Hi, everyone. I'm Yuko Oko, and I'm on the Life Science Tools and Diagnostics team at Morgan Stanley. Before we kick it off, for important disclosures, please see Morgan Stanley's research disclosure website at www.morganstanley.com/researchdisclosures. If you have any questions, please reach out to your Morgan Stanley sales rep. With that, it's my pleasure to host GRAIL today. From the company, we have CEO Bob Ragusa and CFO Aaron Freidin. Hi. Thank you. Okay. To start, could you provide a quick overview of GRAIL's mission for folks that are not as familiar with the story? What are you focused on over the next 12 months? Sure. First of all, thank you, Yuko, for having us as well as the Morgan Stanley team. You know, GRAIL's mission is to detect cancer early when it can be cured. You know, 70% of the cancers that are out there are not even being looked for. Standard of care screening looks for about 30% of the cancers that cause 30% of the deaths. Galleri is really looking for those other 70% of the cancers. For example, in the Pathfinder study, if we added Galleri to standard of care screening, we found we more than doubled the number of cancers found. We had a very high positive predictive value of 43%, a very low false positive rate of 0.5%. We also provided a cancer signal of origin with a high accuracy of around 90%. Right from the beginning, Galleri has been designed as a population scale screening test. Part of the reason for that is we recognize the numbers here are enormous. If you look at the TAMs in the U.S., there's about 100 million individuals who are screening eligible for a multi-cancer early detection test. If you go to the UK, where we're running the NHS-Galleri study, there's another 19 million. Across the EU, there's another 160 million. Even, for example, in Japan, there's almost 50 million. Really large numbers. A lot of the things we've done for this are really geared towards population scale screening. What we're looking forward to in the next 12 months: we've just read out over the summer our NHS-Galleri study, where we found substantially higher positive predictive value than Pathfinder. Pathfinder was already at 43%. In our Pathfinder 2 study, we gave the Pathfinder results again, substantially higher positive predictive value and higher cancer detection rate. In both studies, the specificity or false positive rate was consistent, as well as the cancer signal of origin accuracy was very consistent, and no adverse events in either of those studies. We're really looking forward to it. We submitted and are hopeful we'll be able to present at ESMO in October with our Pathfinder 2 full data readout. In the middle of next year, the full readout on the NHS-Galleri study. Pathfinder 2 was 35,000 people and NHS-Galleri 140,000 people. Large studies. The other big thing next year is we're looking in the first half of 2026 to submit our final module for our PMA to the FDA. Great. Lots to dig in there. Maybe starting off with the competitive landscape, you're first to market in the multi-cancer screening space. Could you elaborate on the competitive landscape today and how you see Galleri positioned? Sort of related to that, one of your competitors launched an MCED at a lower list price versus Galleri. Does that pressure your ASP at all? Yeah. A couple of things there. First of all, you're kind of our first mover advantage. We look again, you know, the test was designed and built for a population scale. We believe from a performance standpoint, we're in really good shape. We also have the largest clinical study. We studied nearly 400,000 people across all our studies. In the more recent studies, Pathfinder of 6,600 people, Pathfinder 2 of 35,000, and NHS-Galleri 140,000. Really large studies. We have a lot of data in interventional studies prospectively in the intended use population. The third piece from a competitive standpoint is just our commercial experience. We've been out there for more than four years. We understand what works and doesn't work. We understand how to integrate it into a clinical practice, what are the important elements. Some of the things to think about there is the low false positive rate, the high positive predictive value. High positive predictive value gets you to very actionable results. When providers see a positive on Galleri, they know that there's something that you really have to go look at, as opposed to some of the other screens, which are low single-digit positive predictive values. That's an important aspect. The other thing is just the cancer signal of origin. To have that cancer signal of origin is really a differentiator. It's what helps guide an efficient diagnostic workup for it. You mentioned ASP pressure and new entries in the market. If you look at the tests coming out, one in particular with CancerGuard, we feel really comfortable about our, again, it's the suite of metrics that make it to our population scale screen. The fact that we have high sensitivity and good cancer detection rates, again, doubling the number of cancers found compared to the standard of care, the very low false positive rate, the high positive predictive value, and the cancer signal of origin capability. When you look at just the specifications and compare one to another, if you take 97.4% published specificity for the other tests and you look at 99.5% at Galleri, on the surface, it doesn't seem like that big of a difference. When you dig into the details, that's a more than 5x