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Edited Transcript of GH.OQ earnings conference call or presentation 5-Nov-20 9:30pm GMT

·52 min read

Q3 2020 Guardant Health Inc Earnings Call REDWOOD CITY Nov 6, 2020 (Thomson StreetEvents) -- Edited Transcript of Guardant Health Inc earnings conference call or presentation Thursday, November 5, 2020 at 9:30:00pm GMT TEXT version of Transcript ================================================================================ Corporate Participants ================================================================================ * AmirAli Talasaz Guardant Health, Inc. - President, COO & Chairman * Derek A. Bertocci Guardant Health, Inc. - CFO * Helmy Eltoukhy Guardant Health, Inc. - Co-Founder, CEO & Director ================================================================================ Conference Call Participants ================================================================================ * Brian David Weinstein William Blair & Company L.L.C., Research Division - Partner & Healthcare Analyst * Derik De Bruin BofA Merrill Lynch, Research Division - MD of Equity Research * Doug Schenkel Cowen and Company, LLC, Research Division - MD & Senior Research Analyst * Patrick Bernard Donnelly Citigroup Inc. Exchange Research - Research Analyst * Puneet Souda SVB Leerink LLC, Research Division - MD of Life Science Tools & Diagnostics and Senior Research Analyst * Sung Ji Nam * Tejas Rajeev Savant Morgan Stanley, Research Division - Equity Analyst * Tycho W. Peterson JPMorgan Chase & Co, Research Division - Senior Analyst * Carrie Mendivil Gilmartin Group LLC - Principal ================================================================================ Presentation -------------------------------------------------------------------------------- Operator [1] -------------------------------------------------------------------------------- Ladies and gentlemen, thank you for standing by, and welcome to the Guardant Health Q3 2020 Earnings Call. (Operator Instructions) I would now like to turn the conference over to your speaker today, Carrie Mendivil, with Investor Relations. You may begin. -------------------------------------------------------------------------------- Carrie Mendivil, Gilmartin Group LLC - Principal [2] -------------------------------------------------------------------------------- Thank you. Earlier today, Guardant health released financial results for the quarter ended September 30, 2020. If you have not received this news release or if you'd like to be added to the company's distribution list, please send an e-mail to investors@guardanthealth.com. Joining me today from Guardant is Helmy Eltoukhy; Co-Founder and Chief Executive Officer; AmirAli Talasaz, Co-Founder and President; and Derek Bertocci, Chief Financial Officer. Before we begin, I'd like to remind you that management will make statements during this call that are forward-looking statements within the meaning of federal securities laws. These statements involve material risks and uncertainties that could cause actual results or events to materially differ from those anticipated. Additional information regarding these risks and uncertainties appears in the section entitled forward-looking statements in the press release Guardant issued today. For a more complete list and description, please see the Risk Factors section on the company's annual report on Form 10-K for the year ended December 31, 2019, and in its other filings with the Securities and Exchange Commission. Except as required by law, Guardant disclaims any intention or obligation to update or revise any financial projections or forward-looking statements, whether because of new information, future events or otherwise. This conference call contains time-sensitive information and is accurate only as of the live broadcast, November 5, 2020. With that, I'd like to turn the call over to Helmy. -------------------------------------------------------------------------------- Helmy Eltoukhy, Guardant Health, Inc. - Co-Founder, CEO & Director [3] -------------------------------------------------------------------------------- Thanks, Carrie. Good afternoon and thank you for joining our third quarter 2020 earnings call. During the quarter, we continued to make substantial progress across our business, driven by our commitment to serve patients. Consistent with these values, I will start off our call with a patient story. A 44 year old nonsmoker was diagnosed with stage 4 adenocarcinoma, a type of non-small cell lung cancer. His oncologist originally ordered a limited panel tissue test, but he was confirmed negative for EGFR, ALK, ROS1 and PD-L1. So the oncologists selected chemotherapy plus pembrolizumab for first-line I-O treatment, despite not having complete biomarker testing. However, the patient failed to respond to treatment and was being considered for hospice. Fortunately, his oncologist then decided to try liquid biopsy for a complete genomic assessment of his tumor and ordered a Guardant360 test. We quickly identified a BRAF-mutation. Based on this result, the oncologist was able to put them on a corresponding targeted therapy, a combination of dabrafenib and trametinib for treatment. His story demonstrates the importance of the precision oncology paradigm. It underscores the challenge of using tissue to get guideline complete genotyping and how our liquid biopsy platform is uniquely qualified to address the needs of patients at all progression time points. Turning to our business. We ended the third quarter with $74.6 million of revenue, growing 23% over the third quarter of 2019. The clinical volumes for Guardant360 grew to 16,950 tests, a 28% increase compared to the third quarter of 2019 and a 24% increase compared to the second quarter of 2020. So turning back to the levels we saw in mid-March, prepandemic. I'm proud of the Guardant team to continue to successfully serve our customers despite the challenging backdrop. However, over recent weeks, there has been a resurgence of COVID cases in some regions across the United States. We are seeing some early signs indicating that this resurgence will adversely affect clinical volumes as renewed or continued office closures are resulting in overall reduced in-person cancer patient visits and limited access. During the quarter, FDA approval of Guardant360 CDx helped us achieve a key catalyst for adoption of comprehensive genomic profiling in patients with any solid tumor cancer and as a companion diagnostic to identify non-small cell lung cancer patients with EGFR alteration who may benefit from treatment with Tagrisso. This approval is a landmark decision, demonstrating the value liquid biopsy delivers to oncologists, and more importantly, to the patients they treat. We applaud the FDA for their collaborative review process and for approving the first comprehensive genomic profiling liquid biopsy test. FDA approval of the Guardant360 CDx assay was based on multiple studies comprising more than 5,000 samples and represents what we believe to be one of the most rigorous validation of the clinical and analytical performance of a liquid biopsy test. Following FDA approval, we launched 2 versions of Guardant360 in September, the first product, Guardant360 CDx is the FDA-approved version of our assay. We are confident that our FDA approval will help to accelerate wider adoption of guideline recommended genomic profiling and increase the number of advanced cancer patients who received potentially life-changing treatments. Specifically, we expect FDA approval to strengthen reimbursement by advancing conversations with private payers and further improving Medicare pricing, extend momentum for our companion diagnostics business and advance the use of Guardant360 with physicians who have been slow to adopt a comprehensive genomic profiling over the medium to long term. The second product we launched is the next-generation version of our Guardant360 laboratory developed test, or LDT, that doubles down on our commitment to continue innovating in this space and offer additional biomarkers to our customers as they become relevant. This exciting new