NEW YORK – Guardant Health said on Thursday that it has seen strong uptake of its Shield colorectal screening test launched earlier this year, and that it is still on track to complete a regulatory submission to the US Food and Drug Administration for the test in the fourth quarter.
The company provided these updates during a call to discuss its third quarter financial results. It reported revenues of $117.4 million, up 24 percent from $94.8 million in the same quarter last year and just missing Wall Street expectations of $117.8 million.
"We achieved this accelerated growth despite continuing challenges of staffing shortages and lingering access restrictions across a number of practices, the majority of which we'd expected to resolve more quickly," Guardant co-CEO Helmy Eltoukhy said.
Guardant's precision oncology revenue grew 29 percent in Q3 2022 to $102.1 million from $79.3 million in the year-ago quarter. The company reported 32,400 tests to clinical customers and 6,750 tests to biopharmaceutical partners in Q3 this year, which is a 42 percent and 40 percent increase, respectively, over the same three months in 2021.
Development services and other revenues were down 1 percent during the quarter to $15.4 million from $15.5 million in Q3 2021.
During the call, Guardant executives provided updates on the market uptake and further development of its Guardant Shield and Reveal tests.
By the end of Q3, Guardant had received more than 8,000 orders from over 600 accounts for its Shield laboratory-developed blood test, which the firm launched in May with the goal of increasing colorectal cancer screening rates. After five months on the market, the average per-provider order rate was four Shield tests.
"This is much greater than the depth of ordering for [Exact Sciences' noninvasive screening test] Cologuard after many years being on the market," Guardant co-CEO AmirAli Talasaz claimed during the call. "We are excited by this uptake and believe the promise of blood screening for patients is becoming a reality."
Approximately 120 million people in the US between ages 45 and 85 are at average risk for colorectal cancer, but only around 71 million individuals are getting screened, estimated Talasaz. This is likely due to the fact that patients don't like colonoscopies and stool tests.
Patient adherence — calculated as the ratio of blood samples received to the number of tests ordered — is more than 90 percent for the Shield test. "By comparison, one out of every three patients who receives a Cologuard kit, never completes their test," Talasaz claimed.
Guardant is betting that the unmet opportunity in the colorectal screening market will translate to a robust market opportunity for Shield. "We believe Shield will make a significant impact across the entire screening eligible population," Talasaz said.
Guardant is also "very close" to achieving in the next few days the target 70 colorectal cancer cases it needs to complete a prospective evaluation for the Shield test in the ECLIPSE study. "This means, we're now in the final phases and are on track for this study to read out during the fourth quarter," Talasaz said, adding this will allow the company to submit to the FDA the final module of its premarket approval application for Shield in Q4 as planned.
During Q3, the company added two more indications to the Guardant Reveal liquid biopsy test. This test was originally launched to detect residual and recurrent disease in colorectal cancer, but in Q3, Guardant began marketing the test as a tool for detecting relapse of early-stage breast and lung cancers, too. The test, which has a positive reimbursement decision from Medicare contractor Palmetto in the colorectal cancer setting, saw an increase in its Medicare payment rate from $3,600 to more than $4,900.
During Q3 2022, Guardant recorded a net loss of $162.0 million, or $1.58 per share, compared to a net loss of $107.5 million, or $1.06 per share, in the same period last year. Non-GAAP loss for the quarter was $120.8 million, or $1.18 per share. Analysts, on average, had expected a net loss of $1.26 per share.
The firm's R&D expenses in Q3 2022 rose 41 percent to $100.0 million from $71.0 million a year ago, while SG&A costs increased 21 percent to $121.5 million from $100.3 million in Q3 2021.
The company said that due to the challenging economic and reimbursement environment in the clinical oncology business, Guardant Health is lowering its full-year 2022 revenue guidance to a range of $440 million to $450 million, which still represents an 18 percent to 20 percent increase over its 2021 revenues. Previously, Guardant had said it was expecting revenues in 2022 to be in the range of $460 million to $470 million.
Because the company is still seeing staffing shortages and access restrictions at clinical practices, Guardant CFO Michael Bell said the firm is also lowering its expectations for year-over-year test volume growth from 50 percent to around 42 percent.
Guardant ended the quarter with $158.3 million in cash and cash equivalents and $799.7 million in short-term marketable debt securities.