Hi, welcome to the Canaccord Genuity Growth Conference. I'm Kyle Mikson. I cover life science tools and diagnostics for Canaccord Genuity. Please welcome me to a fireside chat with GRAIL here with us today. The company offers the first- of- its kind commercialized multi-cancer early detection test called Galleri. With the company, we have Aaron Freidin, CFO. Thanks, Aaron, for joining us today. Yeah. Thanks for having us. Appreciate it. All right, so starting with the second quarter results, I think you reported about a week ago. Congrats on the 35% test volume growth. Just comment on how the volume progressed in the quarter. Anything external that impacted volume or pricing, anything like that in the quarter that helped you guys have that solid revenue output? Yeah, no, thanks for the questions. Thanks for having us. Yeah, so we're really happy with the first half. We had a revenue growth of about 30% and volume growth of about 42%, over 117,000 tests now in the first half. We've been really focused on building this market in this pay reimbursement space, whether it's through digital health or self-insured employers, in addition to your brick-and-mortar physician offices. We continue to see growth, really, in the digital health and the employer channel space. We've expanded our sales force. That effort really started this quarter in Q2, and it completed by the end of it. We had everybody up and trained by the end of it, and we'll see those sales folks out in the field here shortly. Actually, they are out there now. We also released data at NHS-Galleri data at ASCO. We've trained the sales force on that now, and they're out having really good conversations with physicians. It's pretty significant, clinically meaningful Stage IV reduction, for an intended screening test, like an [I.M.] said. No one's demonstrated that before. That's pretty important. I think the things really driving growth right now are traction in those channels, and then the education of those sales reps now having the ASCO data in hand. Okay. Helpful. Then maybe just touching on the Quest Diagnostics partnership, the athenahealth kind of integration, and anything else that helps you sort of streamline the ordering and the enablement of all this testing. Anything like that in the quarter, or is that more of a second-half impact? I mean, athenahealth and Quest have been in place now for over a year. Yeah. What we've found is once a physician is bought in and they are detecting cancers, that really removes the friction from the system. It makes it much easier for them to order. So physicians who use that and are bought in are ordering more tests. What we're excited about is by the end of the year, we'll have Epic integrated, which will be even further friction removing for physicians. Okay. Could you just double-click on the digital health kind of channel and your partners like Function and these others, but maybe how material is that sort of a partner, and could that almost expand and kind of grow further? Yeah. I mean, digital health is a really big opportunity for us, and we've seen that really through Function. These digital health platforms are built to go out and find customers who are proactive about their health, which lines up very nicely with our test. People who want to find cancer before their symptoms. As they make it available, it's very efficient for us from a sales perspective. They drive the marketing. They drive the selling and retention of the customer. But we've also learned that it's very impacted by their level of investment in the marketing and whatever products that they're pushing. So Function has been a very good partner. Our digital health channel overall volumes have grown, doubled quarter-over-quarter compared to last year, which is nice to see. But we're really just beginning that journey into the digital health channel. We'd had a launch with Hims & Hers earlier this year. Their attention has been focused on their GLP-1 business, not so much on their labs business, so their investment hasn't really been made currently. But that's upside when that happens. Right. That could accelerate maybe going forward at some point. All right, that's volume, I guess. On the ASP side of things, the test has like a patient pay price of $950 or so. You're kind of getting that down lower as we kind of get towards the Medicare reimbursement, which is eventually going to be maybe $500. You're at an ASP now of, I believe, $700 per test. Again, probably due to some negotiations with some of these one-off customers and so forth. But you talked about, I believe it's like low single-digit decline sequentially in ASP quarter-over-quarter. Is that the right framework to think about basically going forward and just triangulate what the volume has to be to get your guidance, essentially? Is that fair? Yeah. We've been built for population scale from day one. We've got a lab that can run over 1 million tests. We know we have a lot of fixed cost leverage to grow into to drive our margins. We learned last year there's definitely price elasticity in the market. Last year, we started to contract with physicians, health