degradation in false positive rate as you go from 99.5% to 97.4%. Since we were designed for population scale, we're looking at big numbers. If you look at a million people, that means with the Galleri test, you're looking at 5,000 false positives. With the other test, you're looking at more than 25,000 false positives. If you couple in the cancer signal of origin, it guides the directed workup, so you have an efficient workup on the Galleri side. On the other side, there is no cancer signal of origin, so you have more than 25,000 with a non-guided workup. We feel good about the competitive landscape. We think our performance, coupled with all the studies, you know, Galleri is the only MCED with demonstrated performance in individuals being screened for cancer in the intended use population. Coupling performance and our studies, we feel really good about our competitive position and our ability to be priced to where we are. Great. You mentioned a lot of the pros to being a first mover advantage. One of the cons you can say is that you have to pave your way through reimbursement, right? When you were thinking about potentially developing multicancer tests versus a single cancer test and then taking a multicancer approach after that, what are the criteria or what are your thinking around that? Yeah. Again, we looked at, you know, through GRAIL's history, we looked at kind of all combinations we get in there. We really focused on multicancer because that ultimately is where the need was. You know, again, if you look at, you have, it's always meant to be a complement to standard of care screening. Standard of care does a good job of looking at the 30% of the, you know, the cancers that cause 30% of the deaths. To really comprehensively look at the other 70%, we found it impractical to go cancer by cancer because there's so many cancers that make up that huge long tail. The reality is, you know, in the early discoveries, we found a shared cancer signal across those. That really pointed us towards the MCED. There have been some forays to try to use a single cancer test to get, you know, get reimbursed for a multicancer test. We think that raises a lot of questions. We're hearing, you know, at this conference, we've heard in the previous conferences some of the questions around that strategy. Not for me to go into detail on that. That's another company strategy. We'll be looking to see what happens there. I think when you're evaluating any, any, you know, whether it's single cancer, multicancer, you really have to look at the data. How much data is there in the intended use population? Again, here's where, you know, we've spent a lot of effort across really large studies to really understand how the test performs in intended use. We've been really pleased that our case control data translated into Pathfinder very well. It's also translated into very large NHS-Galleri studies and Pathfinder 2 of 35,000, 140,000 people. It's unusual for the performance to actually get better in those studies. A lot of times you see when it goes from case control to intended use population, it degrades. We've been very happy with the fact that it's, you know, at least replicated and the latter two cases have gotten better. Okay. Great. Let's dig into those results. You recently announced the top-line results for Pathfinder 2, which demonstrated substantially higher PPV and cancer detection than Pathfinder. Ahead of the detailed results at ESMO, could you provide a high-level overview of the trial design and key aims for the trial? Given this is one of the key data that will be part of your PMA submission in the first half of 2026, what are the regulators focused on in the study? Yeah. Yeah. So, Yuko, as you said, the study was designed and is part of our registrational, you know, clinical package to go to the FDA. Pathfinder 2 is designed as a safety and performance study in the U.S. It's 35,000 folks in total, one time point, one test, and then followed for a year. That period expired. We're now going to present that data next in ESMO, and we're excited about that. We enrolled that study to be very to look like the intended use population, right, to specific the right demographics, the right ethnic mix, socioeconomic mix, and so on. I think that's why you're actually seeing the performance in PPV, as we said, improve. It looks more like the intended use population. We'll be submitting that, as we said at ESMO. As we said earlier, the PPV is substantially greater. Specificity is in line with what we previously said in Pathfinder. The cancer signal of origin. The other really important part is that we've improved the number of cancers found when compared to the standard of care, when compared to Pathfinder. Pathfinder was more than 2x, where we're now, we're greater than that, which is really important because you think about cancer yield. When we think the FDA, what we know what the FDA is going to look at is benefits to POMs. They're going to look at the performance. As they've looked at our performance in our prior studies, they were done under IDE. The FDA has been on this journey with us since 2019 when we were in breakthrough with them. We're excited to get this data in their hands. What are some of the reasons that Pathfinder 2 may have shown a higher cancer detection rate in PPV than the prior Pathfinder trial? Are there any key differences between trial design or population enrolled in the study? Yeah. Yeah, that's exactly where it's