version provides even higher performance than previous versions of Guardant360. It includes additional homologous repair deficiency genes in an effort to keep up with the continued expansion in the PARP inhibitor space, NTRK2 and NTRK3 fusions and a best-in-class tumor mutational burden or TMB score, which was recently approved in tissue as a biomarker for pembrolizumab for solid tumor patients who have progressed following private treatment. Our blood-based TMB assay is highly differentiated and built upon deep sequencing of 2 megabases of genomic content. It uniquely integrates information about tumor setting levels, somatic driver alterations and CHIP mutations to provide a robust TMB score that can help identify more patients than other TMB tests. This product offering allows us to address the barrier of confidence in liquid biopsy among some late adopters with an FDA approval and the opportunity to provide enhanced features to those customers who are regularly using liquid biopsy in clinical practice. Overall, I could not be more proud of the Guardant team for the progress made this year. It's hard to believe it was only a little over 2 years ago when we became a public company and broadly presented our vision to address the continuum of cancer care for screening to recurrence monitoring to therapy selection with a portfolio of practice-changing products. There is clearly growing appreciation of this vision and a growing realization of the potential of liquid biopsy to truly transform the field of oncology. Since our IPO, we have made incredible progress establishing liquid biopsy as a vital clinical tool for therapy selection in advanced cancer patients. Achievement of several key milestones, including securing reimbursement, have made the $6 billion addressable market attainable as comprehensive genomic profiling becomes standard of care. We've also made significant progress with our LUNAR programs, aggressively addressing the even larger opportunities in the recurrence monitoring and screening populations. These programs are initially focused on colorectal cancer, which will serve as a beachhead for expansion of monitoring and screening for multiple cancer types. I'm confident from recent data that our LUNAR-1 assay for recurrence monitoring is best-in-class from both a performance and clinical workflow perspective. I am also encouraged by the breakneck speed with which our team is executing ECLIPSE, our colorectal screening trial and that, if successful, will address significant unmet need. With that, I will now turn the call over to AmirAli for more detail on our biopharma business and our LUNAR program. -------------------------------------------------------------------------------- AmirAli Talasaz, Guardant Health, Inc. - President, COO & Chairman [4] -------------------------------------------------------------------------------- Thanks, Helmy. Starting with our biopharma business. As Helmy mentioned, during the quarter, we reached a critical milestone for our CDx business with FDA approval of Guardant360 CDx. Since the FDA approval in mid-August, our CDx discussions have accelerated, and we believe our first approval will pave the way for new companion diagnostic partnerships. We had another strong quarter for development services and others revenue growing 63% to $14.2 million, led by increasing CDx services. On the sample testing front, biopharma sample volume of 3,071 tests was 42% below the prior year period, but grew 9% from the second quarter of 2020 due to the expansion of our customer base. Our robust CDx pipeline demonstrates that our biopharma partners are recognizing the value of CGP to accelerate clinical trial enrollment. To that end, a new study published in nature medicine led by the National Cancer Center Hospital East, NCCHE, in Japan demonstrated that the Guardant360 liquid biopsy is not only concordant to tissue genotyping, but also accelerates clinical trial enrollments, detects more actionable alterations and achieved similar treatment response rate and progression-free survival in patients with advanced gastrointestinal cancer. Patients with advanced gastrointestinal cancer, including gastric and colorectal cancer, were matched to novel therapies that target the specific biomarkers identified. Compared to tissue genotyping, the Guardant360 sped up screening by threefold and improved trial enrollment rates by 132%. We are also making great progress with GuardantINFORM, our real-world clinical genomic platform, which we launched in June to help accelerate research and development of the next-generation of cancer therapeutics. GuardantINFORM, combines the robust genomic data from each Guardant360 test with the identified clinical information for each patient. Our biopharma partners are finding significant value in longitudinal real-world evidence, which gives insight into how patients are treated based on their mutation profile as well as patterns of drug response, resistance and tumor evolution. We are excited by the number of deals we have signed to date by the number of active discussions that are going with additional customers. Now turning to our LUNAR program. Since our inception, we have been committed to commercializing tests across the continuum of cancer care that will offer superior clinical utility mean they offer physician-actionable information for patient care. So similar to the beachhead approach we took with Guardant360 to establish clinical utility in non-small cell lung cancer. We are using a focused strategy for establishing clinical utility of our LUNAR assays in colorectal cancer, in spite of the broad applicability of our LUNAR technology to multiple cancer types. Turning to ECLIPSE. We are continuing to see robust patient enrollment. We have now nearly 150 sites that are onboarded and actively enrolling patients. Overall, we are very pleased with our progress and are on track to complete enrollment within the 24-month time frame announced last November. We applaud the recent decision from USPSTF to expand their recommended screening guidelines to 45- to 49-aged population. This aligns with the enrollment criteria of ECLIPSE, which was designed to assess performance in that age group. We are also pleased with the recent draft NCD proposed by CMS for blood-based CRC screening. The data we have previously presented indicates that the performance of LUNAR-2 assay exceeds the minimum requirements in the draft NCD, and we are optimistic that the result of ECLIPSE trial will confirm that our assay meets those requirements. This development of this draft proposal reaffirms our choice of CRC as a beachhead of our early detection program. Finally, during the quarter, FDA granted emergency use authorization of Guardant19 for using detection of SARS-CoV-2. The test is being offered to Guardant health employees and select partner organizations. While we are leveraging our expertise in liquid biopsy testing and are proud of the contribution that we are making in battling the pandemic, serving cancer patients remain our top focus. With that, I will now turn the call over to Derek Bertocci for more information and details on our financials. Derek? -------------------------------------------------------------------------------- Derek A. Bertocci, Guardant Health, Inc. - CFO [5] -------------------------------------------------------------------------------- Thanks, AmirAli. Revenue for the third quarter of 2020 totaled $74.6 million, up 23% from $60.8 million in the prior year quarter. The increase was driven by an increase in precision oncology testing revenues, resulting from significant increases in clinical sample volume and average selling price or ASP per test as well as higher development services and other revenue. Total precision oncology testing revenue for the third quarter was $60.4 million, comprised of $48.4 million from clinical tests and $12 million from biopharmaceutical tests. Precision oncology revenue from clinical tests included $4.3 million in revenue received from Medicare for samples processed in [2019]. Given the age of the samples associated with this revenue, we do not believe it to be indicative of