Hey, everyone. Good morning. I'm Tejas Savant, and I cover the life sciences here at Morgan Stanley. Before we begin, for important disclosures, please see the Morgan Stanley Research Disclosure website at morganstanley.com/researchdisclosures. If you have any questions, do reach out to your Morgan Stanley sales rep. It's my pleasure to host Guardant Health today, and speaking on behalf of the company, we have co-founder and CEO AmirAli Talasaz and CFO Mike Bell. Thank you guys for joining us today. Maybe to set the stage, could you just share your vision for Guardant when you started the company, AmirAli, and where you are in that journey today? Yeah, sure. Thanks, Tejas, for having us. Great to see people in the audience. So 12 years ago, when we founded Guardant Health, we were envisioning some days that with a simple blood test, you can offer more time to patients free from this disease. And we are seeing some days that eventually, with a simple blood test during annual checkup, you can detect this cancer at earlier stage. And I'm very pleased with actually what we have achieved so far. You know, back during those days, liquid biopsy and cell-free DNA biology was more just a scientific endeavor than a serious clinical impact. Right now, for advanced cancer management, it has become standard of care. A good fraction of all cancer patients are getting managed with liquid biopsy tests. Majority of them with Guardant 360 right now. A lot of good and exciting progress in the field of MRD and managing cancer survivors, and most recently, I think this FDA approval of Shield as the first primary line for colorectal cancer screening was very exciting for us. Effectively, we are getting to that founding vision, where reality is just FDA approval is not gonna save the lives. A piece of paper is very important. What's important is just making sure people get access to this test and showing the commercial adoption on such a great market opportunity, which is in front of us. So we are very excited with the progress that we made across all these three major brands that we have at Guardant. And, very excited of what we can do by end of this year and going to next year. Got it. Let's start with therapy selection and maybe, you know, one of the questions we've gotten over the course of the last few weeks has been the sequential growth in Guardant360 volume. Mike, I'm sure you've gotten your fair share of those inbounds as well. So, you know, folks basically trying to do the math on the outer periods and the blended ASP ranges and so on, to back into what sequential growth there looked like. So could you just share some color on that quarter over quarter? Yeah. You know, we were really pleased with our, with our Q2 clinical volume. You know, growth of 29%, sorry, 14% year-over-year on the, on the clinical side. We knew that that was going to be, a, a tough comp because of the ESR1 last year. So we were really pleased that it came in at that. And again, on our, earnings call, we reiterated for the full year, 20% year-over-year clinical volume growth. So no change, no change to that forecast. You know, the sequential growth for the quarter, it was about 2500 sequential tests. The majority of that sequential growth came from Guardant360 and the majority of the Guardant360 growth came from the US. So again, we were really pleased with the progress that we're making in the US on Guardant360. It all went to plan. Understand that people are looking at the back half of the year and, you know, seeing that with our projections, there needs to be a further step up in the sequential growth. But we're sat here, you know, confident that we can deliver that 20% year-over-year growth for the full year in the second half. Got it. And then that's actually a great segue to my next question, right? So substantial progress over the last 18 months or so on reimbursement wins, including those from private payers, improvement in the LDT rate from CMS, and then you've got the biomarker billing benefit sort of coming in over the next couple of years as well. So as you think about the next leg of the journey for Guardant360, including, you know, the international rollout and the Smart Liquid Biopsy transition, can you speak to how you're planning to build on the momentum you've already seen so far? Yeah, sure. So, we're very excited with a bunch of actually growth drivers that we have in our core business. Like, this Smart Liquid Biopsy update that we did, a couple of months ago now, adding epigenomics into the backbone of Guardant360 through Smart Liquid Biopsy platform that we have. We believe it would even redefine the role of liquid biopsy in the treatment selection. It's gonna add some new information with material impact for clinical decision-making, how the patients are gonna get treated. We also increased the number of genes 10 times the sensitivity of just looking at the tumor level, you know, very meaningful, like, 10 times. So we are very pleased with that, and that would be a good growth driver for us. In fact, we are seeing in the marketplace, some level of actually, excitement about actually what this smart liquid biopsy can