at. When Pathfinder was enrolled, it was enrolled, you know, during the pandemic. It was a highly screened population. There's very well known that certain populations like to get screened more than others. With Pathfinder 2, we really took the time to make sure that we weren't focused on a highly screened population, that we were looking at what the world looks like, who's not getting screened that should, but still asymptomatic, no symptoms for cancer, and so on. That test performance I think is really more representative of what the world actually looks like when it comes to cancer versus what folks who enroll in these studies can sometimes look like. Okay. Given that physicians should have had more time to gain clinical experience with Galleri versus when the original Pathfinder study was run, is there a potential for a diagnostic resolution to be shorter than the 57 days for those with positive signal and 162 days median diagnostic resolution for false positive results seen in the prior study? Will we see these metrics with the detailed results at ESMO? Yeah. It is one of the endpoints that we're presented at ESMO. If you recall, that follow-up was all done during the pandemic. We'll see what it looks like when it comes out and we present it. We do these qualitative releases not because we don't want to get the data out there, but if we put the data out there, we're not going to be able to go present it at one of these large conferences, which we think is really important. It's great, it's where you want to present this type of data. We'll see it all then. All right. Looking forward to it. All right. I want to jump into NHS-Galleri. You shared top-line results from the NHS-Galleri trial as well, which also showed substantially higher PPV in the first round of blood draws than observed in Pathfinder, though PPV may decline in the subsequent blood draws. Similar to the question on Pathfinder 2, are there any key differences in the population enrolled in NHS-Galleri or its design that may have driven PPV higher than in Pathfinder? Yeah. That's a good question. In NHS-Galleri, similar to Pathfinder 2, we went to extraordinary lengths to make sure that we had a population that was representative of the UK. We looked across ethnicity to make sure we had the match ethnicity mix as well as socioeconomic scale. In the UK, they actually have scales for it in quadrants, and we made sure those all matched. We're very comfortable with that. The population is very representative. Likely, one of the things that changed the incidence that would have impacted the PPV, many times you have that culling effect. In the first round, you could have an impact on PPV as you go into future rounds. That's definitely a possibility. The important element within the NHS-Galleri that sets it aside is it's an interventional longitudinal three-year study with a year follow-up. It's actually looking for clinical utility. We're looking for stage shifts, so reduction in late-stage cancers in the intervention arm compared to the control arm. We'll look at stage 3 and 4 reduction versus the control arm, as well as just stage 4 reduction versus the control arm. We should be able to get a measure of clinical utility out of that. That'll all come out in the middle of next year. Great. I know you said previously that regulators aren't focused on the clinical utility aspect of NHS-Galleri. It is important for payer conversation and physician buy-in, right? Outside of NHS-Galleri, what other clinical utility studies are on the way that you believe are important from a reimbursement perspective? Sure. The REACH study in the U.S. in the Medicare population is 50,000 people over three years, similar to the NHS. It will be compared against a synthetic comparator arm, but the intervention arm is 50,000 people. That will generate the clinical utility data in the U.S. Medicare population that should be able to be used for payer discussions. We're looking forward to that data as well in the future. Great. Do you have an estimated timeline for when that would complete? We'll probably be through a lot of the milestones before that study is actually completed. We'll probably look at using partial data out of that for actual payer discussions. Great. Okay. One of the things that KOLs are concerned about with MCEDs in general is the potential that it would lead to lower adherence to existing screening products. Have there been any studies conducted to date to address that concern? Yeah. It's kind of, again, from the beginning realm, when we recognized you wanted to have a population scale screened. We recognize the goodness that are in standard of care screens. We've never really been targeting to try to replace those. It's really been as a complement to those. In Pathfinder, one of the things we measured is the people who are participating in it and got a Galleri screen, what was their likelihood of continuing on with their standard of care screening? We're happy to see that the standard of care screening continued on quite well with that group. In Pathfinder 2, that's also one of the readout elements we'll look at, what's been the inherent standard of care screening with people taking Galleri. Great. The repeat order rate had been steadily increasing with a 25% reorder rate in 2Q despite being ahead of any meaningful reimbursement. What are key drivers of the uptick in reorder rate in your view? Yeah. We're really happy with the reorder rate being where it is at 