ordinary course of operations. Third quarter clinical precision oncology volume totaled 16,950 tests, up 28% from the prior year quarter and up 24% and from the second quarter of 2020, which was especially impacted by the COVID-19 pandemic. Clinical precision oncology ASP was $2,852 in the third quarter of 2020, up 23% from $2,319 in the prior year period, a 23% increase in clinical ASP over the prior year quarter was due principally to the reimbursement from Medicare for testing of non-lung cancer samples in addition to lung samples starting in March 2020. As a result of the evolution of coverage for the testing of Medicare patients, when changes in coverage had permitted, we have submitted appeals and revised claims for samples processed in prior years. In the third quarter of 2020, we recorded $4.3 million of revenue for payments from Medicare from appeals and revised claims for samples processed in the prior year. In the third quarter of 2019, we recorded $5.5 million of revenue from Medicare appeals. Excluding the impact of revenue from Medicare appeals, clinical ASP in the third quarter was approximately $2,600 per sample, down from approximately $2,700 per sample in the second quarter. The decline was due principally to commercial payers with whom we are a noncoverage provider beginning to provide lower payments for tests. Precision oncology revenue from biopharmaceutical tests in the third quarter totaled $12 million, down 44% from $21.4 million for the prior year quarter, but up 6% from $11.4 million in the second quarter of 2020. Third quarter pharma precision oncology volume totaled 3,071 tests, down 42% from the prior year quarter, but up 9% from the second quarter of 2020 due mainly to additional customer programs. ASP was $3,919, down 3% from $4,052 in the prior year period. The ASP was driven mainly by changes in the proportion of total biopharmaceutical tests using the GuardantOMNI test, which has a higher selling price than the Guardant360 test. Development services and other revenue in the third quarter totaled $14.2 million, up 63% from the prior year quarter. The increase from the prior year was primarily due to companion diagnostic revenue. Gross profit for the third quarter of 2020 was $53.4 million compared to a gross profit of $42.3 million in the same period of prior year. Gross margin in the third quarter was 72% as compared to 70% during the third quarter of 2019. The increase in gross margin compared to the third quarter of 2019 was primarily due to the increase in clinical precision oncology sample volumes as well as to the higher clinical precision oncology ASP. Total operating expenses for the third quarter of 2020 were $127.6 million, a 113% increase from $59.8 million in the third quarter of 2019. R&D expenses for the third quarter of 2020 were $36.2 million compared to $24.6 million in the third quarter of 2019. The increase was primarily attributable to increased spend to support our LUNAR programs, including the ECLIPSE clinical trial, our FDA submission for Guardant360 CDx and other research and development programs. Sales and marketing expenses for the third quarter of 2020 were $25.1 million compared to $18.8 million in the third quarter of 2019. The increase was due to growth in sales and marketing staff plus spend on programs to increase education and awareness about liquid biopsy. General and administrative expenses for the third quarter were $66.3 million compared to $16.4 million in the third quarter of 2019. G&A expenses for the third quarter of 2020 included $50.1 million in stock-based compensation, or SBC, including expense related to market-based restricted stock units granted to the company's founders on May 26, 2020, as compared to $1.7 million in SBC in the third quarter of 2019. The remaining increase in G&A expense is $1.5 million, which was primarily due to additional staff to support the growth of the company, legal expenses and the cost of compliance with requirements of being a large accelerated public filing with the SEC. Net loss attributable to Guardant Health common stockholders was $77.7 million or $0.78 per share for the third quarter of 2020 compared to $12.8 million or $0.14 per share in the third quarter of 2019. We ended the third quarter of 2020 with slightly over $1 billion in cash, cash equivalents and marketable securities. Beginning in the second quarter of 2020, we added disclosure of adjusted EBITDA and non-GAAP financial measure to our financial reporting to assist management and investors in evaluating the performance of our core business by removing the impact of income or expenses attributable to material noncash items, specifically stock-based compensation and fair value measurements due to the subjectivity, management judgment and market fluctuations involved around these amounts. We exclude certain other items because we believe that these income or expenses do not reflect expected future operating expenses. Additionally, certain items are inconsistent amounts and in frequency, making it difficult to perform a meaningful evaluation of our current or past operating performance. You will find a detailed presentation of non-GAAP adjusted EBITDA and a full reconciliation to GAAP net loss attributable to Guardant Health common stockholders in our Q3 2020 press release results and quarterly 10-Q filed with the SEC. Our use of adjusted EBITDA as a non-GAAP financial measure is not intended to be considered in isolation of, as a substitute for or as superior to the correspond financial measure prepared in accordance with GAAP. Non-GAAP adjusted EBITDA was a loss of $14.6 million in the third quarter of 2020 compared to a $9 million loss in the third quarter of 2019. The impact of COVID-19 created headwinds from the oncology space during the third quarter. And due to its unpredictable evolution, we do not believe that we can reasonably estimate the magnitude or duration of specific impacts on our business. Accordingly, we're not reinstating financial guidance at this time. Where we sit today, we believe the effects from COVID are likely to continue to impact the oncology space in the near term. As Helmy mentioned, there has been a resurgence of COVID cases in some regions across the U.S., and we are seeing signs indicating that this resurgence will adversely affect clinical volumes. While we have been successful in continuing to serve our customers in this environment, we expect that clinical volumes for the fourth quarter will only grow modestly in the low single digits compared to the third quarter 2020 given this resurgence. Regarding our biopharma business, we expect that biopharma sample volumes will continue to grow in Q4 at a rate similar to Q3. We expect development services revenue to remain strong and be comparable to Q3. At this point, I would like to turn the call back to Helmy for closing comments. -------------------------------------------------------------------------------- Helmy Eltoukhy, Guardant Health, Inc. - Co-Founder, CEO & Director [6] -------------------------------------------------------------------------------- Thank you, Derek. Before closing, I want to again thank our team at Guardant for the dedication and efforts they have shown, particularly over the last few months, I believe we have a truly unique opportunity at Guardant to expand unprecedented access to cancer's molecular information throughout all stages of the disease. With that, we'll now open it up to questions. ================================================================================ Questions and Answers -------------------------------------------------------------------------------- Operator [1] -------------------------------------------------------------------------------- (Operator Instructions) The first question comes from the line of Puneet Souda from SVB. -------------------------------------------------------------------------------- Puneet Souda, SVB Leerink LLC, Research Division - MD of Life Science Tools & Diagnostics and Senior Research Analyst [2] -------------------------------------------------------------------------------- So first one on clinical volumes. Clinical volumes didn't