Hello and welcome everyone to the Guardant Health Shield receives FDA approval call. My name is Maxine, and I'll be coordinating the call today. If you would like to ask a question, you may do so by pressing the star followed by one, literally the keypad. Please limit yourself to one question and a follow-up. I will now hand you over to Zarak Khurshid, Vice President, Investor Relations, to begin. Zarak, please go ahead when you are ready. Thank you, Maxine. 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. Guardant 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. We're joined today by AmirAli Talasaz, Co-CEO, as well as Helmy Eltoukhy, Co-CEO, and Mike Bell, CFO, who will be available for Q&A. With that, I would like to turn the call over to AmirAli. Thanks, Zarak. We are pleased to report the U.S. Food and Drug Administration has approved the Shield blood test for colorectal cancer screening in individuals at average risk for the disease, age 45 years or older. Importantly, Shield is the first blood test to be approved by the FDA as a first-line colorectal cancer screening option, which allows healthcare providers to offer Shield in a manner similar to all non-invasive methods recommended in colorectal cancer screening guidelines. Additionally, based on the strong performance of the test, Shield is the first blood test for colorectal cancer screening that meets the requirements for Medicare coverage. The Shield label, including its first-line intended use, contraindications, and precautionary language, is in line with our expectations following the FDA Advisory Committee meeting in May of this year. CRC represents the second leading cause of cancer-related deaths in the United States. The American Cancer Society estimates that more than 150,000 people will be diagnosed with CRC in 2024, and it will be responsible for more than 53,000 deaths, with the vast majority of these individuals who die from CRC not up to date with their screening regimen. Of the 120 million people in the U.S. eligible for CRC screening, only around 60% are screening compliant. When colon cancer is found at an early stage before it has spread, the five-year relative survival rate is 91%. This approval is a significant win for patients, as Shield helps solve the greatest barrier to CRC screening compliance and will save lives by detecting more cancers at earlier stages. Patients will be able to access the Shield test in primary care physician offices during any healthcare visit, including routine checkups with a simple blood draw. The Shield blood test offers a new, more convenient, and pleasant CRC screening option, which doesn't require special preparation, dietary changes, the time, and discomfort associated with colonoscopy, or the unpleasantness of handling stool. Our screening sales team is trained and energized, and our lab operations are ready for launch, which we expect to commence in the near future. We look forward to updating the investment community on Shield-related performance indicators when the time is right. The FDA approval of Shield is not only a great victory for patients, but a monumental achievement for Guardant in our mission to conquer cancer with data. This was our founding vision for Guardant Health, and we are so excited to reach this milestone. This is also a historical moment for liquid biopsy and cancer screening. Shield approval is the culmination of over 10 years of research and development, including collaboration between Guardant Health and leading health organizations globally. We are incredibly proud of the dedication and execution across the company to make this possible. I'd like to thank the team at Guardant for their hard work during the last 10 years, and especially during the last three years, to take us to this pivotal moment. I also like to acknowledge and thank the FDA and the review team for their collaboration and partnership. With that, we are happy to take your questions. Thank you. If you would like to ask a question, please press star followed by one on the keypad now. If you do change your mind, please press star followed by two. When preparing to ask your question, please ensure that your line is unmuted locally. Please limit yourself to one question and a follow-up. You are welcome to rejoin the queue for a second question, or we'll come back to you if there is time. Our first question today comes from Tejas Savant from Morgan Stanley. Please go ahead. Your line is now open. Hey, guys. Good morning, and thanks for the time here. First of all, congrats on FDA approval, AmirAli. Maybe let me start with that sort of precautionary paragraph on the label here. How do you think sort of that plays into adoption curves? Does it have any implications at all for the eligible patient population? We've been getting a few sort of inbounds from folks who are a little bit concerned about that language since you don't see it in Cologuard or the ColoSense labels. So just would be helpful if you can help contextualize that in terms of the broader approval here. Yeah, thank you, Tejas. So this is in line with our commitment to even the commitments that we made during our ADCOM Advisory Committee meeting, that we are going to make sure physicians and patients are well-informed so they can make decisions appropriately based on the risk-benefit associated with Shield. We are very excited to get this point of securing the first-line label effectively. All 120 million average risk patients would have access to this test, and their physician and the patient can make the right decision based on the information that's going to get shared with them. We continue to believe that colonoscopy is the prioritized option for all for people who have access to. But as we know still, the reality is at least 50 million people remain unscreened. This blood test as a new choice, a new option for the physician and patients can really help them to pick whatever screening methodology and