setting process for reimbursement under the Medicare Clinical Lab fee schedule next year. If finalized, this will be a major milestone for Gardens that will have a meaningful impact in our top and bottom lines. Mike will share more about the uplift we expect to see in our ASD shortly. We are also working to expand private pay reimbursement with the ultimate goal of getting national biomarker testing coverage. We are seeing important inroads made here. To date, 13 states, most recently California, have enacted biomarker bills into law that require providers to cover biomarker testing. Collectively, these enacted bills cover nearly half the U.S. population. Two more, Ohio and New York, are pending. In many cases, these bills support private payer coverage for both therapy selection and MRD. We will continue to support efforts by the American Cancer Society and others to get these bills passed in more states to expand access to comprehensive biomarker testing through broadened private payer coverage. Lastly, we are continuing to make progress with reimbursements for Tissue Next and recently surpassed 200 million covered lives. For MRD, we also received coverage for garden reveals from the Geisinger Health Plan, providing coverage for more than half a million members. The test will be covered when used after surgery or curative treatment to inform physician decisions about adjuvant therapy and to monitor for disease progression, recurrence, or relapse. This builds on the previous coverage we received from Blue Cross and Blue Shield of Louisiana. We look forward to continuing to drive adoption of reveals and additional reimbursement wins. Moving on to slide eight to discuss some recent data for review. In October, Pegasus interim data was released as a late-breaking abstract of the ESMO Congress. Pegasus is a de-escalation clinical utility study for post-surgical liquid biopsy-guided treatment of 135 stage 3 and high-risk stage 2 colorectal cancer patients. Initial results show that 34% of patients with a positive liquid biopsy result after surgery had their cancer relapse, despite initiation of adjuvant chemotherapy. In addition, only 10% of patients with a negative result experienced a relapse. Approximately 40% of patients converted from ctDNA positive to ctDNA negative after treatment, suggesting treatment efficacy of chemotherapy for some patients. These results are promising and suggest that a revealed blood test can provide a sensitive tool to help oncologists make informed treatment decisions that improve outcomes for their patients. We expect full readout of this study in 2024. With that, I will now turn the call over to Amir Ali to provide an update on our screening business.