25% for a non-reimbursed, non-guideline test. People are really seeing the value on an annual basis of taking the test. The improvement in that is, I think, through more physician interaction, more physician understanding how to follow up on guidelines, doing more work, as Bob has said, and our studies have shown, a PPV of over 40% is something that you need to follow up on as a clinician. When you compare it to mammography, which is around 5%, people who I'm sure you've had mammograms and they say, oh, you have a positive, but don't worry about it, you're going to go get a follow-up. That's not what physicians tell people who have positive Galleri tests. I think the more data we have, the more FDA approval we have, the more clinical utility we have, I just see that number continuing to grow. We're very happy with where it's at for it being an out-of-pocket test. Another potential driver of volume for you is the 7% of orders coming in 2Q from the Quest Diagnostics platform. What's driving that growth, and how much volume do you think you will eventually see coming from the platform? How could the platform also help you with further improving the repeat ordering rate? Yeah. The Quest partnership has been really, really great for us, and we're excited about it. We're still early days as far as some of the longer-term impact of it. What we do know is where physicians have onboarded the Quest, we've seen those physicians ordering more tests. There's this theme I'm sure you guys are all aware of, that barriers to getting testing, whether it's in any sort of health care, when you remove those barriers and make things easier for somebody to get a blood draw or order a test, generally shows an improvement in the number of people ordering the test or complying. We're excited about where that's at. We're also now starting to see new physicians come onto the platform that are using Quest, but we're still in the early days of some of those integrations. We're excited with what we've seen so far. Does it also have additional features on the platform that sometimes it has alerts for ordering again when you're due for a next test? Is that some of the features that are available in that? We have seen those in some of the integrations that we've done with different EMRs. I don't know if Quest Diagnostics specifically has that or not. We have seen, in different health systems, where they have a flag for you should offer Galleri to this person, or it's their turn to take it again. It helps the physician remember that they should offer it or ask. Okay. I know one of the things that is required for the PMA filing also is the bridging studies. Could you talk a little bit about the bridging studies that will be needed to support PMA approval Galleri 2.0? Sure. We've talked about our new version of the test. The studies were run on the previous version. In the discussions with the FDA, we know we'll have to show a bridge between our older version and the current version of the test that we're running. That's being integrated into the PMA process. In the first half submission next year, we'll have that bridging information in there. How large is the study required to be for bridging? Yeah, that we're still working out with them. It'll be substantial, but it'll also be samples that we already have as opposed to going and getting new samples for new studies. Great. Legislation is working its way through Congress and has passed, granting the ability for CMS to cover Galleri tests upon FDA approval. Can you provide an update on where that bill is in review and the next steps? Also, could you provide an example of other screening paradigms that might have undergone the same process in establishing Medicare reimbursement? Sure. Maybe starting with the second one first. We call it rectal screening. Quite a while back, colorectal screening law was passed to be able to enable CMS to be able to reimburse for that. One of the key things you see in that field is just the level of innovation that's occurred in the ensuing decade after that to be able to really drive innovation in that field. That's part of the hope of the MCED bill as well, not only because it's not a GRAIL test, it's an MCED legislation. Really driving innovation and providing more certainty about reimbursement at the end of the game so that people can invest in innovation. At the end of last year, it was in the package that was ultimately shot down by the 1,600 going to 160-page bill. In that process, it came out of the House Ways and Means Committee at 38 to 0, so unanimous vote in favor of it. As we look at it going again this year, we have more than half of the House, more than half of the Senate, nearly 2/3, not only as supporters, but as co-sponsors. It's the third most co-sponsored bill in Congress, and it's the number one most co-sponsored bill in health care. It also has about 700 advocacy groups that are pushing for its passage. We think it's positioned as well as it can be, and now it's really looking for the right funding vehicle. We're hopeful that it'll occur this year, but obviously, a lot of it's outside of any of us control. Right. Should the efforts to establish CMS statute fail to pass, you have another shot on goal. You can work through the USPSTF pathway following FDA approval to establish reimbursement. How quickly following FDA approval could USPSTF review Galleri? How did the recent headlines around potential dismissal of all members of USPSTF affect