decline as much for you during the COVID lows of the second quarter. As compared to some of the other diagnostic peers. So we weren't expecting a major recovery for you in the third quarter here, given that backdrop. But just trying to understand some of the comments that you made around COVID resurgence. Is that -- I understand the conservatism there, but is there anything else that we need to keep in mind? After all, the value of G360 liquid has been the ease of access and it's a blood-based test and accessible to the patients in their home setting with the phlebotomist. So just trying to understand how to frame that given the second -- sort of second wave of COVID that's coming here. And then on G360 LDT, if you can help us understand if that's going to be meaningful next quarter? Obviously, you're having some unique features here with TMB and a number of additional genes. -------------------------------------------------------------------------------- Helmy Eltoukhy, Guardant Health, Inc. - Co-Founder, CEO & Director [3] -------------------------------------------------------------------------------- Yes. Great question. So in terms of the COVID -- in terms of the clinical volume, the efficiency of being able to service and detail physician offices, in a remote and virtual environment, it's just not the same as being in person. I think we saw a very quick recovery to pre-COVID levels because of the agility of our teams on both medical affairs and our commercial teams of really being able to convert to this new normal, this new environment of being able to detail and service our clients and our customers and physicians through this new virtual means. That being said, I think it's challenging. We're seeing record numbers of COVID cases. I mentioned before that cancer patients have about a 30% mortality rate due to COVID. So they are a population that is heavily in danger that needs to be sheltered in place. We are seeing very good utilization of mobile phlebotomy and some of the other services that help in this environment. And I think it's why we're continuing to see growth in this environment. We're -- we saw a 28% year-over-year growth in terms of clinical volume. I think if you think about what the backdrop looks like in oncology, physician -- patient visits are still depressed from pre-COVID at times. They're still at around 90% of where they were. So the top of the funnel is still the depressed. There are still headwinds there. And I think those headwinds are going to increase. And so we're seeing some regions that will do well, where we see growth. And all of a sudden, when there's a resurgence of COVID, there are more office closures and there's more care being taken by the physicians in those practices. And so we feel very good about how we're managing in this environment. But that being said, COVID is still very real and still a very large concern in this environment. In terms of -- yes? -------------------------------------------------------------------------------- Puneet Souda, SVB Leerink LLC, Research Division - MD of Life Science Tools & Diagnostics and Senior Research Analyst [4] -------------------------------------------------------------------------------- Yes, on G360. And then if I could actually wrap it up into another question, FDA approval of G360 was great to see. Can you just walk us through the G360 version to LDT? What is the regulatory pathway there as well? -------------------------------------------------------------------------------- Helmy Eltoukhy, Guardant Health, Inc. - Co-Founder, CEO & Director [5] -------------------------------------------------------------------------------- I think as we alluded to on the call, we now have this framework where we have an FDA-approved product with Guardant360 CDx. That product has best-in-class turnaround time. It's an amazing tool with a wealth of clinical evidence supporting it in terms of one of the most rigorously validated tests, liquid biopsy tests out there. And it's something that is extremely useful for the first-line setting and very useful for onboarding physicians who may be aren't used to using CGP on a day-in, day-out basis. And so we see that as a very important piece of our product portfolio. That being said, the field is continuing to evolve very rapidly. New biomarkers are being added. There are new clinical trials. And so continuing having LDT test like our next-generation Guardant360, which we launched at the same time, is going to be important for us to remain really best-in-class in terms of biomarkers that are available to test for in terms of our physicians and for their patients. And so Guardant360 LDT is a commitment to continuing to move fast in this field. And we're seeing very nice engagement on both sides. There are early adopters out there that want -- looks -- want to look for new biomarkers and look for essentially next-generation types of clinical trials as well as thinking about the progression setting where you may need look at some extended options for those patients. And so we see having these 2 products really complements -- they complement each other. And help really segment the market in a way that drives value for both types of physicians. -------------------------------------------------------------------------------- Puneet Souda, SVB Leerink LLC, Research Division - MD of Life Science Tools & Diagnostics and Senior Research Analyst [6] -------------------------------------------------------------------------------- That's very helpful. And last one, if I could ask, Helmy, on multi-cancer screening. You are a leading company in the space in liquid biopsy. And just wanted to get your thoughts on how Guardant views the multi-cancer screening opportunity in the light of the 2 large pre-revenue transactions that have happened in the space? -------------------------------------------------------------------------------- Helmy Eltoukhy, Guardant Health, Inc. - Co-Founder, CEO & Director [7] -------------------------------------------------------------------------------- I mean, AmirAli, do you want to take this? -------------------------------------------------------------------------------- AmirAli Talasaz, Guardant Health, Inc. - President, COO & Chairman [8] -------------------------------------------------------------------------------- Yes. Sure. So as in our comments, our lead indication is CRC. We think we are far away from all other kind of players who are trying to build blood-based CRC screening assays with the performances that would really increase the compliance in that space, compliance to screening. The same core platform technology, in fact, is applicable to the other cancer types. So for different kind of settings, we have looked at other cancer types like breast cancer and lung cancer. So -- but we're on the clinical utility side of it, we're starting from CRC and generating evidence on that side and building the regulatory and reimbursement pathway through our lead indication. But you could imagine, in terms of the life cycle of our LUNAR-2 assay, other cancer types would be added to since the whole platform is compatible to multi-cancer screening. -------------------------------------------------------------------------------- Operator [9] -------------------------------------------------------------------------------- Tycho Peterson from JPMorgan. -------------------------------------------------------------------------------- Tycho W. Peterson, JPMorgan Chase & Co, Research Division - Senior Analyst [10] -------------------------------------------------------------------------------- Helmy, I'll start with the FDA approval for G360 CDx. Can you just talk on the expected pace of private payer coverage expansion? And how much volume lift and ASP improvement we can expect from the approval? -------------------------------------------------------------------------------- Helmy Eltoukhy, Guardant Health, Inc. - Co-Founder, CEO & Director [11] -------------------------------------------------------------------------------- Yes. Great question. So we're definitely seeing a pickup in terms of conversations with private payers. I think there's