regimen which suits their schedule, suits their requirements the best. It's non-restrictive. And again, as I mentioned, it's basically sharing the information about the performance of the test for CRC, for advanced adenoma up in front so the physician and patient can be well-informed of what they are getting. We are very excited at where we are today. Got it. Super helpful, AmirAli. A couple of follow-ups for me are, so later on in the discussion, in that sort of information to be shared with patients section, the FDA makes a point about stage 1 lesions that were less than 10 mm and how Shield did among those patients versus lesions above 10 mm. So how do you think that gets interpreted by physicians in the context of this precautionary language? And then on a somewhat related note, you do have V2 here, where I think stage one performance did get better, right? So as you think about the FDA process for that and perhaps even accelerating that process a little bit here, any color on that would be helpful. Yeah, again, I think the information that you're seeing in terms of the summary of the Shield, the notion of the performance of different sizes are in line on exactly the data that have been presented in our publication before. These are just fact-sharing about the performance of the test. There's nothing new about it. And we've been supportive of adding all the fact-related information about the Shield in our label in such a way that the physician and patients would be well-informed of what they are getting. We have no concern about any of these fact-sharing and educations with physicians. In fact, in the market with Shield LDT, we are talking about the risk-benefit of the Shield and the good and bad of this test. And we are seeing how much enthusiasm exists in the primary care physician to get access to this test. Regarding V2, we are very excited with where we are with our V1 and securing this label, securing this FDA approval. But this is not where we are going to stop over time. The test is going to get better, and indications hopefully are going to get expanded. But in terms of, again, this precautionary language for stage 1 performance, we have no concern about it to wait for V2 to change that label language. We are okay with it. Got it. Super helpful. Appreciate it. And congrats again, AmirAli. Thank you. Thank you. The next question comes from Bill Bonello from Craig-Hallum. Please go ahead. Your line is now open. Hey, guys. Thanks a lot. Hey, just another question and then a follow-up, hopefully, but another question around the labeling. So there's something in there that says patients with a negative result should continue participating in colorectal cancer screening programs at the appropriate guideline-recommended intervals. I just wanted to understand sort of your take on that, particularly when you're not yet in guidelines, but I suppose you will be in the American Cancer Society guidelines. So, I mean, is there anything to be read from that that somebody who gets a Shield test and has a negative result, the implication is that they still need to get some other type of colorectal cancer screening, or is that not at all how you would interpret that? No, that standard language which has been the precedent for the field for other kinds of tests when they got the FDA approval. So that language is exactly similar to other tests. And again, maybe I refer to another section that we have in our label summary that this test should be considered in a manner similar to other guideline-recommended non-invasive CRC screening modalities. But no, Bill, thanks for your question, but that language is very similar to the language other tests have in the field. That's super helpful. And just as a follow-up on the label, I didn't think I saw anything in there in terms of interval. So how does that kind of play out? How does that get established, what the appropriate interval should be? Yeah. So I think when we look at the testing interval, as we expected, FDA initially did not get into setting the interval testing when the performance of the test in longitudinal kind of programmatic testing is not established, right? So as part of our post-approval study, we are going to do a study, again, very similar to the post-approval study that stool test needed to do to establish the longitudinal performance of Shield in a triennial testing program, so testing the patients on a 3-year basis. So that would be a kind of a very long-term study that we are going to do in the background to see what the performance of Shield would be in year 3 and beyond. Okay. Thank you. But it would be the role of guidelines, also CMS, as you know, in terms of payers, in terms of setting the right utilization of these healthcare services. Perfect. Thank you so much. Thank you. The next question comes from Puneet Souda from Leerink Partners. Please go ahead, Puneet. Your line is now open. Yeah, hi. AmirAli and team, first of all, congrats on the FDA approval here. I know it's been a long journey for you. My question is, as you think about the label where it stands today, your next steps with CMS and then eventually USPSTF, I'm sure you've thought about that. How should we think about the penetration for such an assay in the market longer term? Maybe if you could comment on that first and then also talk to us about the next steps, which is potentially the ADLT and the CMS as well. Yeah, sure. So when you look at this market, I think the interesting fact is about 120 million people are eligible to get colorectal cancer screening done. 55 million people are getting screened by colonoscopy. And about 15 million are getting screened with stool test, and about 50 million remain unscreened. And as you know, these methodologies have been around some for a decade, some for over a decade, for over even two decades. And this is the situation that we have, that more than 50 million people are remaining unscreened. That's 16 million