Thanks everybody for joining. Good afternoon. I'm Matt Sykes, Cover Life Sciences Tools and Diagnostics at Goldman Sachs. I have the pleasure of welcoming the Guardant Health management team here today, to my right is Helmy Eltoukhy, Co-Founder, Co-CEO, AmirAli Talasaz, Co-Founder, Co-CEO, and Mike Bell, the CFO. Thank you guys for joining today. No, thank you. Appreciate you coming down. Maybe, if you could just help us kind of set the stage first, talk about some of the more recent results you've had and what trends you're seeing in your business as we enter into the second half of this year. Yeah, no, I mean, we're really pleased in terms of how we started the year. Started very strong in our core with, some of the approvals in terms of ESR1, some of the, coverage decisions that were very positive with United and Aetna and Anthem now. You know, I believe we have coverage or partial coverage with every plan that's more than 1 million lives in the United States now, which it took a while, but, you know, we're finally there with 360. It, I think, bodes well for, continued, sort of positive coverage decisions over time. You know, I think the nice thing about this year is, with some of the macroeconomic backdrop, we think there's a little bit more rationality ruling in terms of how companies are really managing their businesses. We've always tried to focus on both the top and bottom line and be very judicious in terms of where we spend. We've built our business the right way, and I think we're reaping some of those, rewards now this year in terms of seeing some of our competitors, you know, have some layoffs with some of their teams. We just continue to grow organically as our volume, continues to increase. Obviously, we've made great progress in the screening side, you know, as well with submission of, you know, our package to the FDA and some of the staging data that came out that, you know, I think showed really an impressive profile in terms of, what the future of screening with blood could mean. Great. still some mice under for the next couple questions, it's okay. It's a great overview. Maybe talk about the core business. I mean, it has always been a strength of Guardant. It just seems to have hit a certain inflection point this year. Either investors are noticing it or there was an inflection point. I think part of that is coverage. Maybe talk about where you see the Guardant360 business today versus what was it a year, a year and a half ago, and what kind of durable growth rate do you think you can generate from that business? Yeah, no, I mean, we've actually always seen this strength in that business. I think, you know, with some of the sort of, you know, I think noise that's been around some of the, certain aspects of our business with some of the data releases and so on, I think we took the opportunity to just kind of shine a light back on the core, which, you know, for a business in its ninth year with the 360 business, I think growing nearly 30% year-over-year is really exciting. I think there are a couple aspects to that that are underappreciated, which is, a lot of the first eight or nine years has been this zero to one phase of how do we get each patient one test per lifetime? how do we stand shoulder to shoulder with tissue biopsy and really initiate this era of liquid biopsy being a standard clinical tool? I think we're there now, but now we're really shifting into the next gear, which is thinking about, you know, how can liquid biopsy be used to manage, essentially, dynamically and adaptively patient care? This is taking the opportunity from 1 test per lifetime to perhaps 4 or 5 tests per year per patient. This is a huge multiplication of the TAM where instead of being 20%, 30%, 40% penetrated in that 0 to 1, sort of, calculus, we're only, you know, single digits penetrated. This is where that ESR1 approval, I think, is really its first of its kind sort of paradigm shift where we're going from there are about 40,000-50,000 metastatic patients diagnosed every year, but many of them, fortunately, live for multiple years and have, you know, fairly long sort of, you know, overall survival. There are actually multiple testing opportunities in terms of those patients potentially having an emergence of an ESR1 mutation or failing the aromatase inhibitors that are on. The testing opportunity is actually much larger than initially appeared. We think that sort of idea of testing early and testing often will be really initiated across many different tumor types. It's the major opportunity we have ahead of us now. Could you maybe talk about the nine years of building this business and what lessons you've learned as you start building out MRD and screening and things that you would do differently today than you would have done back then? Yeah, no, I think things ended up, you know, pretty well in terms of, you know, where we ended up with 360. I think we have a good sense of, kind of what the bar is for clinical validity, clinical utility, what it takes to sort of, bring physicians and payers on board. That balance of how much do you pre-invest before reimbursement in terms of market shaping and market adoption versus post-reimbursement? We have a