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Guardant Health Touts Testing Growth, Reimbursement Wins as Q4 Revenues Grow 22 Percent

NEW YORK – Guardant Health said Thursday that its fourth quarter revenues rose 22 percent year over year, driven by a 29 percent boost in clinical test volume.

Specifically, the firm's core liquid biopsy and tissue tests Guardant360 and Guardant TissueNext established themselves across nearly all major insurers in the US, as well as in a growing number of international markets.

Guardant's total revenue for the three-month period ended Dec. 31 was $155.1 million, up from $126.9 million in the same quarter of 2022 and beating analysts' average estimate of $149.6 million.

Precision oncology revenue grew 25 percent, to $142.2 million from $113.8 million in the prior-year period, driven predominantly by an increase in clinical and biopharma testing volume, which were up 29 percent (to 46,600 tests) and 16 percent (to 9,500 tests), respectively.

Development services and other revenue was down slightly at $12.9 million from $13.1 million in the same period of 2022.

During a call with investors on Thursday, Guardant co-CEO Helm Eltoukhy said that payor coverage for Guardant360 now surpasses 300 million covered lives. He also highlighted the firm's receipt of national reimbursement in Japan for Guardant360 and the Centers for Medicare and Medicaid Services' decision to reimburse its Guardant Response test as significant milestones for the past year.

Guardant has also seen some important test pricing wins, including Medicare's move in November last year to crosswalk the Guardant360 laboratory-developed test price to the price of the US Food and Drug Administration-approved Guardant360 CDx. This change, which took effect on January 1, increased the Medicare price for Guardant360 LDT from $3,500 to $5,000.

"We're also starting to see the positive impact on Guardant360 [pricing] from commercial payer coverage wins and believe that this is a tailwind that will continue to play out in the coming year," Eltoukhy added.

Among recent developments for Guardant Reveal, Eltoukhy highlighted the company's update of the test to a broader methylation technology it calls Smart Liquid Biopsy. The firm presented data at a January meeting of the American Society of Clinical Oncology demonstrating 80 percent surveillance sensitivity with 99 percent specificity for the updated test in post-surgery colorectal cancer patients, and it plans to include this data in submissions to Medicare for a surveillance indication.

Eltoukhy also discussed some of the company's work in breast cancer, where he said Guardant has now assessed three clinical cohorts with the updated Reveal platform. He said the test achieved an 82 percent surveillance sensitivity for distant recurrence with 97 percent specificity in this combined "sizable" cohort, which he argued is "in line with, if not favorable compared to other approaches in this space."

Overall, Eltoukhy said Guardant has almost 80,000 samples from 20,000 patients across a variety of solid tumors supporting its work with the Reveal assay, with plans to expand application of the test into additional tumor types such as lung, pancreatic and gastric cancers.

Guardant's Q4 net loss rose to $187.0 million, or $1.58 per share, compared to a net loss of $139.9 million, or $1.36 per share, in the year-ago period. The firm attributed the increase in net loss primarily to a non-recurring $83.4 million legal accrual, partially offset by a $32.0 million improvement in loss from operations and a $11.7 million increase in interest income.

Non-GAAP net loss was $75.9 million for the quarter, or $.64 per share, beating the Wall Street consensus estimate of a $.87 per share net loss.

Guardant's R&D expenses during the quarter were $89.9 million, down 16 percent from $106.6 million in Q4 2022. Its SG&A spending was down about 2 percent at $116.8 compared to $119.3 million the previous year.

For full-year 2023, Guardant's revenue totaled $563.9 million, up 25 percent from $449.5 million in 2022 and beating the Wall Street consensus estimate of $557.9 million.

Precision oncology revenue grew 31 percent in 2023, to $514.2 million from $392.0 million in 2022, again driven by higher clinical and biopharma testing volumes, which were up 39 percent (to 172,900 tests) and 15 percent (to 29,900 tests), respectively. Full-year development services and other revenues were down 14 percent at $49.7 million compared to $57.5 million in 2022.

Eltoukhy said during the call that test volumes for the firm's Guardant Reveal MRD assay were up more than 90 percent in 2023 compared to 2022.

Guardant's 2023 net loss was $479.4 million, or $4.28 per share, compared to a net loss of $654.6 million, or $6.41 per share, the prior year. On an adjusted basis, net loss was $352.3 million, or $3.15 per share. Analysts, on average, had predicted a net loss of $3.59 per share.

Guardant ended the quarter with $1.13 billion in cash and cash equivalents and $35.1 million in short term marketable securities.

The company projects 2024 revenues, excluding screening, to be in the range of $655 million to $670 million, representing growth of 16 percent to 19 percent over 2023.

With its therapy selection testing base increasingly established, Guardant's investment has shifted to the newer assays and markets that it has targeted, which include minimal residual disease testing and blood-based cancer screening.

One snag that Guardant discussed for its plans moving into 2024 is a delay in the FDA's review of its Guardant Shield test, a blood-based colorectal cancer screening assay. The company's co-CEO AmirAli Talasaz said that the agency informed Guardant that a planned advisory committee meeting has been postponed from Q1 to late Q2, due to vacancies on the panel.

That said, Guardant still expects to receive FDA approval during 2024, he stressed. "Our team is working hard to prepare for this panel meeting and in parallel is preparing to scale out the commercial operations post the FDA approval."

"While Shield has only been in market for a short time, we are highly encouraged by the overwhelming enthusiasm … We are witnessing real world evidence of its effectiveness and the potential to drive unparalleled compliance in completing cancer screening," Talasaz added.