a lot of momentum there. Certain private payers view FDA approval as one of the last milestones in terms of really getting over the hump in terms of reimbursement. So those conversations are happening, and we're seeing progress there. I would say that I think in this quarter, we added -- this last quarter, we added over 10 million covered lives. So we're continuing to make very good progress on that front. In terms of improvement in ASP. There are a couple, I think, different components to that, especially on the Medicare side. The indication for our FDA group product is wider in terms of the Medicare population. It's a test that can be used in the first-line setting. And so rather than just 85% of our Medicare volume being covered under the LCD, we believe that we can be in the 90%, even 95% range for the NCD that we now are covered by for our G360 CDx. And then I think longer term, we think, in the next few quarters, we'll be able to qualify for ADLT status with a unique code. And we think, at least, on the Medicare side, that should move up our payment rate from $3,500 to something that will likely be over $4,000. And so we're very, I think, optimistic about continued improvement in ASP over the medium to longer term. -------------------------------------------------------------------------------- Tycho W. Peterson, JPMorgan Chase & Co, Research Division - Senior Analyst [12] -------------------------------------------------------------------------------- Okay. That's helpful. And then on OMNI, the SMO guidelines now endorse large panels, including the use of TMB. So can you talk to U.S. guideline conversations are shaping up and whether parent coverage will accelerate? Or does it largely depend on FDA approval? And how should we think about the difference between the enhanced G360 test versus omni since both can do TMB now? -------------------------------------------------------------------------------- Helmy Eltoukhy, Guardant Health, Inc. - Co-Founder, CEO & Director [13] -------------------------------------------------------------------------------- You want to take this, AmirAli? -------------------------------------------------------------------------------- AmirAli Talasaz, Guardant Health, Inc. - President, COO & Chairman [14] -------------------------------------------------------------------------------- Yes, maybe I'll take the last part in terms of the differentiation of these 2 products. So as Helmy mentioned, this Guardant360 LDT is the next-generation of Guardant360. So you -- look -- you got to look at it more as a market segmentation, that there's sector of market that FDA-approved Guardant360 CDx would be a better fit for their clinical use cases. It's going to be FDA approval of Guardant360 CDx would accelerate some of the guideline enhancement around that product. Having said that, there's other part of market sector that, really, they want to have access to the latest and the greatest in terms of biomarker testing. And when you think about the life cycle management of this product portfolio that we are talking about, most probably, you can expect you're going to have a life cycle around Guardant360 CDx and a life cycle around Guardant360 LDT, and the current [regimen] of LDT could be the future generation of CDx and the next, next generations would be the Guardant360 LDT that we are talking about. But as you know, making some guideline changes would take time. -------------------------------------------------------------------------------- Helmy Eltoukhy, Guardant Health, Inc. - Co-Founder, CEO & Director [15] -------------------------------------------------------------------------------- Yes. I think the first part of this question -- yes, I mean, I think we see it as a certain positive. TMB is broad sequencing. It's an important part of CGP and the more -- and certainly, there have been some payers that have come on board. And we see that as a positive development for the space. -------------------------------------------------------------------------------- Tycho W. Peterson, JPMorgan Chase & Co, Research Division - Senior Analyst [16] -------------------------------------------------------------------------------- Okay. And then lastly, on the clinical studies. I think last quarter, you alluded to maybe you could finish enrolling the ECLIPSE study early. Is that something that is still on the table in your view? And then also, when should we get an update on LUNAR-1 readout time lines? -------------------------------------------------------------------------------- AmirAli Talasaz, Guardant Health, Inc. - President, COO & Chairman [17] -------------------------------------------------------------------------------- So on the ECLIPSE, I guess, always, we mentioned, we are on track to finish the enrollment on the originally stated time line of 24 months, which effectively is like November of next year for us. And we are very excited with the progress that we made. And with some of the additional sites that we brought on, we are even expecting if this resurgence of COVID would generate some maybe short interruption in our trial that we haven't experienced yet, but if it generate some kind of issues, still, we would be able to finish the trial on time. So we would be done with it by November of next year in terms of enrollment. -------------------------------------------------------------------------------- Tycho W. Peterson, JPMorgan Chase & Co, Research Division - Senior Analyst [18] -------------------------------------------------------------------------------- Okay, and LUNAR-1? -------------------------------------------------------------------------------- AmirAli Talasaz, Guardant Health, Inc. - President, COO & Chairman [19] -------------------------------------------------------------------------------- And LUNAR-1 -- so our studies are going -- the studies on -- LUNAR-1 study's multi-years and it's going to take some time. We are very excited with conversations that we had with KOLs who are using, actually, LUNAR-1 assay in their clinical trials in the CRC setting, and we made actually pretty good progress. We believe, actually, we have the market-leading performance in terms of the technical performance and what is really required in the clinical setting to really have MRD test embedded in the clinical workflow. We are very excited that one of our partners have submitted publication that actually highlights the performance of the test that we have relative to the experience that they have. So hopefully, when that paper gets published, we can't talk about the details at the right time. But we are excited with what we see right now. -------------------------------------------------------------------------------- Operator [20] -------------------------------------------------------------------------------- Doug Schenkel from Cowen. -------------------------------------------------------------------------------- Doug Schenkel, Cowen and Company, LLC, Research Division - MD & Senior Research Analyst [21] -------------------------------------------------------------------------------- I want to start by going back to the topic of your FDA approval for G360. I'm just wondering if that has changed the tone of discussions with clinicians, especially in the community where accepted some newer technologies sometimes just takes a little bit more time. And sort of related to that, regarding, again, FDA approval. Foundation Medicine also got approval over the summer with FoundationOne Liquid, has that changed competitive dynamics at all? Or would you kind of look at it differently and maybe suggest that we kind of think about more FDA approvals in this class being good for all tests, kind of rising tide lifts all boats, just given how much market is left to penetrate? -------------------------------------------------------------------------------- Helmy Eltoukhy, Guardant Health, Inc. - Co-Founder, CEO & Director [22] -------------------------------------------------------------------------------- Yes. No, great question, Doug. So in terms of the first part of the question, yes, we are seeing very nice engagement with, I would say, the middle