systems, employers, that based off volumes, the price comes down, and we've seen that happen. We'll be opportunistic, and as we see more confidence in that elasticity, the price will come down over time. At the end of the day, the CMS reimbursement rate will be around $500, which with the current version of the test, we're comfortable operating at 50%-60% margins at scale. Right. Okay. I mean, maybe just walk through the COGS at this point, and how those have, you had that's basically second version that helped COGS with automation, but has anything further happened basically to help? The version that we are running now, which is the version we launched last year, actually the end of 2024, is the version that is related to those 50%-60% margins at $500 ASP. We are really just growing into the fixed cost leverage. Right. We have run 117,000 tests in the first half, so call it 240,000 for the year if you averaged it. The platform could do 1 million. There is a lot of fixed cost leverage there to grow into. It is highly automated. I mean, you have been to our lab. It has got like a racetrack that just takes samples all over through the different machines, and then somebody finally puts it on a sequencer. It is really not touched after the tubes come out of a box. Awesome. Okay. One of the key accelerators or maybe to this point, a bottleneck, has been the FDA approval of the test Galleri. The U.S. submitted the test to the FDA for PMA approval back in January 2026. The key question, well, I guess since then, like you said, you had some data readouts. Introduced some new information on this whole situation. The key question was going to be if there has to be an AdCom meeting from the FDA to evaluate this really novel product. I guess the reason why that was a question is because there was generally some kind of an AdCom meeting, I believe, three years ago or so. We didn't know if it had to be done again. That seems now it's confirmed. It's going to be, I believe, September 23rd. In roughly a month or so. Again, I think most should have expected that to have happened. It's a super novel test. We saw this for the last blood-based cancer screening test that was approved, or the first of that wave that was approved. What kind of questions could be asked? There was a good point of maybe it could be some of these when Guardant had its Shield AdCom, that was delayed, I believe. Could that happen? What are some of the circumstances that you guys are thinking about as you get ready and prepare for that? Yeah, it's a great question. You're right. They had an AdCom in 2023, which really focused on MCED as a product, not so much a specific company, specific data, specific performance. We believe this AdCom's going to be focused on the performance, the efficacy of the test, based off the data we've submitted. We've had a very iterative and collaborative PMA review with the FDA. It's progressed very well. We're looking forward to really showing everybody in the world all the data that sits behind this product that the FDA is reviewing at the AdCom. It's a paradigm-changing test, and the first one should be evaluated to really establish what good performance looks like with a product like this. Since we're the only company on the market with a clinically validated in the intended use population data set, again, we think it's really important and differentiating. We expect the questions to be around the performance and the efficacy, which we don't know for sure yet at this point. I'm sure as you guys know, we'll know. Yeah. It will become public soon. You think it will obviously not really be super focused on clinical utility. However, will they focus on things such as sensitivity and specificity and that sort of— It could perhaps— That is the test performance. I think, yeah, it will focus on the performance metrics, PPV, specificity. Yeah. Cancer signal detection rate. The last one, that's when they kind of talked about how PPV and CSO were important aspects. I've heard from certain stakeholders that probably aren't as educated that the false positive rate is high. I guess that means when you're screening many people, maybe the number of false positives is non-zero, and that's high to people. The fact of the matter is it's extremely low. It's the lowest it could possibly be, right? Right. That shouldn't be a- Yeah. We accept a very high false positive rate with the single cancer screening paradigm we have today. Right. Those false positives are, what's what? 10%+ false positive rate. The standard of care only finds 14% of cancers currently, and we accept a very high false positive rate for that. That meaning something like a mammogram, 95 out of 100 women who get a positive mammogram don't actually have breast cancer. It's a false positive. Our test still sounds high, but it's 50% of the people would have a false positive because the false positive rate is 0.5%, not 10%, the way the incidence works. It is a paradigm change. It's a different way of thinking. But I always think about when you compare it to what we've accepted today, 14% of cancers are found through screening. In PATHFINDER 2, more than 4x or 6x that