timelines? Yeah. Since USPSTF is a really important pathway for us, we obviously are pretty cognizant of potential changes there. I don't think we have any more insight than what's been in the media in terms of what's actually going to happen there. Upon FDA approval, we would go pretty immediately to USPSTF to give the data and really show the impact on the battle with cancer that a test like Galleri could provide and hopefully secure a strong recommendation from USPSTF. isn't an established timeline for U.S. Preventive Services Task Force review for an MCED in particular. When a new emerging technology comes to market, like, how long does it typically take? Do you have any prior examples of how we can think about those timelines? Yeah. I'm not sure we have any clear timeline on that. You know, MCED is, as you say, a novel space. The flip side of that is when you look at the impact that MCED's had, and by the time they take it up, if you look at the level of impact in terms of Galleri tests that will be out there, the number of cancers we will have detected, the fact that it's FDA approved, we'll have all the studies behind us really showing both the benefit, benefit-harm ratio as well as the clinical utility benefit. We think that will put a fair amount of pressure on being speedy in the process, just given the goodness and the impact on cancer it could have. Got it. There have also been some noise from the KOL community that methylation-based early detection tests have limited ability to detect early-stage cancers. Remind us of the demonstrated stage 1 sensitivity for Galleri. Is that sensitivity sufficient to justify benefit versus cost and risk in your view? Why or why not? Yeah. Happy to talk. We talked about Pathfinder 2 or Pathfinder. In Pathfinder, we more than doubled the number of cancers found by the standard of care, and more than half of those that we found were early-stage cancers, stage 1 and 2 cancers. That's an intended use population study, not case controlled. We have case control data from CTGA that shows stage 2 sensitivity at 70%, which are all cancers you can treat with curative intent. I think we've got data that shows that we can find these early-stage cancers. I think it's really important to focus on the fact that you don't know what cancers you're screening for, right? We're screening for cancer in your body. We're not going after a single cancer and then another cancer and so on. You don't know what that incidence is. You don't know when you're going to find. If you're just looking at sensitivity by cancer by cancer, does that actually make sense? Should you be looking at how many cancers are you finding with this test that currently aren't being found? We're finding more than double the number of cancers found in Pathfinder, and we've improved that ratio in Pathfinder 2. We've shown that those cancers are early stages. I think we've got data that shows that we're finding early-stage cancers that you can treat with curative intent. Great. Given the very large potential opportunity for Galleri, pricing could come under screening should it be rolled out broadly. What price point are you comfortable with where you can still achieve an attractive margin profile? Yeah. We built the version that's out on the market now and the PMA version to be a population scale test, as Bob has said. You know, we built that with it'll have a low COGS and a bare margin at a lower price point than we're at today. If you think about the MCED legislation that would peg the reimbursement for MCEDs at $508 a test, you know, we're comfortable with being in the 50% to 60% margin range at those prices. With the platform we have today, we're currently able to run about a system that's capable of running about a million tests a year. We're running a fraction of that. We've got significant fixed cost leverage to grow into. If a bunch of demand showed up tomorrow, we'd be ready to handle it. We expect the price to come down, and we're prepared for that. Okay. Through the first half of 2025, more than 370,000 commercial Galleri tests have been ordered by more than 15,000 health care providers. Despite Galleri being essentially ahead of any reimbursement, you're guiding to 20% to 30% year-over-year screening revenue growth this year. What are the key drivers that would swing revenues to the high end versus the low end? Yeah. This year, yeah, we said we've guided 20% to 30%. Last year, we grew revenue in the Galleri at about 21%. Volume grew just under 30%. What we're seeing really important this past quarter, what we're seeing drive that, there are a couple of different things. These telemedicine health wellness platforms are becoming more popular. We've got self-insured employers that we sell through and that base is building. Also, our PCPs, through things like Quest Diagnostics and Athena Health, are ordering more tests. We've got a Tricare program, and we'll see how that goes. It's still too early to really say what that will contribute. There are some headwinds. We've got our first responders, like firefighters and so on. They take the test, but that's usually connected to grant NIH head money. We know what's happening in that world. Overall, we're confident that we're going to be in that 20% to 30% range for the year. Great. Where are you seeing the greatest volume growth to date in terms of channel? Health care networks, self-insured employers, life insurance, self-pay? Yeah. I'd say it's the depth of our ordering base, our