majority and laggards in the field. Having an FDA approval, I think, lays to rest a lot of the doubt that existed around liquid biopsy. In fact, I think we are seeing record numbers in terms of number of unique physicians ordering the test on a monthly basis. And so we're seeing, I think, really good metrics in terms of that level of engagement. That being said, we are in a highly impacted environment with COVID in terms of being able to detail physician offices on an in-person basis. A lot of it is virtual there's just no doubt that there's a reduced conversion and reduced ability to sell in a remote environment. So that's going to continue to impact the space. But I think we've always said that FDA approval as a catalyst over the medium to longer term. A lot of these physicians that have been slow to adopt. It will take time to get them to use these types of tests and then finally use it on kind of every patient type of basis. And -- but those early conversations have been really good. And I would agree with the second part of your statement as well, that we see FDA approval, even FDA approval by competitors as really shining a light in terms of the utility of liquid biopsy that liquid biopsy should be part of the standard of care, really bringing focus to the conversation. And so we see that as an overall positive for the space, we see it as clarifying this space as well in terms of really reducing the noise. That exists and really just focusing on those FDA-approved products in the space. But that being said, very confident we have what we believe is really a best-in-class product in terms of performance, sensitivity, breadth and as well as service level. And so we're -- I think we're very bullish and very optimistic in terms of continuing to grow use of Guardant360 and overall CGT in the space. -------------------------------------------------------------------------------- Doug Schenkel, Cowen and Company, LLC, Research Division - MD & Senior Research Analyst [23] -------------------------------------------------------------------------------- And maybe just one more on a different topic. The CMS proposal on how they are trying to outline a path to reimbursing colorectal cancer, liquid biopsy screening tests. I'm just curious at a high level, what you think of the proposal. And then more specifically, how this either impacts or doesn't impact your thinking on LUNAR-2 time lines in terms of when you could get reimbursement from CMS? And then kind of the last part, sorry, for the long question, but what do you think the most important things are that need to be addressed during the comment period? -------------------------------------------------------------------------------- Helmy Eltoukhy, Guardant Health, Inc. - Co-Founder, CEO & Director [24] -------------------------------------------------------------------------------- AmirAli, do you want to take this? -------------------------------------------------------------------------------- AmirAli Talasaz, Guardant Health, Inc. - President, COO & Chairman [25] -------------------------------------------------------------------------------- Yes. So we're really excited with this blood-based CRC screening. It's still in draft form, the proposal. Because we've done this track, based on conversation we had previously, we feel bullish that post FDA approval of the test, we could get actually some favorite coverage from CMS. But now actually, the guideline is more clear. I think that the way to draft a blood-based CRC screening and CDx retest, pretty good. Still, we have some comments that we're working on that we would like to see some kind of changes. But in general, it's pretty good in terms of performance metrics that they have based on all the data that we have presented so far. We feel comfortable about those performances. And we think those are the right bar for timing that says that could make an impact. We don't expect this would accelerate our reimbursement time line in a significant way. It could -- all would be dependent to the -- in the time gap between FDA approval and formal CMS approval. We were expecting that time line would be short. And now with this guidance, it would be maybe slightly shorter. -------------------------------------------------------------------------------- Operator [26] -------------------------------------------------------------------------------- Derik De Bruin from Bank of America. -------------------------------------------------------------------------------- Derik De Bruin, BofA Merrill Lynch, Research Division - MD of Equity Research [27] -------------------------------------------------------------------------------- So the bulk of our incoming questions lately have been around LUNAR-1 and how that test compares to some of the other more personalized TRACERx-based methods that are coming in. I mean other than the workflow advantages, which are clearly obvious in this, can you sort of talk about head-to-head performance and if there's been any studies done in sort of like how the tests, how LUNAR-1 is going to compare to these other tests in terms of how they're going to perform? That's starting to be the real incoming questions that we've gotten from clients. -------------------------------------------------------------------------------- Helmy Eltoukhy, Guardant Health, Inc. - Co-Founder, CEO & Director [28] -------------------------------------------------------------------------------- Yes. I would say that -- maybe I'll start and then AmirAli can patch in. I think there's a misconception, frankly, that something that tissue -- is tissue-informed is necessarily better than something that is blood-only. And I think what we're seeing with some of the recent data is we have a very differentiated method by which we're looking very broadly, not just the genomic space, but the epigenomics space. And you can see that most companies that are going towards early detection and trying to detect cancer at its earliest stages are really following a pathway that leads towards epigenomics or methylation or some of these other markers. And so we feel very confident that we have a very unique approach for the minimum residual disease space. In this LUNAR assay, we have that -- looks at both dimensions, the methylation and genomic alteration simultaneously. And we really see no deficit or no reduction in sensitivity versus -- some of these other methods that they're sequencing the tumor, but they're kind of just simply looking at a few mutations in the blood and tracking them. So we have a very, I think, much more, I think, rigorous comprehensive approach to looking at residual disease. It has a lot of advantages, both from a biology and performance point of view, but just as importantly, from a clinical workflow point of view, being able to -- after you return a result within a week or 2 rather than many, many weeks, time to treatment, time to making a decision is vitally important in the clinical space, and it's no different in the adjuvant setting. -------------------------------------------------------------------------------- AmirAli Talasaz, Guardant Health, Inc. - President, COO & Chairman [29] -------------------------------------------------------------------------------- And regarding the performance, as I mentioned, we have a publication review that's basic publication of one of our KOL partners. So we're waiting for that publication to hopefully come in press and we can talk about it more, but very excited with what they found. So please stay tuned. -------------------------------------------------------------------------------- Derik De Bruin, BofA Merrill Lynch, Research Division - MD of Equity Research [30] -------------------------------------------------------------------------------- Great. And then just 1 quick follow-up. Can you talk a little bit about the biopharma volumes? You said an increase on the quarterly increase between Q3 and Q4. And how should we think about that volume picking up sort of going into next year? I mean, are you still being restrained by samples not being delivered? Are there still issues or trials being delayed? Just some sort of color on when