much better sense of, you know, let's say when it's not competitive, you have the luxury of time just developing the data and developing reimbursement. When it is more competitive, you obviously do the former and are more aggressive. The other thing we have that we didn't have back then is we have a brand. We're a known entity in the oncology space. we're much more sophisticated in terms of our commercial enterprise right now with hundreds of sales reps. We, you know, essentially, on almost every metric, we every quarter, we get rated in terms of our marketing data as really some of the most helpful and most informative of, you know, sales representatives and medical affairs staff in the diagnostics field. That's a huge asset we have as we continue to roll out new products. I think the reason diagnostics is challenging is that it's not like on the consumer side where, you know, you build something and you ship it. You know, you have to get 5 or 6 different things right. You have to obviously get the technology right. Regulatory is not easy. The clinical study is not easy. Getting KOLs to believe in it. Reimbursement, you know, commercialization's not easy. We're fortunate that we've built a solid sort of competency framework in each one of those areas. Got it. Where do you think we are in terms of EMR integration and the potential impact on clinical volumes from that? No, that's another tailwind, a really fantastic one that we have before us. We are just starting with Epic. We're turning on the first few sites. That flywheel is really spinning in terms of the number of sites that are going to come on board. We'll have, we're in the process of turning on OncoEMR, which is another 20% of the market. There's, you know, a couple others that we're working with. I think by end of this year, we should have somewhere between 60%-80% of the market where we can integrate directly with their electronic medical record systems. What we're seeing in the early innings is as we turn each one of these on, we're getting about a 50%-100% boost in volume. We're, yeah, we're very excited to see where that takes us. You talked about the coverage for Guardant360 and how that's progressed. Could you talk about some of the learnings you might have picked up that might inform your strategy about commercial coverage ramp for MRD and eventually screening in terms of duration and expectations for that? Yeah, the first step in terms of MRD is to get Medicare coverage. That's where the bar is around validity data. I think one thing that's underappreciated is that even that validity data requires multiple years of follow-up. If you think about those studies, they could be, you know, relatively small studies, maybe 100 patients or so on. It requires two to three years of follow-up in terms of essentially following those patients, seeing where ctDNA detects recurrence versus a CT scan or a radiography. So that's, you know, and you have to do that per indication. So that's, you know, a lot of data that needs to be collected, a lot of time. Companies that are just getting into that without having collected that, are really at a disadvantage. The nice thing is, you know, we've spent the last 4 or 5 years collecting all of this data. We have tens of thousands of samples, you know, either collected or earmarked for these types of studies. We, you know, we have that first kind of checkbox marked in terms of validity and getting the pipeline for Medicare coverage. The next layer is private payer reimbursement. You know, right now, some of these State biomarker testing legislation, you know, bills are sort of positive trend. We work very closely with American Cancer Society and, you know, helping to get a lot of these bills passed in many states. I would say that, you know, based on a data point of view, a lot of these private payers, and we think the guidelines are gonna require clinical utility data. This is really where you show that not only can you detect recurrence earlier than a CT scan, but you have to show that it makes a difference in terms of outcomes. These are interventional trials. Once again, you know, we turned that on many years ago. We have some trials that are now three or four years in the making. One of them that's gonna read out later this year, early next year in terms of a de-escalation trial. So we're, you know, very pleased in terms of the progress we're making there. Maybe for screening, I'll turn it over to AmirAli. In terms of the commercial payers and the. Yeah. you know, definitely having the step in the door helps in terms of having the right contacts, having the channel of communication open. Where we are with that is, like, on the commercial payer side, we have a bunch of ad boards for educational purposes to make sure they are well aware of actually this blood-based cancer screening is coming and the performance that we have. We are focused on getting our FDA approval to really get into that, you know, CMS coverage, Medicare Advantage claim is gonna get paid post-FDA approval and CMS coverage. Then getting into ACS guidelines. I think ACS guidelines, some of the states would follow that. Some state-level mandates would get kicked in. We started some conversation