NEW YORK – Guardant Health reported after the close of the market on Thursday that its first quarter 2019 revenues were up 84 percent year over year.
The liquid biopsy firm reported total revenues of $67.5 million compared to $36.7 million in Q1 2019, easily beating the consensus Wall Street estimate of $56.5 million.
Guardant's precision oncology testing revenues grew 109 percent to $60.2 million from $28.8 million in the prior year's quarter. Development services revenues shrank 7 percent, meanwhile, to $7.3 from $7.8 million in Q1 2019, reflecting the "timing of achieving project-related milestones for companion diagnostic development programs," the firm said.
The company reported 15,257 test results to clinical customers and 5,266 tests for biopharmaceutical customers in Q1, an increase of 60 percent and 40 percent, respectively, over the same quarter last year.
Guardant said it began receiving its first payments for Guardant360 from its local Medicare administrative contractor during Q1. The company received a pan-cancer local coverage determination from Medicare contractor Palmetto GBA last December, which became effective this February. In line with the Palmetto LCD, Guardant's local contractor Noridian drafted its own LCD last year mirroring the pan-cancer coverage decision. Although the Noridian LCD has not yet been finalized, the contractor has nevertheless been making payments under it since March, said Guardant CFO Derek Bertocci during a call discussing the company's Q1 results.
Although the company is benefitting from these milestones, executives were clear during the call that Guardant has also been affected by the ongoing COVID-19 pandemic.
One surprising result of the crisis is that the company is now considering branching out from cancer to develop its own high-throughput diagnostic for COVID-19 to contribute to what it sees as an emerging need for active viral surveillance.
During the call, Guardant CEO and Cofounder Helmy Eltoukhy said that this exploration "includes a substantial effort from R&D to determine our ability to bring such a test to market, as well as outreach to potential customers of the test."
Regarding its existing cancer genotyping business, Eltoukhy claimed that the firm is "operationally, financially, and strategically prepared" to navigate through COVID-associated setbacks, but said that Guardant started to see an impact from the spread of the pandemic during the second half of March, which continued into April.
"Exiting the first quarter, US clinical volumes were down about 30 percent compared to the average level of clinical samples over the first 10 weeks of the quarter," he said.
However, he argued, "cancer treatment, particularly for those patients in late stages of the disease, is not something that can be delayed for long." In line with this, the company has begun to see an uptick in sample volume from the lowest point it experienced in early April.
AmirAli Talasaz, Guardant's president and chief operating officer, added that Guardant also began to see delays in mid-March affecting certain biopharma research studies. Biopharma customers "are still continuing to pursue companion diagnostic programs," he said, and the company "has yet to see any slowdown of engagement related to our CDx development service business."
"While there is still too much uncertainty about the impact of COVID-19 to provide a revenue forecast at this time, the continued flow of patient samples for testing and interest in new programs and biopharmaceutical customers indicates that the need and demand for our products and services is solid," he said.
Guardant's net loss attributable to its shareholders for the quarter was $27.7 million, or $0.29, per share, compared to a net loss attributable to its shareholders of $26.1 million, or $.30 per share, in Q1 2019. On average, analysts had estimated a loss of $.39 per share.
The company’s SG&A expenses rose 47 percent to $44.9 million from $30.5 million in the prior-year period and its R&D expenses more than doubled year over year to $37 million from $16.3 million in the first quarter of 2019, primarily attributable to increased spending in support of the company's Lunar programs, including the ECLIPSE clinical trial.
Talasaz said the firm made significant progress with ECLIPSE during the first 2.5 months of the quarter and now has more than a hundred sites onboarded to enroll patients. "However, beginning in mid-March, elective procedures began to be deferred in order to preserve resources for COVID-19 patients and to protect people from coronavirus exposure," he said.
"While we still believe it is possible to complete enrollment within the 24-month timeframe we announced last November, it is too soon to definitely say when colonoscopy screenings, and subsequently, our enrollment, will ramp up again," he added.
On the bright side, the lower volume of procedures has opened space to accelerate onboarding of additional new sites and the company has decided to expand its target number of clinical sites from 100 to 150 to compensate for these delays.
According to Talasaz, enrollment for two other more recently announced trials — a randomized controlled study, called COBRA, aimed to establish clinical utility for the detection of ctDNA in the adjuvant setting in colon cancer, and a second prospective interventional trial exploring how ctDNA can inform the management of adjuvant treatment in stage III colon cancer patients — has also temporarily slowed down. But he argued that the trials are multi-year studies and said Guardant does not currently expect this disruption "to have a material on the timing of their completion."
As of March 31, Guardant had $152.2 million in cash and cash equivalents and $367.9 million in short-term marketable securities.
The firm is withdrawing its previously announced full-year 2020 revenue and net-loss guidance, due to the described impacts from "the rapidly changing nature of the COVID-19 pandemic."
“During these challenging times, I have even more confidence in the value that liquid biopsy can bring to the cancer treatment paradigm," Eltoukhy said in a statement. "Cancer treatment is not something that can be delayed for long and we remain unwavering in our commitment to serving patients in the advanced cancer setting."