NEW YORK – Guardant Health said on Monday afternoon that its third quarter 2023 revenues were up 22 percent year over year.
Revenue was $143.0 million for the three months ended Sept. 30, compared to $117.4 million for the same period of 2022, beating Wall Street analysts' average estimate of $137.4 million.
Precision oncology revenue grew 31 percent, to $133.4 million from $102.1 million, driven predominantly by an increase in clinical testing and biopharma sample volume, which grew 35 percent and 11 percent, respectively, over the prior-year period. Guardant reported 43,900 tests to clinical customers and 7,500 tests to biopharmaceutical customers during the quarter.
Clinical revenue also included a payment of $3.6 million from the US Centers for Medicare and Medicaid Services, which Guardant said was the result of a successful appeal for claims dated 2018 to 2020.
In contrast to its sequencing-based testing business, Guardant's development services and other revenue decreased by 37 percent. The company attributed this to the timing and nature of milestones related to its various partnerships and companion diagnostics collaborations.
On a conference call to discuss the financial results, Guardant co-CEO Helmy Eltoukhy mentioned first results of the PEGASUS MRD de-escalation trial that were presented at the recent European Society for Medical Oncology annual meeting and suggest that the Guardant Reveal test may help guide adjuvant treatment of colon cancer.
According to the initial results, 34 percent of patients with a positive liquid biopsy after surgery had their cancer relapse despite adjuvant treatment, whereas only 10 percent of patients with a negative result experienced a relapse.
This could mean that the test could help doctors de-escalate the use of unnecessary toxic chemotherapy in patients with that lower risk of recurrence, Eltoukhy said, though he declined to comment on whether the 10 percent relapse rate in MRD-negative patients might be too high for clinicians to pursue de-escalation.
"We're really looking forward to the full readout of this trial sometime in 2024," he said, adding that because PEGASUS employed an older version of Guardant Reveal, the firm might be able to achieve better results with its improved assay.
Reveal is currently covered by Medicare for post-surgery testing in stage II and III colorectal cancer patients under certain conditions. Over the last year, private payors have begun to cover the test as well, most recently Geisinger Health Plan.
Although Eltoukhy said that stronger clinical utility data may be necessary to push for an endorsement of MRD testing in professional guidelines, he expressed confidence that Guardant's existing relationship with payors bodes well for netting additional coverage. He also cited the recent progression of state-level biomarker bills across the US as a good sign for future reimbursement in this setting.
In terms of coverage expansion, the company is currently working to get its COSMOS study published, which Eltoukhy said would likely make up the backbone of a Medicare submission for extended surveillance use of the Reveal assay in CRC.
Guardant also has promising internal data for breast and lung cancer indications, he added, with the aim to publish those data before the end of next year.
AmirAli Talasaz, the firm's other co-CEO, noted the recent publication of Guardant's first peer-reviewed paper for its colorectal cancer screening assay, Shield, which highlights how the blood test could help to increase effectiveness of CRC screening.
Barcelona-based investigators, working with an early prototype of the Shield assay, published the results in the Annals of Oncology last month. The group tested 623 blood samples from individuals who tested positive vial fecal immunohistochemistry or already had a colorectal cancer diagnosis, calculating a 93 percent sensitivity and 90 percent specificity for the Shield test in detecting tumors.
Sensitivity broken down by stage was 84 percent for stage I, 94 percent for stage II, 96 percent for stage III, and 100 percent for stage IV. The test's sensitivity for advanced precancerous lesions was much lower, at 23 percent.
Although these numbers don't reflect use in the test's intended population, they paint an improved picture over data from the Eclipse trial, which is supporting the firm's bid for US Food and Drug Administration approval. Guardant previously faced heat when it released results from that much larger study, in which Shield demonstrated 81 percent sensitivity overall, with stage I sensitivity only reaching 55 percent. The test's detection of advanced adenomas was even weaker, at 13 percent sensitivity.
For Q3, Guardant reported a net loss of $86.1 million, or $.73 per share, compared to a net loss of $162.0 million, or $1.58 per share, for the same period last year. Analysts, on average, had expected a higher loss per share of $.95.
R&D expenses totaled $93.9 million during Q3 2023, down about 6 percent from $100.0 million in the same period last year. The firm's SG&A spending shrank more than 13 percent to $105.1 million from $121.5 million a year ago.
Guardant raised its revenue guidance and now expects full-year 2023 revenue to be in the range of $553 million to $556 million, representing growth of 23 percent to 24 percent year over year. Its previous guidance was for between $545 million and $550 million.
The company ended the quarter with $457.3 million in cash and cash equivalents and $697.5 million in short-term marketable securities.