with regional payers in those states that they have ACS-level mandates. We are in the educational phase. definitely, like, having a step in the door of those payers, is helping us. Got it. Mike, maybe one for you. Just given the discussions around coverage and what you guys have achieved in therapy selection, could you talk about sort of the trends in ASPs you're seeing for that business, MRD? Yeah. Well, I mean, we're seeing good trends in ASP. You know, in the first quarter, we saw ASP for Guardant360 on the clinical side get towards the top end of the range of its $2,600-$2,700 that we've been talking about for the last 18 months or so. The big driver in Q1 was really the mix between the CDx and the LDT. With the FDA approvals that we've had recently, it's pushed that mix a little bit more towards the CDx side. Of course, we get higher reimbursement from Medicare on the CDx side. It's $5,000 compared with the LDT $3,500. you know, with these private payer coverage decisions now from United, Aetna, Anthem, I think over time, as we contract with those payers, you know, definitely we're gonna see the ASP increase. We think once we've got all those payers covering, Guardant360 across all cancer types and across the CDx and LDT, we can get north of $3,000 per test. That's gonna take time. It's gonna take time to get those contracts in place. You know, overall, our ASP, you know, it moves about a bit. That's because although we're seeing the positive headwinds on Guardant360, we're seeing, additional covered lives with TissueNext, and we just got the Medicare reimbursement on response, you know, we're trying to manage our reveal volume because at the moment, it's about 15% of the reveal volume gets reimbursed at the moment from Medicare. We're doing a lot of tests that aren't getting reimbursed. As that volume's going up, it's having a bit of an impact on the blended rate. I think, you know, overall, if you look across all products, we're making good progress in ASPs across each one of them. You know, we would see a step change when we get additional reimbursement for reveal, for CRC in the surveillance setting, then, you know, we would have a step up overall on the blended. Got it. I would say I would just gonna ask the obligatory AI question. With Guardant, actually, there's clear evidence of you utilizing that for some time. Maybe talk about how AI is embedded into smart liquid biopsy and screening and just the overall tech stack and how you guys are utilizing. I know you have a collaboration with Lunit, and you're doing a number of different things. Maybe sort of help investors understand better the AI story behind Guardant. Yeah, sure. Thanks for asking that question. We are a company that since day one, we believe in the value of the data. The tagline of the company as a result of that is, "Conquering Cancer with Data." We are seeing some of the fruits of that kind of a vision and actually investments that we've done on our technology and some of our, infrastructure that we have at Guardant. I'll give a few examples. Like, on the technology and performance side, the performance of our assays are getting better with the high-quality data that we are generating. It's just automatically getting better because algorithms are getting trained on higher-quality samples at higher scale. For instance, an example of it is this Shield V2, which looks like it has a higher analytical sensitivity relative to the first generation of the Shield that we use in ECLIPSE trial by about a factor of 2. It's really got enabled by more data, and the algorithm got better with the AI and learning engines that we have. That's not the only place. For years, even I remember, five, six years ago, we were using actually some AI-based, learning-based solution for our billing practices to see how we can optimizing our billing operation to the payers. Another example is now we have tens of thousands of documents at Guardant. We are using actually some at the early stage, but kind of emerging for us, that how could we reduce that burden of documentation and effectively use AI based on the documents that we have? That AI generates a template or a first draft of documents for us, and our scientists, our other personnel at Guardant just review that and edit it. We are gonna get huge amounts of productivity boost with those kind of infrastructure and systems that we have. Frankly, it would become one of the competitive edges that we have relative to other companies who don't have this much biological data, who don't have the scale of documents that we have. We can show more progress and better productivity over time. Got it. Maybe if we shift to the environment. You guys have called out issues with small biotech customers early on. We're also seeing some softness from large pharma, although that's largely concentrated in capital equipment. Could you talk about the spend environment for your biopharma customers that you're seeing today? Yeah. I mean, I think we're it's kind of in line with, you know, how we kind of thought the year would go out so far, which is, you know, fortunate. I think one of the benefits we have is that we work with over 150 biopharma companies. We have a good amount