PCPs, again, through things like Quest Diagnostics and so on, getting it into their protocol. You know, you've got to remember that the cancer incidence is about 1%. If a physician orders 99 tests, they might not find a cancer. They order 150, they might not find a cancer. When they're finding them, they're seeing that it works. They're seeing how it changes their patient's life and so on. We've got different programs put together to connect physicians who have lots of experience with new ones. That's been successful as well. I think I've already mentioned it, the wellness platforms. As functional health grows, we expect to grow. Great. Outside of Galleri, how should we think about development services business? Yeah. Development services business represents our biopharma partnerships with folks like AZ, where we're working with them on their trials and their drug designs and so on. It's not a revenue line that we guide because it's quite lumpy and out of our control at times. It is important work that we're doing with those partners. I would expect it to be pretty, our investment in that is pretty static, and I would expect the revenues to be pretty static. Great. You also talked about doing more with less after the August 2024 restructuring. What efficiencies have you identified or learned? What changes, if any, are expected in 2026? Yeah. In 2025, with 2024, we've effected that restructuring. In 2025, we've been working through our PMA module submission. We've found that we've been able to stick to our timelines, targeting 2026 for the final submission with 40% fewer resources. The organization and our people, we've got some core values here: solve problems together, embrace change, and so on. Our teams are doing a really great job of coming together to really change cancer outcomes for patients in the world. From an execution standpoint, we're doing what we thought we would. Financially, I would expect in 2025, we're submitting the PMA submission. As Bob said, we've got concordance, bridging studies, clinical validation, analytical validation, and so on. Those things will not repeat in 2026. There'll be some R&D dollars that'll free up. We'll really be thinking about how we spend sales and marketing dollars. We've really been focusing on growing revenue efficiently. We're not chasing every Galleri sale across the United States. We're really focusing on where we've seen success. If we're seeing more success there, we'll invest more dollars. We really want those dollars to be capital efficient. Great. With your investor day set for November, could you give us a little preview of what we might hear there? Yeah. We're, you know, we've scheduled an investor day for November 13th. We're going to run that at our Research Triangle Park site. That's where our main laboratory is, so people will be able to see that. Throughout the day, we'll be able to talk about our studies that we've already done, as well as the top-line readouts. We'll also be able to, at that point, on Pathfinder 2, go into more of the detail of the actual readout. For NHS-Galleri, you know, be able to frame up how the data, how we're going to look at the data, so people get a better understanding of that. Importantly, we'll be able to have investors hear directly from people who are current Galleri users so they can hear firsthand experiences of Galleri users. We think it'll be a great day for people to get a much better feel of just the kind of size and scale of our operation, as well as the clinical studies coming out and firsthand experience. Great. In the last couple of minutes here, I want to wrap up with a bigger picture question. What about GRAIL's story do you feel is underappreciated by investors? Yeah. I think I'm not sure about underappreciated, but if we look, if we kind of just look to the future, one of the big things we have coming out is what we've already done in terms of GRAIL being the only MCED with demonstrated capability in the intended use population of people being screened for cancer. We have mid-next year, we have the readout on clinical utility. It'll be great to see out of the NHS-Galleri trial the clinical utility. We'll be in process of FDA approval. We submit the first half of next year. We expect about a one-year process for that to get the FDA approval. That really starts to unlock broader reimbursement, especially if it gets coupled with the MCED bill. We think those elements give a lot of great inflections. Even earlier on, we have the Pathfinder 2 readout, which we'll have hopefully next month at ESMO. A lot of good things there. I think maybe the underappreciated thing, not necessarily by investors, but in general, is in all these things, we typically talk about the future, what's going to happen. If you just look at what's happening now today, literally every week, every day, we're detecting cancer in asymptomatic people. It's not a future thing. In the future, we'll detect way more. Right now, we're detecting a substantial number of people every week. It's changing patients' lives. It's changing the way providers practice medicine and cancer. They're seeing things that they've never seen before. I mean, we've had physicians who are older than I am that have, they'll see an early-stage pancreatic cancer, and they say, "I've never seen one of those." That change in patients' lives today is really impactful. I think that piece might be underappreciated. That was great. Thank you so much. No, thank you. Thank you.