number. You could find over 50% of the cancers if you added Galleri to the standard of care. Yeah. Do you happen to have any maybe insight on how they choose this panel, these committee members because, yeah- It's not my job. No. Yeah. I imagine they're going to go survey a balanced- Right. Non-conflicted group of people. Yeah. They will slice and dice all this data, and maybe it will not be a unanimous kind of decision kind of a thing, but this is just a recommendation, right? I will say based on you guys have communicated with the FDA over the years. You have kind of constructed your studies to get to this point, basically, and had a modular submission, right? Generally, directionally, do you think this will go in your favor, the whole recommendation? I think you are obviously expecting approval, but this is quite the event to sort of have almost like a decision months before approval would even happen. Yeah. We're preparing for any outcome, right? We're preparing for it to be bumpy. We're preparing for it to be smooth. Lots of different thinking around the types of questions and responses. Yeah. I think it's part of our job is to be paranoid and to make sure that we're prepared for that. I hope it's just unanimously positive, but you never know. Yeah. Okay. On the data, let's rewind to ASCO, and let's not rewind to February when you first announced the NHS, because now we know so much more about the full study results, right? Maybe the NHS-Galleri, let's just start there, and then PATHFINDER 2 later. NHS did not meet the primary endpoint. However, I think if you look further into the data, it's actually not as bad as the service level might imply. What were the key kind of debates around that, and afterwards, why are stakeholders actually looking at it from more of a positive perspective? Maybe just for example, the Stage IV impact was pretty solid actually. The Stage III, not as much, but that's because there was this initial prevalent round that caused some noise, I suppose. Any comments on that? Yeah. At the end of the day, the study found a lot of asymptomatic cancer walking around in the population. Of course, when we modeled these endpoints, it was based off of the known history of cancer and what we thought would be walking around the world at any point in time, specifically in the U.K. And what we found was there was a lot more Stage III cancer just walking around in the population than people ever were aware of, which makes sense, just based off the way that we find cancer through screening asymptomatically versus how it just shows up symptomatically. At the highest level, it kind of made sense, but there's no way to know that at the time. What we did is we found more than 20% reduction in Stage IV cancer, which I think is larger than any other intervention that you could be looking at in the last 15- 20 years for a single product. We found more Stage III cancer, but we also found more Stage I and II cancer. Just looking at Stage I and II cancer, we found more than twice as many stage I and II cancers, I believe, than total cancers found by screening in the NHS. Just think about that. That's at any stage. An asymptomatic test finding cancer in the population found a lot of early-stage cancer. And I think what people wrestle with is we might only be finding early-stage cancers, some of those at 20%, 30% rates and whatnot, but we're looking at across all cancers. You get to add up each of those cancers with one test to get to that doubling of that cancer detection that we found. We've a reduction in emergency room presentation, of course, because you're finding it asymptomatically versus symptomatically. A lot of really good data in there, and what the physicians really resonate with them is it's an opportunity to treat somebody with curative intent most times. Stage I, II, and III, you can treat with curative intent these days. And that's what they want. They want to be able to give somebody a shot and not just be thinking about palliative care or extending life by months. That resonates with physicians. Were there any clinicians or physicians that were on the sidelines to order and recommend Galleri to their patients, and maybe now that there is more information? The biggest, I do not think very many oncologists said nice things about us until they saw this data. I have been at GRAIL for 10 years. When the oncologist community saw this data and they saw the Stage IV reduction, a lot of them were like, "Okay, this is meaningful. This is real. And it is ready. It is finding cancers today." The physicians, it probably is still too early. There are half a million physicians out there. We have got a sales force of about 150-ish, 130-ish people out there on the streets. We cannot get to all of them. Okay. Next steps with, let us just say in the U.K. or with NHS in general. I believe there was talk to extend and get maybe a year of follow-up on that one. Mm-hmm. Yes. Does that still exist, as well as maybe even extending it further? There was some chatter about maybe if you had a longer range study, you could really simulate mortality impacts possibly. What remains to be seen on that