of diversification. We are seeing some challenges, I think, in the small companies. Some people drop in. Others drop out. Seeing reshufflings, I would say, of budgets on the large pharma side. I think there's some concern around small molecules and some of those programs because of the IRA. We're seeing, I think, big pharma really think about what are the new ideas, you know, what are the new areas they should be investing in. In some ways, we've benefited from that because certainly, this idea of precision medicine and, precision oncology is certainly gonna be a tool that is gonna be, I think, very instrumental in, any new kind of framework or a continuing framework that large pharma has. Yeah. We had outlined maybe second half of the year would be a little bit weaker, I think, so far. We're very pleased with the progress to the year. We're continuing to kind of watch the environment and are hopeful that some of that, you know, some of that uncertainty sort of resolves itself. Got it. AmirAli, on the screening side, you submitted the PMA in March, so likely decision under Q1 and Q2 next year. Could you talk about the discussions you're having with the FDA and what gives you confidence in approval for Shield and CRC? So far, so good. Actually, it's going as we expected in general the kind of feedback that we are getting from agencies in line with what we anticipated we get from them. So far, so good. Hopefully, we can take it to the finish line, actually, within the timeline that we talked about before, which should be hopefully sometime next year we get FDA approval and launch it. Got it. Could you remind us of the timeline for other indications? I know long is. Yeah. Next. Just, what could that look like over the next few years? You know, we are a company that we believe with the blood tests, you can do multi-cancer screening. In fact, it's possible to detect early-stage disease with high performance with the core technologies that we have. CRC was our leading indication to get FDA approval, make sure that the tests become accessible for all. We are adding other indication on top of the same for the same tests. For lung cancer, we started a pivotal study last year, another 10,000-patient screening study. We were planning to enroll 10,000 patients over three years. Far, so good. We are in the second year of enrollment, and more than 5,000 patients already got enrolled in this study. We expect the study to get to the readout sometime in 2025. We submit it to FDA for indication expansion for Shield. Got it. Maybe talk a little bit about the adherence concept. I mean, you've talked about the best test is the test that gets done. You know, should we be looking at adherence-adjusted sensitivity? Will the FDA and USPSTF consider these factors in their decisions? Has this resonated with the KOLs? It's well known that the unmet need in the field of CRC screening is making sure the people who are not up to date with their screening or they are unscreened to get the testing done. As a result, the best test is, in fact, the test that patients complete. 75% of the patients who are dying because of colorectal cancer is those patients who are unscreened or not up to date with their screening. That's why it's so important to increase this adherence. It's on top of the mind of actually KOLs in the field. FDA already approved, if you may recall, there was a blood test called Epi proColon that FDA approved that test just because of the improvement of adherence rate when even the performance of that test was lower than the bar that it had for clinical study to pass. It was even worse than FIT. Approval was based on successful adherence study. In terms of USPSTF guidelines, actually, if you read it carefully, you are going to see even that there are notions that real-world adherence is low. It's not 100%. We need solutions to actually increase the adherence rate. If you talk to the KOLs, you're going to hear this consistently across all stakeholders. That's why we believe the blood test with the performance that we've seen, CRC sensitivities of better than FIT, is well above the minimum requirements for guidelines to consider it. If you look at actually an ad board that we hosted post-DDW presentation that we had that we talked about more details of ECLIPSE data readout and the staging information, you even hear from the former interim chief medical officer of ACS, the former scientific director of USPSTF, two major guideline bodies that this test with this kind of performance need to get seriously considered. We'll see. We are very positive about it. Got it. Are you still I know you talked about earlier days with the LDT, you were hitting like 90% type adherence? Are you still seeing that kind of rate in subsequent LDT volumes? Yeah. It continues to be the same. Something that we believe many of you guys believe is blood test is more patient-friendly. More than patient-friendly, it's something that needs almost zero participation from patients because the patients are getting blood drawn for some other test, annual checkup, or any other kind of test that PCP is ordering. Effectively, it just needs two more tubes of blood to be drawn in the same kind of blood test episode