do, and a lot of engagement into the data generation and clinical use case of that product right now. International, we are very pleased with actually where we are. The partnership with the U.K. is going very nicely through the private-public partnership that we have, the lab that we have in the Royal Marsden. We are very pleased with that, and some of that model, you know, is getting kind of replicated into other jurisdiction and other countries, so we are very excited with what we could do. Got it. So on that expanded panel on Smart LB, AmirAli, how are you thinking about opportunities for independent monetization? Or are they mainly a way to widen the moat and drive share gain as new players make inroads into the liquid biopsy market? You know, obviously reimbursement is in place for both Medicare and private payers. Are the gross margins on the new test essentially the same as the original versions? So two separate questions, one on the margins on the transition, and the second one on independent monetization that's unlocked by these new capabilities. Maybe I can talk about differentiation, and also, you know, I give the financials to Mike. Effectively, this upgraded 360 is based on a platform technology that I'm not seeing any competitors are doing any activity. I think till they figure out what we've done with 360, it's gonna be way over and for them to follow the path. And we have very strong IP position around this Smart Liquid Biopsy platform that we have. We are gonna open up some signatures and some indication that would be very exciting, and we are gonna go from just biomarker matching for treatment decision to biomarker matching, plus looking at the whole wellness of the patient, that what kind of treatment they can tolerate, what kind of treatment is not gonna work anymore. We gave an example, like just look at cardiotoxicity. Some of the patient harm, and in fact, some of the lost lives to breast cancer for HER2-positive patients are the patients who get cardiotoxicity by HER2-targeted therapy. Now, just imagine if you can find that cardiotoxicity very early on, which in fact, we've shown some data. With the power of epigenomic and smart liquid biopsy, that would transform how breast cancer is gonna get managed, and I can give you example in bunch of other cancer type. So we are gonna actually increase the barrier and increase this leading position that we have on the treatment selection relative to the competitors. The other thing is, I think our infrastructure, operational infrastructure, that continues to improve even with this Smart Liquid Biopsy. Like, the turnaround time that we have, on average, about five days. It's very significant in marketplace. The doctor sees the patient, effectively the next week, next visit, they're gonna have this data upfront. It's very, very important. A bunch of these operational advancements that we made because of investment in Shield, we are leveraging to make these kind of improvement on the 360 franchise. In terms of financial? Yeah. You know, at the moment now, we've just launched on the Smart Liquid Biopsy. The cost has increased a little bit. You know, we're providing more data. However, that's been more than offset by the increase in the ASP that we've seen since throughout this year. And so actually, you know, if you look at Guardant360 on the clinical side, our gross margins have actually improved this year compared with last year. And so, on the clinical side, they're actually in the high 60s now. And on the biopharma side, you know, where we've been using Smart Liquid Biopsy for more than a year now, the gross margins are in the 70s. So I think, you know, even with the additional cost, we've got really strong margins with Guardant360. Got it. That's great to hear. Before we move on to MRD, AmirAli, just any color you can share on when we get the decision on the post-trial motion from TwinStrand, and just remind us of the range of potential outcomes there? Yeah. So, the post-trial motion is actually, the activities are happening. Apparently, the judge who has our case is kind of dealing with a backlog of a lot of issues, but, you know, maybe we hear something by end of the year. We don't know exactly when that would be. Independent of what happens, in either way, probably it's gonna get appealed all the way through, end of 2025, 2026, till we figure out what's gonna happen with this case. In terms of the range of outcomes, I think the worst case is like, you know, maybe just as a reminder, the verdict that we got, the $80 million kind of damages and then the running royalty, the worst-case scenario could be that, damages could get tripled up based on willful kind of infringement. First of all, we don't believe we are infringing. In terms of worst-case scenario, that could be the outcome. In terms of the damage, the royalty rate, which was in the verdict, continues on 360 till we implement a technology modification. It's not gonna get applied to Shield and Reveal af- in terms of midterm, since we are going with this smart liquid biopsy, which is epigenomics only, and we don't have somatic components there. So that's kind of the range