annual testing opportunity for triennial Shield testing. We are very excited about this market opportunity and the impact that we could have on patients' lives. When you look at actually the reality of colonoscopy, it's the prioritized option, but we have limitation on how many people we can scope, even in terms of infrastructure, healthcare facilities, anesthesiologists, GIs. Looks like we have a capacity of doing 6 million annual screening tests with colonoscopy, and about 5.5 screening tests are getting done right now. For stool test, there are a bunch of factors that come into the play that even the people who do stool tests in surveys, we see 7 out of 10 of them, they do not like to do the test again. The rate of rescreening with stool is very low. It has become really a modality that looks like it's hard to get the patient tested one time, and longitudinal testing has been a major problem. Now we have this easier, pleasant mode of screening called blood that can be done very routinely with, again, 16 million annual testing opportunity right now. So we are very excited about what we can do. We believe the guidance that we set in our Investor Day last summer is what we can really achieve. We are more confident than before of achieving that milestone and those revenue targets, which was about $500 million revenue in 2028, and growing strongly from there. That's our target. In terms of the next steps, yes, we have to work with the American Cancer Society. We need to work with USPSTF to make sure the access and coverage of Shield gets expanded to younger patient population. We are going to work with our local MACs to establish the gap fill pricing for Shield. In parallel, we are going to file for Advanced Diagnostic Lab Test status, which would enable the pathway to get premium pricing for Medicare for Shield. We are very excited about the few catalysts that we have in the near future. Super. And then if I could just follow up on the commercial front, where do you stand today with the number of reps, preparation for marketing this product, and maybe just some thoughts on marketing of this product with this label in hand? Thank you. Yeah, the hiring of our sales team is continuing. We expanded the team in a very meaningful way already. The team that we have hired, they are well-trained. They are going to the field very, very soon. And we are continuing to hire. We are going to reach the milestone of about 100 people in the field by the end of the year, and we are on track to achieve that. And we are expecting to Shield this IVD test in the near future. Got it. Okay. Helpful, guys. Thank you. The next question comes from Dan Brennan from TD Cowen. Please go ahead. Your line is now open. Great. Thanks, uh, thanks for taking the question. Maybe first one would just be, I know, AmirAli, you just discussed a little bit of the path forward with some of the key catalysts in terms of pricing, but can you just give us a sense of timing-wise, like American Cancer Society, just kind of frame that a little bit? What could that mean in terms of commercial uptake? What are the ramifications of what the ACS could do, and what's the timetable at which we might see some visibility on that? Yeah, we have some actually great conversation with the American Cancer Society already. We continue the collaboration and conversation with them. We expect to see some kind of movement by American Cancer Society in 2025. Getting these kinds of wins by guidelines are important in terms of getting some kind of coverages by commercial payers over time. Interestingly, there are a few states in the United States that have state-level mandates for local payers to cover colorectal cancer screening tests, which are included in American Cancer Society guidelines. That's why this ACS guideline could be a very interesting upside for us in terms of improving ASP over time and ultimately Task Force. So we are excited with some of the progress that we are making in terms of publishing some additional evidence around Shield, around improved adherence in terms of also improved life year gains and outcome benefits when Shield is getting utilized in terms of some of the publication we had earlier this year in randomized studies that once Shield is incorporated into a health system, the rate of cancer screening has gone up significantly. So we are making all this progress and looking forward to go through the review cycle by Task Force. Great. And then maybe just on post-approval studies, what's kind of planned, or is there anything that the FDA is asking for specifically for you, whether to establish more about the compliance rate of Shield and/or the interval, even though the FDA doesn't really normally weigh in on interval? It did come up at the AdCom. So just wondering, what are the plans for post-approval studies? Yeah, the high-level lab study has been agreed upon. It's very in line and very similar to the post-approval study that Cologuard test needed to go through about 10 years ago. So it's in line with that. Nothing specifically stands out. It's basically a study that would show the longitudinal performance of Shield when it gets used on every triennial basis and so forth. So yeah, it's going to be a good study for us. It's a very long-term study, though. It's going to take many years to get to the end point of that study. Maybe one more, if I could. Just I know you've set some long-term targets for Shield at the Investor Day. Could you just remind us about how we should be thinking about kind of the long-term opportunity and kind of what the ramp looks like as we kind of move forward over the next few years? Yeah, I think some of the short-term kind of guidance, we need more time to set some of those guidance and update you guys. Some of it is going to be in terms of the early guidance, a factor would be what kind of a gap fill rate we are going to get from Medicare. That would be short-lived, but in terms of just the very