that the patient is going through. That almost zero patient participation is increasing adherence rate to completing the test to the roof. We continue to see more than 90% adherence rate, meaning when the doctor ordered the test, more than 90% of the cases, blood test shows up in our lab for processing. Very exciting. Got it. Maybe talk a little bit about what your expectations are for commercial spend for Shield and how that ramp could look like pre and post-potential approval. We are gonna actually, start incremental investment on commercialization of Shield right before FDA approval, not right now. As we get very, very close to FDA approval, we are gonna start increasing that. We are gonna be very milestone-driven, very pragmatic about incremental investments that we are gonna do. We put a guidance that we believe with this about $200 million, contributing operating loss for Shield and our screening division, we should be able to manage this operation as we even get close to a USPSTF. The main reason is because we believe we can have higher efficiency commercialization for blood tests and compared to stool tests. It's a test that based on our LDT experience, we are seeing higher ordering depth per MD per month than stool ever seen. Also, we are seeing this improved adherence. For stool tests, between one-third to 50% of the cases that the doctor order never shows up in the lab. For us, that number is less than 10%. That goes directly to the bottom line. That's why we believe with a sales force of about 150 to 200 people, even post-FDA approval, we can win in many of the targetable, the target that actually accounts that we have in mind and bring material revenue and contribution for Guardant. We would reinvest back the positive gross profit that we would generate with this brand into additional commercialization investment. Long story short, we believe with this about $200 million, contributing operating loss, we can manage this brand for the next few years. Got it. Mike, maybe turning to you. You've hopefully in the past talked about sort of the breakdown of OPEX or the cash burn spent on a per-segment basis. Kinda remind everybody what that looks like over the course of this year and how that could potentially change and shift as you reemphasize or reprioritize some of your efforts? Yeah. I mean, from an OPEX point of view, you know, we've sort of said this year, our overall OPEX spend is gonna be lower than it was last year. you know, as we look forward, there's a few different parts that are moving parts. you know, one is this year where we continue to invest heavily in ECLIPSE. We continued the enrollment into this year. We've got about $40 million spend, in ECLIPSE that we're incurring this year that we won't incur next year. We should expect our, you know, research and development expense, next year to actually sort of come down. Next year, you know, the focus, especially on screening side of the business, is gonna, shift to sales and marketing. As we, get ready for an FDA-approved launch, you know, we'll be sort of as AmirAli was saying, we'll start to ramp up the sales and marketing effort there. I think if you look across how we're gonna manage the burn, across the business, you know, we've talked about therapy selection, MRD, and screening. We have the target where you know, we're targeting to be at break-even for the company, 1-2 years after being in screening guidelines, so around about 2027, 2028. The way we look at that over the next 5 years is therapy selection is very close to being break-even now. Actually, over the next 5 years, it's gonna generate positive cash flow. MRD is still in investment phase. We're still having to fund the samples that don't get reimbursed. We're still doing the market development. We're still doing the data development. As we start to get incremental reimbursement, that'll flip to being cash flow positive. As we look over that 5-year period, basically, therapy selection and MRD, if you put them together as an oncology business, they're gonna be self-funded over the next 5 years. As AmirAli was saying, you know, when we look at then at screening over the next 5 years, that's a, you know, maximum of $200 million burns. We know we can manage with the cash balance that we have now, which was $1.3 billion after this raise, we can manage our OPEX spend, to get to break-even, within the cash balance that we currently have. Got it. Just on gross margins, you touched on ASPs earlier and gave us a good sense for where trends are going. Could you talk about the COGS side and what kind of efforts you're putting into lowering those COGS, whether via automation? I mean, I think sequencing costs will happen but not probably for a little while out. Just maybe talk about sort of the development you've made on COGS. Yeah. I mean, we're continuing always to focus on the cost per test. I mean, we just hired a very experienced chief operating officer. He came from a, you know, background of labs that were testing millions of tests. So we've got a real focus on automation, and, you know, our I mean, our gross margins, if you look at the core business at G360, very healthy growth margins there. On the clinical side, sort of