of outcomes that could happen. Got it. Fair enough. So the smart LB transition on Guardant360, though, that doesn't sort of fully insulate you from... That's not the tech workaround that you were referring to in terms of the IPs at stake? Our position continues to be frank, like, you know, we don't think we are infringing that IP. If they wanted to actually have a cell-free DNA assay that worked based on their core platform technology, that company have tried multiple times, what they are claiming is not the backbone of what we do in Guardant360 with no kind of infringement. So we continue to take that position. But even if there is some kind of still misinterpretation of what we do, I think there are potential ways to even have not that kind of misinterpretation of what we do with that IP. Got it. I want to switch to MRD. You know, the COSMOS study was recently published, and that sort of facilitated your submission to CMS for CRC surveillance reimbursement. Remind us how much reimbursement in the surveillance setting could expand your opportunity there? I think right now you're paid for three tests in the first 12 months in the adjuvant setting, basically. Why do you think the tumor-naive approach may be preferred here? Oh, maybe I start with the last part, then might we have next to payment side. So when you look at the MRD opportunity, there are 15 million people that we believe they could be beneficiary of these MRD tests. Out of this 15 million, 12 million of them are cancer survivors who are at least two years away from their surgery. We believe tumor-naive has a much better product market fit for those 12 million, which are far away from their surgery. As long as the performance of tumor-naive is similar to the tumor-informed assays, which we believe with the power of Smart Liquid Biopsy that we have and the Reveal performance that we've seen, Reveal can really have good performance. The MRD market that we see today, I think it's highly penetrated around more of those three million people, with some indexing around the adjuvant cases. So in the long term, when we kind of uncap the growth of Reveal, after we have a positive gross margin Reveal, which we expected in 2025, I think we can really figure out how big of an opportunity a test like Reveal has toward unlocking that 12 million patients who are two years away from their surgery. It's just much more convenient to not to have, you know, the limitation of getting, finding and getting access to a tissue, which is an old tissue sample. Yeah, from the ASP perspective, we'd expect a nice step-up for Reveal if we get CRC surveillance reimbursement from Medicare. You know, as a reminder, we're reimbursed for CRC in the adjuvant setting. When we do get paid by Medicare, we're getting, you know, over $2,000 per test. It's in a bundle, but it equates to about $2,000 a test. But the issue there is it's only a small proportion of the tests that we're doing. CRC surveillance is the biggest proportion of the tests that we perform. So yeah, if we're getting Medicare covered, it'll depend on the rate, but, you know, the rate is going to be higher than zero and so it's going to be a nice step up on our ASP. Did I hear you say three zeros? Higher than zero. Fair enough. Follow up there, I mean, I know you've done a bunch of sort of physician surveys that underpin your confidence in, in that dynamic, AmirAli, so, any color you can share there? And then as a follow-up, Reveal breast and lung reimbursement timelines, I think you've got a breast publication coming up, around year-end. What other data remains to be generated or published to, unlock those two indications? Yeah, sure. So, I think some of the survey results may be more important than survey results. I think is the reality of the commercial experience that we have with Reveal and our volume today. Although we are kind of capping the growth rate for Reveal, majority of our Reveal CRC cases are coming from the surveillance setting versus adjuvant setting, although we have reimbursement for adjuvant, which is kind of a signal of what I mentioned earlier, that for these patients who are, you know, a couple of years away from their surgery, this kind of tumor-naive solution can have a very strong product market fit. In terms of the timeline for reimbursement and publication, yes, we expect a breast publication by end of the year, and we laid out all the different timelines that we have for different cancer types in our last earnings call presentation slide, that I refer you back to that. There is some additional data that are getting generated for a variety of different cancer type as we speak. We talked about we have tens of thousands of samples now biobank for different indications, for indication expansion for Reveal. Got it. All right, let's switch to the screening side of the business, AmirAli. You know, given the first line label for Shield, how should we think about near-term penetration among current colonoscopy or stool-based testing users versus the 50 million unscreened eligible population? In the past, you've shown surveys demonstrating a preference for blood-based approaches among both