early days of Shield, that would impact our ASP. As we go to 2025, we continue to expect the financial targets that we communicated before, the blended ASP of about $500 getting to break-even gross margin. And then in four years, in 2028, we are more confident than before to get to this $500 million annual revenue, which continues to grow very strongly after that. This market is very deep. To get to about 1 million annual testing opportunity when there are 50 million unscreened patient population, we believe there is a big opportunity in front of us. Great. Thank you. Congrats. Thank you. Thank you. The next question comes from Doug Schenkel from Wolfe Research. Please go ahead, Doug. Your line is now open. Hey, good morning, guys. Congrats on another huge achievement in the liquid biopsy space, where you've clearly been a pioneer in advancing products like this first in therapy selection and now in screening. A couple of questions. First, just doing some, I guess, level setting on assumptions. Is there any change in how you've previously talked about pricing and ASP expectations for Shield? Kind of building off of that, from an expectation standpoint, are you still thinking USPSTF is kind of 2026, 2027? Those are the assumption questions. Then there was an earlier question on sales force ramp. I know you're not getting real specific on the size or the trajectory of the sales force, but I'm curious if you'd be willing to comment on the importance of building that sales force fairly quickly. I'm just thinking of how dependent this market has traditionally been on promotion and also the need to probably counter-detail a larger existing sales force when it comes to the message on label. Thank you. Yeah. Thank you very much for the appreciation, Doug. In terms of the ASP assumption and the guidance, as I mentioned earlier, we continue to believe the targets that we now set for a few quarters now still hold up, and we are more confident than before to achieve them about blended $500 ASP in 2025, powered by getting favorable ADLT pricing for Medicare. In terms of actually sales force, we are on track to have about 100 people in the field by the end of the year to support this IVD launch. Our plan for expansion of the commercial team is also, as we said before, by the end of this year, we are going to have 100 people by the end of next year, probably around 100-150 people in the field. As we get closer to the Task Force, we are going to have about 300 people in the field. In terms of counter-detailing, this is a competitive market. Well, actually, we have a lot of interesting insight from the last two years that we are in the market selling Shield LDT. Our Shield LDT has been getting counter-detailed. We know the messaging, the messaging that works. And the reality is, again, there are 50 million unscreened patient population. So yes, 7 out of 10 people who are getting tested with stool, they are not interested to do stool testing anymore. But the reality is the biggest piece of pie for us is a part of the market which has not been accessible for stool-based testing and not accessible for colonoscopy because we have issues with colonoscopy in terms of capacity and hesitation of the patient to complete them. So we are going to continue to execute based on that commercial roadmap that I mentioned earlier. Timeline for USPSTF, we are going to monitor to see how the early topic review is going to pan out, but the default assumption would be USPSTF by the end of 2026, if not very shortly after. I think the first thing that we are going to see is the draft research plan. And once the draft research plan gets published, I think we are going to have better visibility over the timing of Task Force. But there is no signal that we got from anybody that tells us the Task Force is going to have a delayed review process. But we'll see. We'll We'll see how it's going to turn out. Okay. Thank you. Thank you. The next question comes from Jack Meehan from Nephron Research. Please go ahead. Your line is now open. Thank you. Good morning. And thanks for the update this morning. I was wondering if you could talk about the investment plans for the screening business. I was wondering if you could confirm, I guess, the $175 million you talked about previously for this year and $200 million thereafter. Does this label or update change any of your spending plans for the business? Thanks. No. Same as before. In fact, getting to these kinds of approvals have been milestones for us that if we were meeting the milestones, we would continue the investment on building this brand. We mentioned getting to this FDA approval is a milestone for us. Our guidance for the remainder of the year continues to be the same, that $175 million. And for next year and years following, it's at approximately like $200 million investment. So it's the same. Again, this approval is not the last milestone. We are going to continue to be very disciplined on our investments around Shield. As long as we are meeting from now on our milestones around ramp, volume ramp, revenue, and reimbursement catalyst, we are going to continue this level of investment, which we believe we have a very, very good shot at meeting these milestones, but still we have to execute and perform. There is nothing in this approval that would tell us we need to increase our investment or spend. In fact, as I mentioned earlier, we are very excited and more confident than ever about what we can achieve with this level of resources and investments. Great. And then one follow-up. Just was hoping you could elaborate a little bit more on the Medicare coverage process. So you have the existing NCD out there. Just remind us what needs to take place for Shield to be included as part of that. Thank you. Yeah. So this FDA approval was the last thing we needed to be covered by CMS. So right after we launched Shield IVD, any of the claims which are associated with Medicare Part B are