high 60s. In the biopharma side, the gross margins are on the 70s. What's impacting our gross margin more than anything at the moment, again, is the sort of unreimbursed volume. It's on the Reveal side, but also on the Shield side as well, you know, probably not appreciated by everybody. We've got the Shield LDT. the volumes are going very well there. In fact, better than we expected. That's a cost to us in our cost to revenue line. I think there's something like 300 basis point impact just in Q1 on our overall gross margin. We're trying to balance those volumes of unreimbursed tests as well as, you know, a lot of focus on automation. Yeah, you mentioned sequencing. I mean, if those costs come down, then obviously, we'll have a positive impact from them going forward. Got it. You recently raised money to bolster the balance sheet. Could you talk about the timing of that raise and where this puts you in terms of the ability to scale up the commercial efforts for Shield and sort of what the timing cadence of that spend looks like? We talked a little bit about it. Just wanna understand better the rationale and sort of how you're thinking about the balance sheet. Yeah. No. I mean, I would say, first of all, we were really pleased with the outcome of the financing, both with, you know, our ability to sort of upsize that to from $250 million to $400 million, which puts us in a really strong position. We're also really pleased with the sort of the quality and the depth of the investors that participated. You know, it was a real sort of, those investors really reaffirming the confidence in the company and the strategy. We were really pleased with the outcome. Yeah, again, I think, post that raise, you know, again, we have a cash balance of around $1.3 billion. You know, based on our financial plan and what we were just talking about with the different businesses, that enables us really to fund us ourselves through to break-even. The timing was important for us. You know, we didn't feel that at the moment, we had, a financing balance sheet overhang. What we didn't wanna be is in a position getting close to an FDA approval where we know we're gonna have to start investing on the sales and marketing side, and we'd have a lower cash balance for people to start thinking there was a financing overhang and an expectation that we would absolutely need to go out and raise equity. I think it's just put us in the strongest position we could possibly be in at the moment. That's gonna enable us to really, you know, push hard when we get to an FDA approval and do everything we wanna do across all of the business units. Maybe as we wrap up here, AmirAli, just sort of a high-level question for you. I mean, you're building essentially a pan-cancer portfolio screening, one cancer test at a time, one indication at a time versus the other strategy of multi-cancer early detection just going after them all at once. Maybe talk about the merits, whether it's sensitivity, specificity, you know, commercial, the merits of sort of your approach versus the MSI approach of doing it all at once. We believe, as we talked earlier, it was very important for us to start with CRC as the indication to make sure we get approval. Actually, the path for accessibility of the test would be open for 120 million people in the U.S., hopefully. Then we are doing lung as the second indication because it would increase the interval testing to every year in high-risk patient population instead of every three years. We don't have planned to go after indications one by one and do independent study for each cancer type one by one. It's gonna take forever. It's not our plan. After CRC and lung, we are gonna add a panel of cancers into the same device as a panel. We are exploring actually the pathway for it in terms of even potential FDA clearance for it. Potentially, we can consider a CRC-plus lung FDA-approved device can detect other cancer type as a lab-developed test, potentially. We are still exploring different ways of how the mechanism would work. We don't have a plan of adding cancers one by one after CRC and lung. All right. Maybe just to wrap up, Helmy or AmirAli, what do you think is most misunderstood about Guardant today? I mean, I can think of four or five things. If you had to boil it down in the 51 seconds we have left. Unfair question. Maybe talk a little bit about what you feel is misunderstood about Guardant at this stage. Yeah. I think, you know, there's, I think the bar for making sort of claims in this space is very low. Actually, you know, achieving success and traction and so on is very high. I think we're a company that has always been heads down, just, you know, kind of breaking barrier after barrier, helping patient after patient. You know, I think the next few years, we're very confident that we're essentially gonna show in, you know, like, just like we have in therapy selection, just kind of what, you know, it takes to win an MRD and what it's gonna take to win in screening. Yeah, we're intellectually, you know, humble kind of company but one that just keeps driving forward and driving this field forward. Great. Great, great place, Dan. Thank you, guys, very much. Appreciate it. Thanks.