groups. So, just your updated thoughts there. The biggest piece of market for Shield is this 50 million unscreened patient populations which are out there. That's a lot of annual testing opportunity. And we are very excited with this Medicare coverage that we have, which effectively, like, 45 million people out of 120 million people who are Medicare beneficiaries, Part B or Part D, now have access to Shield, and we have reimbursement for it. So we are very excited with just this fast start. But yes, there is the reality of what we are seeing in our surveys, and the reality of market is, for stool, it continues to be a push market. There is a lot of patient navigation, a lot of push for the test to get utilized and gets completed. Versus for us, the reality of our two-year experience with Shield now, even as a lab-developed test, there was a strong pull by the marketplace. Even in terms of media attention, once we got the FDA approval, it exceeded my expectation, how much just unearned kind of awareness we saw just by the level of enthusiasm that we got from media, and frankly, Guardant was not behind it in any material way. It's just kind of what happened. It's which just shows how much pull and interest is in this marketplace. With our Shield IVD launch, we continue to see the same thing. This is really a pull market. Doctors are very enthusiastic. So when you look at the people who are using stool right now, about 1/3 of them do not complete the test at the first time being, and our understanding is even a larger fraction of the patient don't even do the test the second time. Which gets connected to our survey results, that seven out of 10 people who've done stool tests do not wanna do it again if they have options of other tests. So this is the reality of the dynamics of stool and blood. Having said that, the biggest opportunity is to screen 50 million unscreened patient populations. Got it. Got it. Fair enough. So, you know, double-clicking on that 45s, right? So that translates into about 15 million annual testing opportunity on the Medicare side. Out of that, I think, like, 40% of them are essentially unscreened, and then the rest of them are probably going to be, you know, they're screened by stool-based methods or colonoscopy. So do you have a breakdown of that? You know, 40% is unscreened, and how much is colonoscopy, and how much is sort of other stool-based methods? Because where I'm trying to get with this mental gymnastics is the fact that, you know, the colonoscopy screened population is probably going to be the lowest or the hardest to penetrate for you, but the other two are sort of rich categories where you could see early traction. You know, this is also our focus in terms of messaging and promotion of for Shield. We are not after replacement of colonoscopy, and the reality, colonoscopy is a gold standard. If anybody is okay to do colonoscopy and have access to colonoscopy and have the time flexibility to do the colonoscopy, they should take the colonoscopy, and that's why they are kind of been the gold standard for last many years. There are multiple issues with colonoscopy beyond just this prep, and access is like, we are almost at the capacity of how many people we can scope to. So there are not much extra capacity in U.S. healthcare to scope more people. And it's not just a matter of having more colonoscopists, it's anesthesiologists, healthcare facilities, the GI, and so forth. So it's really infrastructure and capacity issue. Then it becomes, okay, for the rest of people who cannot do colonoscopy or don't have access, or we don't have capacity, what could we do? And really, these non-invasive tests become an option. For the unscreened patient population, keep in mind, stool has been around for 20 years. Colonoscopy has been around for many, many years. So if the problem would have been solved with just scoping or running stool on these patients, the problem would have been solved. Some of the growth that we see in stool is, you know, because of younger age group participation, too. But I think that level of screening rates for. If you just look at the age group that has been guideline recommended for a long time, the growth of the rate of screening has been very minimal. That's why this blood test can really play a role and increase that screening rate in a very meaningful way, and this is not just in theory, this is the experience of two years commercial. Once the doctor ordered this test, more than 90% of the patient completed this test. In a randomized study, once the Shield got incorporated into a healthcare system, the rate of screening went up significantly, two to three times, when they added Shield on top of FIT and colonoscopy. So these are solid clinical evidence that we have generated, that blood can really contribute. Got it. I want to switch to, you know, the new IVD price and ADLT designation. Do you think there's a chance that we could get ADLT designation in place in the first half of 2025? And, in light of that new cash pay price, about just south of $1,500, is it fair to expect that you'd initially... I mean, at least for the first couple of years, once you