you expect the biopharma samples begin picking up. -------------------------------------------------------------------------------- Helmy Eltoukhy, Guardant Health, Inc. - Co-Founder, CEO & Director [31] -------------------------------------------------------------------------------- Do you want to take that AmirAli? -------------------------------------------------------------------------------- AmirAli Talasaz, Guardant Health, Inc. - President, COO & Chairman [32] -------------------------------------------------------------------------------- Maybe I start, then Derek can maybe patch in. So in terms of actually Q3 -- Q2, we started feeling the impact, obviously, and Q3 was modestly better than Q2. And Q4, we are (inaudible) see similar level of progress relative to Q3, modestly, we're growing. And that is still COVID, it has some impact in terms of the distraction to our biopharma companies who have some major programs around some COVID-related activities. But also what we are seeing is there is a life cycle in our partnership with pharma companies that conversations are getting graduated from sample testing to prospective studies and then CDx development. And for different programs, 1 sample testing gets graduated and goes to, let's say, CDx conversation. We are seeing some kind of shift of revenue from 1 market to the other market. That could generate some kind of up and downs in terms of volume testing. Maybe -- I ask Derek if he wants to add on that. -------------------------------------------------------------------------------- Derek A. Bertocci, Guardant Health, Inc. - CFO [33] -------------------------------------------------------------------------------- Yes. Just a couple of other comments that I think are helpful. We're encouraged -- well, we certainly have had a deep trough in Q2. We're encouraged by the growth in Q3, what we expect to see continued growth at that rate of growth in Q4 and underlying that, we are encouraged by the broadening of the base of customers who are working with us. And so it -- there can be, as you know, in the pharma business. Individual programs to sort of grow blocks and then they complete and then you're filling in with others. But what we're happy with is that we're seeing a broadening of that base of customers. And so in the future, we're hoping that those will lead to the kind of growth that we saw in the past. -------------------------------------------------------------------------------- Operator [34] -------------------------------------------------------------------------------- Brian Weinstein from William Blair. -------------------------------------------------------------------------------- Brian David Weinstein, William Blair & Company L.L.C., Research Division - Partner & Healthcare Analyst [35] -------------------------------------------------------------------------------- Just to go back to a couple of questions to go on the CMS draft on CRC. I wanted to see if I heard AmirAli's comment right. Did you think that, that would potentially shorten the time frame for coverage? Because our read of it was with inclusion required in 1 of the guidelines, that it might actually extend it. So I wanted to make sure I understood the thought process there. And then also, do you think that there's a need for advanced adenoma goalpost to be added to the final document there? -------------------------------------------------------------------------------- Helmy Eltoukhy, Guardant Health, Inc. - Co-Founder, CEO & Director [36] -------------------------------------------------------------------------------- Maybe I'll start. That's actually no different, the requirement. And kind of statutorily, that's required for coverage by CMS in this setting. So we don't really see that as a big difference in terms of previous thinking and what was typically required versus what's being proposed. I think this only further I think, gives us confidence in terms of being able to have a time line that is extremely quick. And I think reaffirms our choice of colorectal cancer as a beachhead for our early detection program. In terms of -- I don't know if AmirAli could take the second part it? -------------------------------------------------------------------------------- AmirAli Talasaz, Guardant Health, Inc. - President, COO & Chairman [37] -------------------------------------------------------------------------------- Advanced adenoma, yes. So I think really depends to the clinical application. If you want to increase the compliance rate to screening, really like the performance of early-stage detection should be [enough to wait]. And actually, we designed an ECLIPSE study. We are going to look at the sensitivity and the performance of the CRC and specificity. We're going to look at CRC in advanced adenoma because we are expecting that we are going to detect a fraction of the advanced adenoma cases. But in terms of guidance and requirement for blood-based, based on everything we know in this deal and conversation we had with KOLs, having even a blood-based assay that can detect early stage CRC can increase compliance rate in a very significant way. So maybe that performance criteria they have should be sufficient. -------------------------------------------------------------------------------- Brian David Weinstein, William Blair & Company L.L.C., Research Division - Partner & Healthcare Analyst [38] -------------------------------------------------------------------------------- Got it. And then separately, have you guys looked at or are you interested in the nodule management space given how deep you are in lung cancer management? Does it make sense for you to enter the discussion there around something maybe a post-CT nodule management? We saw a small study. It looked like you were involved in there, but I'm really just not sure how much to make of it because I don't think I've heard you talk about it before. -------------------------------------------------------------------------------- Helmy Eltoukhy, Guardant Health, Inc. - Co-Founder, CEO & Director [39] -------------------------------------------------------------------------------- AmirAli do you want to? -------------------------------------------------------------------------------- AmirAli Talasaz, Guardant Health, Inc. - President, COO & Chairman [40] -------------------------------------------------------------------------------- Maybe let's look at those pipeline activities for us. We even showed, I think, some line data maybe a few months before we went IPO, so even 2 years ago or more than 2 years ago. So the reality of this platform technology is it's really a multi-cancer platform technology. Seen some performance in bunch of cancer types already. So we have a bunch of work ahead of us. So we don't want to distract ourselves on the utility at this time. We got the utility of other cancer types besides CRC. When you look at it this way, that what we are -- the platform technology that we have, not only look at genomic markers, but look at epigenomics, look at methylation patterns, fragmentation patterns which basically the signals could come from multiple sources from tumor, from tumor microenvironment, potentially even some signals from immune response. That's what we are assaying with our platform technology, which is a very broad concept, and we are excited with some early data that we have, but those are very early. So let's look at those more as pipeline activities for us. -------------------------------------------------------------------------------- Operator [41] -------------------------------------------------------------------------------- Patrick Donnelly from Citi. -------------------------------------------------------------------------------- Patrick Bernard Donnelly, Citigroup Inc. Exchange Research - Research Analyst [42] -------------------------------------------------------------------------------- Helmy, maybe one for you just on the resurgence on the clinical volume side for 4Q. Just trying to figure out, I guess, how much impact you guys have seen quarter-to-date already in terms of the October trends versus some level of conservatism baked in. I