kind of end of things? Yeah, we are doing that 12 months of additional follow-up. We would expect that data to read out sometime in the first half of 2027. Extending beyond that, I think it is always an option to. At a certain point, though, because you are no longer offering the screening test, the intervention arm, the arms start to look more alike because you are not intervening every year. There will still be a difference, but I do not know if it is going to be meaningfully different after three or four years than after four or five years. One of the other endpoints was a nested mortality study and then a cancer mortality study. I think the nested mortality will read out sometime in 2028. All right. It wouldn't really impact the. The FDA is looking at that first year, the prevalent round- Yes. of the NHS study. Probably wouldn't impact that, assuming that you get the approval. Maybe there's future iterations of the product that maybe go for approval. Maybe that'll impact things. All right. The other data piece that was submitted to the FDA was the PATHFINDER 2 results. It's like 35,000 patients or so. I think that was very safety and efficacy and some performance metrics. PPV was nicely above 60% which was good. Which is just putting in context, colonoscopy, a lot of these other first-line screens today have less than 10% PPV. Adherence, obviously, with this it should be much higher because it's blood-based. That was great. Anything else from PATHFINDER 2 that will matter to the FDA that we should remember? It obviously went fine, quote unquote, compared to the NHS, which was more nuanced. I would say, anything on that study? Yeah. The PATHFINDER 2 study was another version of the first PATHFINDER study, which was almost 7,000 patients. What's really reassuring to the clinician community, and likely the FDA, is our performance in the intended use population has stayed consistent or gotten better. Most times you've got case control data, which looks really good, and then you go put it in an intended use population, a screening population, and the performance degrades. Ours did not. Therefore, we've got confidence in reperformability of the test across various populations in the U.S. All the metrics, I believe, improved from the first version of PATHFINDER. Okay. Then internationally, what steps remain to either scale or kind of enter on. I think you have U.K. business sort of in a way. It can be smaller, but how do you scale there? Just given you had the study, but it's not sure what happens next. In Asia, you have this Samsung partnership. Which, again, maybe it's not a super near term thing, but how does that scaling look in those countries that are associated with the agreement? Yeah. Starting with the NHS, we're in discussions with them about what we do next. They've got the data, they're excited about the data, and we'll figure out how to partner going forward. But there's a lot of variables in that beyond just the study performance. There's politics, there's budget, and so on. We'll keep everybody updated as those discussions progress. But I don't expect it to move quickly given it's the NHS and there's a lot of other things going on in the NHS right now. For Samsung, we've just executed that agreement and closed a $110 million financing in June of this year. That was extended a long period of time from when we actually announced it due to CFIUS review. So during that time of CFIUS review, we weren't interacting with them, given that it was under review by CFIUS. Now we are. That agreement will originally start with a distribution type agreement where Samsung sets up a sales force in Korea and sells tests and sends them back here, basically from the self-pay market in Korea. If that goes well, and as we get FDA approval, then we'll look at another phase of the agreement, which would be much broader and more expansive, including them moving to Japan, potentially building a lab, and so on. We believe having the data set we have, plus an FDA approval, will help a lot of foreign governments move quicker on making national rollout decisions. Okay. All right. Nice. Back to the studies in the U.S. Some of the ones that may be more important would be REACH, maybe some of the registries. Just simplify some of these. When is the next kind of data related catalyst or milestone for you guys? I think just reference REACH, that is really important for the Medicare kind of population and so forth. Could that be a 2027 sort of event where we find out some interim data from that study? Yeah, it is a great question. We are focused on FDA approval. We are in the early days of our discussions with CMS and getting up to speed. The REACH study will be important to the CMS discussions around an NCD. Now that CMS has the authority to cover the test once FDA approved, they can take up an NCD. We have got the NHS-Galleri data, we have got PATHFINDER 2 data, we have got all of our real world data. I think we have got over 1 million samples ran now between clinical and commercial data. REACH will be another important part of that because it will be in the Medicare population, and it is really designed around