going to be directly covered. It's going to take us some time to establish pricing from and get that pricing from our local MAC. But we are going to bill back to the date of FDA approval and IVD launch, and all those claims would be eligible for coverage. And in parallel, we are going to pursue the ADLT status, as I mentioned earlier. That's the independent parallel activity that we are going to do. Okay. Thank you. The next question comes from Dan Arias from Stifel. Please go ahead. Your line is now open. Good morning, guys. Congratulations. I'm merely maybe just sticking with payer stuff here. Now that you have the approval, what are the expectations around other reimbursement and payer contracts? I think some of that's probably tied to USPSTF, but you guys had talked about the chance to get on the board with some coverage at the state level maybe ahead of the guidelines. So curious what you're thinking there. Yeah, sure. So we continue to expect ACS guidelines sometime in 2025. That would activate some of the state-level coverage mandates that I talked about earlier. We are excited about that. And then the rest, actually, we are in our financial planning, we don't have any kind of assumption in terms of getting private commercial coverage before Task Force guideline inclusion. If anything happens, it would be an upside for our planning. So the rest of the coverage, we are assuming to come after Task Force guideline inclusion. Okay. And if I could just maybe stick with this idea here and just revisit the idea of reimbursement aligning with whatever the USPSTF does when they come out with their guidelines. You've said that you think you will get the three-year designation, and you said that if you don't and it's one year, then that's a good thing because you run more tests, which makes sense. But I just want to square that away with payment by CMS every three years per their current policy, which seems like it could leave two of every three tests currently not being paid for. Do you need CMS to revise that policy? Is that something that you think could happen? How would the economics work under that scenario? If you could just sort of refresh the thinking there, that would be great. Yeah. Good question. I think the reality is some of these major coverage policies would really set the practice of medicine too. So CMS with triennial kind of a coverage policy that they have now. In fact, it's not going to be very straightforward for us to give access to Medicare beneficiary patients to get tested more frequently than every three years. So effectively, it's kind of generates some kind of boundaries of how much the patients would get access to this healthcare service. So it would be every three years, not more, not less, because we cannot offer free testing for providers outside the coverage policy. So that's why these payers, and especially CMS, really set precedents in terms of how the practice of medicine would be, and manufacturers like us need to stick to them. So in terms of now scientific and clinical argument, based on everything that we are seeing, since we have a very high performance in detecting stage 2 and above, it looks like using Shield on a triennial basis has the optimum utilization of this service in terms of risk of doing excess colonoscopy on the false positives versus benefits of finding these colorectal cancers. So we continue to be in agreement with CMS coverage policy that the right utilization of this test should be every three years, and that would be our initial recommendation. But we are going to continue to work with guideline bodies to see how KOLs and different guidelines would think about the best utilization of Shield in practice. Yep. Okay. Thank you. Thank you. The next question comes from Kyle Mikson from Canaccord. Please go ahead. Your line is now open. Hey, guys. Thanks for the questions. Congrats. I want to go back to the timeline for the proposed approval study. AmirAli, you said that'd be similar to Cologuard, so that was 2015 to 2020, five years. I think if you did that kind of a timeline, it wouldn't have the data in time for the USPSTF review in 2026 or 2027. It just sounds like this triennial kind of interval data would be critical for that label up, that kind of what's kind of put out there. So is there a way for there to be an interim readout that could be used for USPSTF? And also, maybe another way to think about it would be, could this PIS be shorter maybe than the Cologuard study, given Shield, the blood-based workflow is actually more streamlined and faster than the stool-based workflow? I think I invite you guys to think about it with a different perspective, right? So our recommendation would be utilization of Shield on every 1-3 years. CMS is every three years. And I think what we are hearing from KOLs in the field, everybody's appreciating this major problem of unscreening and the fact that the rate of screening has not gone up as anybody expected in the field with the options that have been available so far during the last 10+ years. So I expect when the guidelines on USPSTF and ACS look at it, in fact, they would have a favorable perspective of giving this option of blood testing to patients, especially the unscreened patient population, and starting that access and just see over time how the additional clinical evidence would follow. I think that's very similar to what happened with other tests. The USPSTF went with the manufacturer recommendation, every 1-3 years testing. At this time, based on all the data that we have and the performance that we see, our recommendation would be the same. We are excited to get to those days and go through this review cycle with Task Force. Again, if you look at it with this perspective that 76% of CRC death is in unscreened patient population, we are talking about 50 million people that we need to screen them. At the end, the best screening test is the one that gets done and gets completed by the