have ADLT status in place, it would be in that zip code? We expect the ADLT pricing to be in place in 2025. The first half of 2025 is likely. But, we are expecting it sometime in 2025. The price would be $14.95. I mean, you know, the process is the process, and we know how it works. So that would be our ADLT pricing once it gets activated, and we get that status designation. And then it's gonna be in place for a while. Got it. So that's actually the perfect lead-up to my next question for Mike. You know, five to 10 million Medicare patients, you know, even leaving aside the colonoscopy screening population. $1,500 ASP, at least for the next couple of years. With tiny, tiny penetration rates, you can get to very meaningful revenue numbers there, right? So as you think about, when you guide to 2025, will you be guiding for Shield, given the possibility of meaningful contributions in the back half of the year? Yeah, I think, can't say 100% for certain, but I think, when we do guide for 2025, yeah, we do see that we'll be having screening revenue. And I think everybody's interested in what that revenue will be. Everybody's interested in the volume. So, I expect that we'll break out the screening revenue in our numbers, and we'll provide guidance for 2025. But, you know, we're still. It's still very early days. We're a few weeks into the launch, so, you know, let us see how that goes. But, yeah, hopefully we can be providing that guidance for 2025. Got it. I want to ask you a hypothetical, AmirAli. You know, if your competitor's PCR-based assay comes in a little bit south of you on CRC sensitivity and specificity, but above the CMS threshold, but they're better than you on advanced adenoma. How does that change sort of the competitive positioning or the framing of the narrative, for you guys? So I think what we are seeing in the PCP market in our survey result is really a good fraction of PCPs look at non-invasive tests, as all of you guys are missing majority of advanced adenoma. So if advanced adenoma is important, in fact, which is important for prevention, the patient should get colonoscopy, instead of debating, hey, it's 40% versus 13% or so forth. That's actually what we are seeing. Like, when we do surveys, there's a lot of sensitivity around CRC sensitivity number versus AA. That's the way market is shaped today, so we'll see actually how it works out in a longer term. You know, we know the biology of cell-free DNA very well, and we know the track record, a bunch of historical data disclosures by other players, and even, you know, including us, frankly, like, you know. In some of our data from ECLIPSE cohort, we saw 19% AA performance. May of 2022, we launched our LDT with that claim based on that data that we have. And in our pivotal study, larger study, the way FDA study works, at the end, we got to the performance of 13%. But I think, the other parameter is, at what level of AA performance, potentially AA would be in the label. Based on, you know, everything that we know since we've been in conversations with FDA and rigorous review process with FDA, like, you need to get to the ballpark of FIT AA performance for it to be relevant So if you are 25% plus, minus, that's the relevant kind of performance for FIT. Below that, you're on par relative to the precedent in terms of getting AA in the intended use. So that has been o ur expense. Got it. A little bit of debate on just USPSTF review timelines. What's the latest there? I mean, the draft research plan, are you still expecting it by year-end? And some folks have, you know, pointed to the U.S. HPV, the cervical cancer screening guidelines, right? Which still not final, two and a half, three years out. So they're like, if the process only starts, you know, early next year, then is 2027 more likely than 2026? Which we continue to expect this draft research plan to drop actually by end of the year. What we've seen, actually, after our FDA approval, it's been some positive engagement and ask from patient advocacy groups and other stakeholders to our task force to do this review and do it in an accelerated way. We don't know. We are gonna monitor. What we have control and what we are very excited about is this 45 million people, Medicare beneficiary, who have access to this test right now. It's a huge market opportunity for us, even if you just look at the unscreened patient population, which is completely rational. It's millions of tests, annual opportunity just for Medicare beneficiary, that we have a lot of business to mine and develop while we are waiting for guideline inclusion, first by ACS and then task force. There are multiple ways for us to get to our 2028 target that we shared in our investor day of 1 million annual testing for Shield. There are multiple ways, and we think we can even get there with just this Medicare opportunity, which is fully reimbursed right now. Got it. Fair enough. On expanding the Shield label, AmirAli, beyond lung, what other indications could we see data on next year? And at what point will you add those to the label, or will they essentially be run as separate assays for a while before you launch a multi-cancer