looking at utility Stage IV and so on, reduction. I believe there will be likely readouts as CMS wants to see data as we are having those discussions. Timeline on that, I do not have that currently. All right. I think the REACH study is originally designed to read out, I think, in 2030 or 2031. We can read data out along the way. Do you think that CMS will likely not establish this NCD prior to the AdCom, for example, which is happening in a month or two. That's not going to happen. I am sure that they either would probably wait for the FDA approval to occur to be successful for you guys, or maybe see some interim data from some of these studies. I am not sure. Which one do you think would happen? We are already talking to them. We have been working with the FDA for seven years, six, seven years now, to get the FDA program to where we are because it is a new paradigm changing technology. It will likely be a similar, hopefully shorter road with CMS. Having an FDA stamp should make CMS questioning less around the performance of the data, the efficacy, the quality of the data, and focus more on the clinical utility aspects, which we have a lot of data on. Just between PATHFINDER 2 and NHS-Galleri, it is 175,000 people worth of data, including a randomized controlled trial. There are three or four competing tests that are commercially available that maybe not all of them are said, but generally just blood-based cancer screening tests that have the potential to be for multi-cancer to varying degrees of commercial adoption and all that, and just support in general. How does that impact maybe CMS or other bodies being a little bit slower in evaluating the full group rather than just. Obviously, you guys are ahead of the pack by far. They could hold you back, perhaps, these other entrants. Possibly. I cannot predict the future. I am not aware of any other market entrant having an FDA registrational program even started. Some have even said that they are not going to go the FDA route. It would be hard if I was CMS to wait for something that other companies say they are not going to do or haven't said they are going to do. What we are most proud of is our data has actually been demonstrated in the asymptomatic screening population. No one else's has. We consider those tests unproven because they haven't shown any data in that population. I think we will learn more about what the impacts of that are over time, and hopefully it does not hurt the sector or hurt the product category. Our test is designed to find cancer floating through your blood. We find a signal, and if there is, we tell you where it is coming from. We do not restrict that for any specific cancer types to make our numbers look better. There are other companies out there that are only releasing data on eight or 16 cancers, but they have got higher false positive rates. What you might end up finding is there are cancers that they are not reporting that are sitting in that false positive rate. That is, again, in my view, that makes me pretty uncomfortable if I was a physician relying on that type of result. Mm-hmm. So much earlier, you referenced the sales force expansion w hich took place earlier this year. Also, maybe with all this more material competition, maybe you market a bit more or a bit differently or a discount or something. That is going to obviously impact your cash burn. Your cash burn for this year, you are expecting less than $300 million for the year, which is a very large number, obviously. But you had the influx of $110 million. You raised some last year as well. There is a scenario in which you may not have to raise again in the future. That is possible, maybe, depending on how successful you are on the top line. So maybe just talk about the runway and ways to mitigate cash burn and scenarios in which maybe cash burn does not matter as much because it is all just going so well in terms of all this reimbursement and things like that. That would be really nice and easy, Kyle. We've got about $900 million in the bank at the end of the quarter, and that gives us a pretty decent war chest to go out and deploy. As we did the sales force expansion, as we see demand, we'll deploy capital to meet that. That might mean burn stays a little bit higher in the near term, and then it brings in revenues faster. We also have the opportunity to just hold onto the capital and drive growth more efficiently. We're at this place now where we're trying to really figure out is that demand going to be there and sustainable in this pre-reimbursement space? If it is, then we're going to continue to lean into it. Okay. Aaron, anything that we didn't touch on that we should know before walking away? Again, I think it was a really good discussion. We're really proud of the growth we've had. We've got our sales force out there trained, the data out there. This test can find a lot of cancer out there in the population. Our publications for NHS-Galleri and PATHFINDER 2 should be out shortly, which will be another inflection point, peer-reviewed publications. Other than that, I think you nailed it all, Kyle. All right. Awesome. Thanks. Yeah. Thank you.