patient. To me, it's very straightforward of what guidelines should do, but we'll see over time how it's going to work out. All right. That makes sense. Then just one on kind of the reimbursement situation. So just given, I guess, it's immediate with CMS here, just maybe just talk about what the gap fill rate could be and how that could be calculated. I know you talked about some ASP assumptions, but just kind of diving into that would be interesting. And then maybe if you could just talk about how much of the Shield volume to date has been covered by that Medicare entity or would have been covered by the entity. Yeah. I think you're absolutely right. It's kind of interesting kind of a process with some proprietary algorithm that local MACs have, which, frankly, I'm not sure. We took multiple products through that kind of a pathway, and if you tell us exactly how that pricing works, it's kind of some aspects of it even we don't understand. So it's hard to predict what would be the gap fill pricing for Shield. But again, it's going to be short-lived. We are expecting this ADLT status sometime in 2025, and we know how ADLT pricing would be. That's what we have experienced. We have track record. We know how to do it, and we can set the right expectation on how that ADLT pricing would be, which is going to be based on our cash pay price. What else I missed? The rest. Was there anything else? Or I forgot about the rest. Maybe that was it. Thanks for your question. Thank you. Our next question comes from Subbu Nambi from Guggenheim. Please go ahead. Your line is now open. Hey. Congratulations on the approval, and thank you for taking my question. In response to Tejas' question on V2, you said performance will get better and indication gets expanded. Could you elaborate on what indication expansion would mean, given it is first line already? And then I have a follow-up. Oh, yeah, yeah. Thanks for asking that important question. It's very hard to expand the CRC indication anymore because it's for 120 million people and high-risk people. It's a very high bar to expand indication to screen high-risk individuals. The only methodology is, at this time, colonoscopy, and it's very hard to have an alternative for that. CRC indication is this. This is the broadest any test can get for average risk screening. When I mentioned indication expansion, I meant beyond CRC. As you know, we are working on some other cancer screening indications. We have an ongoing screening trial around lung cancer. We are working on multicancer detection as an additive to the current Shield IVD, which at the right time, we would continue to update the investor community about the progress we are making on the non-CRC front. That makes so much more sense. Thank you for that. Last week, you published a paper on the CAN-SCREEN model, but the blood test metrics was what CMS set. In the AdCom, though, you had data on Shield's performance in the same exact model. Could we expect you to publish Shield-specific data, and how should we think about this in relation to the ACS guideline or USPSTF guideline inclusion? Yes. I think you can expect to see some of our modeling results get published in the peer-reviewed journal before the end of the year. I think, interestingly, even for some other modeling results that have been published, I think nobody debates that health outcome benefit of Shield is very high for screening unscreened patient population. I think there is still some residual debate on Shield versus, for instance, FIT testing in terms of cost-effectiveness. From our perspective, it doesn't need very complicated modeling exercise to show if you can be as cost-effective as a $5, $10 test for colon cancer screening. What we are doing with blood is more expensive for us to run those kind of highly innovative, sophisticated assays, but that's what we need to do to really bring these unscreened patient population around the table and screen them. We are excited to, hopefully, by the end of the year, put some of our outcome models in some peer-reviewed journals too. Thank you. The next question comes from Eve Burstein from Bernstein Research. Please go ahead. Your line is now open. Great. Thanks a lot. One question on Medicare coverage, just following up on Jack's question from earlier. You guys said that FDA approval was the last step that you needed to meet the requirements for Medicare coverage. My understanding was that way back in the day, when Medicare looked at Epi proColon, they said they'd pay for tests with specificity greater than or equal to 90%. Maybe we're totally splitting hairs here since Shield specificity rounds up to that number, but it's still slightly under that. Can you just clarify, have there been updated conversations with Medicare or other developments that clarify and really give you confidence that you will, in fact, be getting this coverage, or is there any remaining risk here, however small? Yeah. There is no risk. We've been in conversation with the CMS team, and we kind of posted and keep them informed about all the progress that we made and the data and where we are with the FDA. And they've been waiting for us to get to this moment of FDA approval too. That 90% specificity, keep in mind, is specificity for negative colonoscopy or what's known in the field as specificity of category 6 when you exclude any adenomas in specificity calculation. And the bar that they refer to in NCD was 89.8% of what Cologuard had, and our category 6 specificity is, in fact, 89.9%. So we are very confident that we are meeting all the performance criteria. We just needed to get to this point of FDA approval, which is what we achieve right now. So yeah, there is no risk that we are aware of about that Medicare coverage. Great. That's good news, and thanks for the clarification. One follow-up, just how to think about 2024. So clearly, this is great news going forward, but could there be any financial headwinds in the