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Guardant Health Q3 Revenues Spike 181 Percent

NEW YORK  – Guardant Health reported after the close of the market on Thursday that its third quarter 2019 revenues more than doubled year over year.

Based on the strength of the results, the company raised its 2019 revenue guidance. 

The liquid biopsy firm reported total revenues of $60.8 million for the quarter ended Sept. 30, compared to $21.7 million in the same period of 2018, easily beating the consensus Wall Street estimate of $45.4 million. The firm noted that it adopted a new revenue recognition standard, without which total revenues would have been $59.7 million.   

Guardant's oncology testing revenues in Q3 2019 increased 185 percent year over year to $52.1 million from $18.3 million as a result of higher testing volume and increased revenues per test. Development services revenues grew 156 percent to $8.7 million from $3.4 million in Q3 2018 due to new projects in companion diagnostic development and regulatory approval services for biopharmaceutical customers. Total revenues also included $5.5 million in payments from payors for samples processed in 2018 that they had initially denied but which Guardant successfully appealed. 

The company reported 13,259 tests to clinical customers in Q3 2019, an 89 percent increase from 7,027 tests reported the prior year. The company also reported 5,280 tests to biopharmaceutical customers during the quarter, more than double the 2,505 tests reported in Q3 2018.

Guardant recently submitted a premarket approval (PMA) application for its liquid biopsy profiling assay Guardant360 test with the US Food and Drug Administration, CEO Helmy Eltoukhy said during a call with analysts. The agency will review the test on a six-month timeframe, and if the decision is positive, the test will be eligible for national coverage through the Centers for Medicare & Medicaid Services.  

However, the test may achieve local coverage sooner. Medicare Administrative Contractor Palmetto has issued a draft local coverage determination for Guardant360, proposing to cover the test for patients with advanced solid tumors when tissue-based genomic analysis is not possible or when tissue testing for non-small cell lung cancer patients hasn't identified actionable mutations. These patients must be considering treatment with an FDA-approved, biomarker-defined indication or a therapy that is recommended by the National Comprehensive Cancer Network. Eltoukhy said that the company is expecting Palmetto to finalize this LCD by the end of the year. 

According to Eltoukhy, the company is seeing good uptake of Guardant360 in Japan and in Southeast Asia, where thousands of samples have been tested. "We believe our FDA package is important not only in the US but internationally," he added. "That data [from the PMA] will be used in submissions to other regulatory bodies" including Japan's Pharmaceuticals and Medical Devices Agency.

He added that the company's pharma partners continue to express interest in the company's GuardantOmni test, which helps determine whether cancer patients are likely to respond to immunotherapy and targeted treatments. He highlighted, for example, that drugmakers are increasingly exploring predictive signatures such as homologous recombination deficiency (HRD) as a way to gauge response to PARP inhibitors. The FDA recently approved Myriad Genetics' myChoice CDx, a test that provides an HRD score and can be used to predict response to the PARP inhibitor niraparib (GlaxoSmithKline's Zejula) in fourth- or later-line ovarian cancer.

Turning to the company's Lunar-1 program to develop a blood test for adjuvant therapy decision-making and recurrence monitoring, Guardant President AmirAli Talasaz said during the call that the company has clinically validated and launched an assay through its CLIA-certified lab for use in a prospective clinical trial. The company will initiate a prospective study in the near future in which the Lunar-1 assay will be used for adjuvant therapy selection in colorectal cancer patients. 

Within the Luna -2 program, which aims to develop a blood test for early cancer screening, Guardant has kicked off a 24-month, prospective colorectal cancer screening study, called ECLIPSE, which will enroll around 10,000 individuals between 45 to 84 years old, who are at average risk of colorectal cancer. The first patient enrolled in this study a few weeks ago, according to Talasaz. The study will evaluate the circulating cell-free DNA test's ability to detect colorectal cancer in average risk patients and Guardant hopes to submit the data as part of a PMA package to the FDA.

"We are encouraged by our early discussions with both FDA and CMS and believe that if successful, this regulatory grade study will pave the way for FDA approval of our Lunar assay, and later, CMS coverage," Talasaz said. 

During the recently completed quarter, Guardant reduced its net loss to $13.1 million, or $.14 per share, from $23.5 million, or $1.94 per share, in Q3 2018. Analysts, on average, had predicted a loss per share of $.37. 

Guardant's R&D expenses were up 72 percent to $24.6 million in Q3 2019 from $14.3 in Q3 2018. Its SG&A expenses rose 63 percent to $35.2 million from $21.6 million in the prior-year period.

As of Sept. 30 the company had $147.2 million in cash and cash equivalents and $375.8 million in short-term marketable securities. 

Based on its quarterly results, Guardant Health updated its full-year guidance, and now expects 2019 revenue to be in the range of $202 million to $207 million, compared to a previous range of  $180 million to $190 million.

In Friday morning trading on the Nasdaq, Guardant's stock price had increased around 6 percent to $68.11.