version? So CRC is our lead indication, but it was never our last indication or only indication. It was our pathway to have a reimbursable blood-based colorectal cancer screening. There was regulatory pathway, there were reimbursement pathway within the way that the health system works today and the jurisdiction that all the stakeholders have. Now that we took that to the finish line we are gonna effectively execute on our strategy of expanding that to multi-cancer screening. And multi-cancer screening does not mean it's just CRC plus lung. What we are gonna share, and we are excited about to get to that data and share it, is 2025, we are gonna have a panel of cancers that we are gonna share the data of the performance of the same Shield assay in detecting them across a wide variety of cancer types all together with a high specificity, joint specificity, and we see what the performance would be. The way we built Shield is it's pan-cancer, multi-cancer, ready upfront in terms of data generation. So effectively, other indications as a panel can get added with a new color on top of what we have today. So patient is gonna see CRC report. And for some patients, if there is interest, they can get access to the multi-cancer, large panel cancer detection information within the same test. Got it. We are very excited of what we could do with that lifecycle management for Shield. Got it. I wanna switch to a couple of financial questions, Mike. You know, a bunch of tailwinds across the portfolio. On the last quarter, you said, you know, you could pull forward your revenue and break even targets, you know, I think potentially by a year. I don't want to put words in your mouth, but y eah it sounds doable. I wanna talk about sort of clinical volume growth into next year. On, you've got the end of the ESR1, you know, comps here. You've got, you know, meaningful review ramp. You've also got, you know, potentially some help from the biomarker legislation kicking in. So, and of course, you know, the ADLT rate or benefit, et cetera. So as we put all of those together, is there anything sort of to flag on clinical volume growth, right? I mean, would it be fair to say that it this year you're calling for north of 20%, but in 2021, 2022, and 2023, it was closer to 40%. So, do you think somewhere in the midpoint of those two sort of bookends make sense? I think it's a bit premature to sort of talk about clinical volumes for 2025. You know, when we look at all of the tailwinds that we've got. Yeah, we've just launched Smart Liquid Biopsy for Guardant360. We've seen really good traction there. And we've seen really great traction for Reveal. It's growing very strongly this year, and potentially next year, you know, is the year that we can take the brakes off and really push hard on volume because we can flip the test to be in positive gross margin. So that's gonna be a real driver for us, clinical volume growth. And even on the tissue side, you know now that there's potential, in some cases, to order tissue and liquid at the same time and our sort of market share on the tissue side is relatively low, so I think there's room for us to grow in the U.S. We've got international opportunities. So when we look at the clinical volume growth, we've still got a lot of these growth drivers. But it's hard to sit here and say for 2025, you know, what that growth number will be. But you know, we still feel very confident on the 20% CAGR that we set at our Investor Day on the revenue side through to 2028. I think we're feeling yeah, still very confident that that's the number that we can a chieve. Got it. So here's another fun one for you to wrap it up. So, you know, current cash on hand expected to be, you know, sufficient to get you to cash flow breakeven. Given your healthy balance sheet, can you talk about sort of the rationale of the recent $400 million ATM? But, you know, Zarak and I were talking earlier this morning, and we said we wouldn't let you use the words good housekeeping. It's good housekeeping. You know, we've been asked that question a lot over the last week or so, and I think it really is simply, you know, a good housekeeping because we wanted to. We didn't have one in place. We wanna make sure that going forward, we've got all the options available to us, and we just, you know, we always wanna be prudent, and we wanna make sure that we're managing the balance sheet in the best way possible. That being said, you know, we have over $1 billion of cash. Our plan to get to breakeven means that we don't need to raise any additional cash The billion that we've got is more than sufficient, and in fact, you know, we've said now, potentially we could bring that breakeven forward. So, we've put this in place. We sat here today with no intention to use it, but again, yeah, we wanna be prudent, and we wanna make sure that we're doing the, you know, the best management of the balance sheet for the company. Got it. Fair enough. I'll ask you again after a couple of glasses of wine over dinner tonight. All right. That's all we have the time for. Thanks so much, guys, for joining me. Appreciate it very much. Thanks a lot. Thank you.