back half of 2024 from this? And I say that because you've scaled up your sales force, you get a bump from FDA approval and utilization, but you're still going to get gap fill pricing, which is presumably worse than what you'd expect from ADLT. So if your utilization goes up, could that, in fact, be a headwind for the company in the back half more so than you expected going into the year? So maybe I start, and if Mike, you want to add anything, please feel free. So in our guidance, actually, we said even that $175 million bearing for Shield, we considered all the stuff that could happen, and that's the way we set the guidance. So no, I think we believe for Shield and screening, that $175 million burn, considering the Shield volume wrapped, the dynamics of gross profit and stuff, all are included. Mike, do you want to add any additional color? Yeah. There's not much more to add, but I would say, yeah, I mean, we've looked at all of the scenarios. I think we're very confident with the $175 million burn that we've previously guided. And our assumption has been very limited reimbursement in the back half of the year. We're really looking at 2025 when the revenue really kicks in. So I think, yeah, we're pretty confident with the guidance that we've got, and we don't really see any headwinds. Thank you. The next question is from Kayla Hostetler from Jefferies. Please go ahead, Kayla. Your line is now open. Hello. Thanks for taking the question. I just kind of wanted to touch on the recent House appropriations draft, which essentially defunded AHRQ, which funds USPSTF. I understand that fully defunding USPSTF is highly unlikely, and it will likely get funded in the Senate. On the off chance that it doesn't, what other guideline groups should we be looking to that could hold similar influence to USPSTF over time? Just to make sure I heard the question right, is who can have some influence on the USPSTF? Your line was not very clear. That was the question? Oh, sorry. If USPSTF were to get defunded, which guideline group should we look to? Oh. So actually, if the USPSTF completely gets defunded, I think the whole prevention medicine services of this country is going to be into some problem. But always HHS, the funding comes from HHS, and it's kind of minimal budget, but it's a much, much bigger issue than what we are talking about, the Shield. And the reality is, throughout the last two years of congressional efforts that we have done on the Hill, the Task Force has a very high degree of visibility, I can say, from both sides of the aisle. But we'll see how some of the budget dynamics would work. But yeah, if the whole prevention medicine and vaccination and mental health and other cancerous screenings get into the question, then yeah, I think we're going to have an issue. Finding $10 million-$11 million to keep the USPSTF active, I think should not be a material issue here. Thank you. The next question comes from Andrew Brackmann from William Blair. Please go ahead, Andrew. Your line is now open. Hi, guys. Good morning. Thanks for taking the question. Maybe just back to some of the reimbursement discussion related to Dan's question. Just assuming that private payers do take a while to come on board, I think some others in the space have shown that there could be a lot of brand damage that happens if patients get a large bill in that sort of time period before coverage occurs. Can you just talk about some of your plans to ensure that those patients who might not have coverage for a few years do have that good experience and that sort of negative perception with the bill doesn't gain steam? Thanks. Yeah. We are going to actually be very transparent and open with both physician and patient about the areas that this test is covered for and the areas that it does not have coverage. So both patient and physician can make the right decision of the utilization of this test. Also, where appropriate, we have financial assistance programs at Guardant that would kick in for some patients who meet the criteria for that financial assistance program. In general, throughout, I think, many years of being a commercial organization and dealing with these reimbursement matters, I think we have good experience of how to deal with these matters. But yeah, I think the reality is patients at age 65 and above all have access to this test, especially Part B with $0 out of pocket. And younger patient population, 45 to 64, the access would be more limited. That's why we are going to continue to generate awareness and work with guideline bodies to make sure we generate equitable access at the end of the day for everybody who can benefit from this test. It's going to take us some time to get to those milestones. Thank you. The next question comes from Sung Ji Nam from Scotiabank. Please go ahead. Your line is now open. Hi. Thanks for taking the questions, and congrats on the approval. Just one question for me. I was curious about the 4 vials that you guys currently collect for the testing. I know that kind of came up on the AdCom meeting as well. Just kind of curious. I know you don't require all of them. So I was wondering if you saw any pushback while this is available as an LDT and whether kind of in the future there might be a possibility of being able to collect fewer vials. Thank you. Yeah. Good question. Actually, in the real world, we did not see any kind of issue that got escalated that this 4 tubes of blood is generating a barrier for adoption of this test. No, we haven't seen that issue. Interestingly, the test just needs 2 tubes of blood. So in terms of customer experience, we get to a point that just going back to 2 tubes makes more sense. It would be an easy transition for us. The reason we are getting 4 tubes is for some minor cases that there is some kind of a quality issue or lab failure, we have additional blood sample already in the kit that we can rerun and effectively finish the screening journey—not the journey—screening test of that patient with Shield instead of asking for a redraw. But again, as I mentioned, test just requires 2 tubes of blood. So far, we haven't seen any issue with 4 tubes. Thank you. The next question comes from Patrick Donnelly from Citi. Please go ahead, Patrick. Your line is now open. Hey, guys. Thanks for taking the questions, and congrats on getting this through. AmirAli, obviously, a lot of ground covered on the USPSTF piece, but just curious, I guess, in terms of your kind of diligence, and you guys have talked to experts on this, and as you look at it, how do you expect some of that precaution piece on stage 1 and AA to come up with the USPSTF? And just maybe bracket how you expect that discussion to go and any impact it could have would be helpful. Thank you. Yeah. Sure. So actually, the way we look at it is USPSTF always look at the totality of the information. The reality that blood is a unique option, the reality that we have data, and we are going to have more publication over time that adherence rate with blood testing is high. We have randomized study that when health system incorporates Shield blood testing, the rate of screening goes up by about 2.5x. We have NEJM publication, favorable AdCom voting, and briefing documents. Some results, published results around health outcomes, life year gain when we screen unscreened patients with Shield. I think we believe they're going to continue to look at the totality of this information. Again, that precautionary language that we have in our label, it's just fact-sharing, and those facts are facts of Shield. We have the performance of stage 1 of what we have, stage 2, stage 3, stage 4. Our test has limited performance in AA. So I think all that is the reality of this test now highlighted as a precaution or just be part of just the test result. That's what it is. We've been in conversation with some of our advisor, former Scientific Director of Task Force, and we continue to be confident and optimistic of how they should look at the Shield. But we have to go through that process. One thing that I invite you since I got this question of Task Force multiple times today, Task Force is a major catalyst, but just the Medicare patient population, that size of the market by itself is very big. There are 25 million Medicare beneficiaries who are not doing colonoscopy right now. 25 million. That's 8 million annual testing opportunity just for a Medicare beneficiary. So we have a lot of greenfield in front of us, a lot of business to mine while we get to the expansion of coverage to younger patient population. So let's keep that. Let's have the right perspective on the opportunity in front of us. Okay. Thank you. The next question comes from Vidyun Bais from BTIG. Please go ahead. Your line is now open. Hey, guys. This is Vidyun on for Mark. Thanks for taking the question. I think I heard the expectation for ADLT status in 2025. I think we've seen companies secure ADLT in as little as six months. Just any more granularity you could provide if that's front or back half of 2025, and if we could also dig into what the economics look like. Thanks. I think based on the process that we have experience with, and it's kind of a quarterly process that you have to go through, we believe 2025 is the right time frame to set the expectation without ruling out earlier kind of progress on that side. But mid-2025, I think, is the right expectation to get to that point. Economics, since it's going to be based on our cash pay price, it's kind of simple in earlier stages, and after that, it would be based on power rate. And our cash pay price is what we have for Shield. So I think that's what we expect. And the way ADLT process works, it's very predictable of what the ADLT pricing would be. So that would get activated sometime in 2025. Okay. Thank you. Our final question today comes from Andrew Cooper from Raymond James. Please go ahead, Andrew. Your line is now open. Hey, everybody. Thanks for squeezing me in. A lot already asked. So maybe just one kind of simple one from me. Just anything in terms of that transition from LDT to IVD as we think about the immediate term. And then when should we think about you really unleashing that sales force that you have kind of at present to press harder when we know you sort of had not pressing on the accelerator as hard as you could have? And is there any cash flow dynamics to think about, even on a quarterly basis, in terms of when you get that gap fill rate and when the cash actually starts to flow in the door versus when volumes could be lifting and you see some of the costs? Yeah. So we are expecting this commercial launch to happen in the near future. There are some work that we need to do internally in terms of transitioning some of the software and some of the reporting from an LDT configuration of the test to the IVD configuration. And some of our commercial-facing material needs to change. So there are some work that we have to do, but that launch date would be in the near future, and we would keep you guys posted once that launch has happened. Once we launch Shield IVD, we are going to try to accelerate volume as quickly as we can. So with some early emphasis around Medicare beneficiaries since we are going to have favorable P&L for Medicare testing, and we go from there. So that would be our plan. In terms of the sales force, the people that we have hired and trained, they're ready to go right after we launch the IVD test. Thank you. That does conclude our Q&A session for today. So I'll hand back over to Amir Ali for any closing remarks. I think that's it. Thank you very much for the time. We are very excited with this milestone that we have achieved and looking forward to saving many, many lives and launching this product in the near future. Talk to everybody soon. Bye. Thank you, everyone. This does conclude today's call. Thank you for joining. You may now disconnect your line.