mean I know even 3 months ago, you guys had some conservatism for 3Q with the potential second wave. How are you viewing this quarter in terms of the resurgence? And how much impact have you seen already? And how much are you seeing kind of currently versus the fear of what's to come, I guess, in the next 2 months or so? -------------------------------------------------------------------------------- Helmy Eltoukhy, Guardant Health, Inc. - Co-Founder, CEO & Director [43] -------------------------------------------------------------------------------- Yes. It's a good question. I would say it's really along the lines of what we commented on back in our Q2 earnings call. We're seeing these regional flare ups. We're seeing impact on a kind of short-term basis, depending on the region and the level of fear that exists. And clearly, we're in a much more, I would say, high alert time with the U.S. crossing 100,000 cases per day in terms of new infections. And so there's, I think, a well-founded, I think, level of -- I think a well-founded kind of level of, I think, conservatism on the part of the physicians in terms of really trying to make sure that they keep their patients as healthy as possible. We're also -- this is not just reflected in our own data, we're seeing in the patient visit data and overall oncology field data that there's a fluctuation there from week-to-week in terms of in-person patient visits. The field, in general, has moved very significantly to remote visits. And so all of that reduces the number of opportunities for patient engagement and physician engagement. Virtual calling is just not as effective as being in person. But that being said, we are seeing excellent metrics in terms of number of physician adds, in terms of unique physician orders. Really in terms of our share of voice in the field. So we're very confident that despite these headwinds, we're doing, I think, something that is really second to none in terms of the oncology diagnostics space. But it's going to continue to be a challenge. It's not the same type of conversion that we had a year ago, pre-COVID. -------------------------------------------------------------------------------- Patrick Bernard Donnelly, Citigroup Inc. Exchange Research - Research Analyst [44] -------------------------------------------------------------------------------- That's helpful. And then maybe just to pick up on one of your last points there. I was kind of wondering how orders tracked for the unique new physicians versus existing accounts. To your point there, just about kind of virtually calling, how do you see the ability to open these new accounts during what was a pretty nice recovery in 3Q? Did you see that accelerate? And how should we expect that to trend in the near future here? -------------------------------------------------------------------------------- Helmy Eltoukhy, Guardant Health, Inc. - Co-Founder, CEO & Director [45] -------------------------------------------------------------------------------- Yes. We saw a low in Q2, but that being said, we're back -- I wouldn't say we're back to 100% in terms of new ordering MVs, but very close to that in terms of Q3. So we're still -- we still have the ability to be able to add new physicians. We certainly think FDA approval is something that has helped as well -- help us not just engage new physicians, but reengage those that maybe tried us a long time ago and now realize that this is much more validated and something that is worth their time. -------------------------------------------------------------------------------- Operator [46] -------------------------------------------------------------------------------- Tejas Savant from Morgan Stanley. -------------------------------------------------------------------------------- Tejas Rajeev Savant, Morgan Stanley, Research Division - Equity Analyst [47] -------------------------------------------------------------------------------- So just a couple of ones here, Helmy and AmirAli. So first on GuardantINFORM. You probably got north of 100,000 patients in the clinical genomic database here. So can you update us on some of the work you're doing there to monetize that offering and what the pipeline looks like, particularly since it's likely to be a very high-margin offering for you? -------------------------------------------------------------------------------- Helmy Eltoukhy, Guardant Health, Inc. - Co-Founder, CEO & Director [48] -------------------------------------------------------------------------------- Yes, it's good, AmirAli, do you want to take that? -------------------------------------------------------------------------------- AmirAli Talasaz, Guardant Health, Inc. - President, COO & Chairman [49] -------------------------------------------------------------------------------- Yes, sure. So we're -- that's a very exciting business for us. From a business perspective, also generating a bunch of new clinical data to show the value of liquid biopsy there and that we are even more excited in what we are doing in GuardantINFORM is looking at longitudinal real-world evidence. One of the unique advantage of liquid biopsy is -- and the database that we have is multiple lead time points that we have from different patients. And you could really see what's happening to a patient as a result of treatment over the course of relatively long period of time, when the patient is getting tested multiple times, and that has opened up some interesting opportunities for us. Besides, like it's real-world evidence in terms of single point data, we've seen a lot of excitement by our biopharma partners. Almost with all biopharma partners that we had, we had some interesting conversation around GuardantINFORM. We have signed a bunch of deals and many more deals are in the pipeline of conversations. Still it's early for us so -- and we have to go through this process of conversations to really be able to access the opportunity size for next year better. So -- but it's an exciting area of emerging business for us. -------------------------------------------------------------------------------- Tejas Rajeev Savant, Morgan Stanley, Research Division - Equity Analyst [50] -------------------------------------------------------------------------------- Got it. And then just a couple of ones on LUNAR here. Helmy, I mean, just in terms of the implications of the Palmetto draft LCD, would you consider accelerating your plans to submit for other indications beyond colorectal, particularly as the space gets a little bit more competitive here in light of a supportive reimbursement landscape? And then on LUNAR-2, I mean, this just goes back to an earlier question around some of the M&A activity in this space. But in terms of your own commercial channel build out efforts ahead of launch, are you sort of incrementally more open to considering partnerships in this space versus a go it alone strategy as far as that -- targeting those physicians is concerned? -------------------------------------------------------------------------------- Helmy Eltoukhy, Guardant Health, Inc. - Co-Founder, CEO & Director [51] -------------------------------------------------------------------------------- Yes. No, great question. And the first one, we've always had a road map of starting with initial beachhead cancer, right, that's colorectal for our LUNAR-1 program. And we've made excellent progress there. And I think we're very excited with the capabilities of the platform. But that being said, we have researched in multiple cancer types. We're very confident from the data we have that we can make a big impact in terms of the field, in other cancer types as well and some of the main cancer types that could benefit from residual disease monitoring as well as recurrence monitoring. We think we have some unique capabilities for our platform in some of those other cancer types that maybe aren't just -- aren't very amenable to some of the more simplistic approaches that are out there. So yes, that's certainly something that is in our road map and something that certainly going to be a next step for us. I would say, in terms of the LUNAR-2 side of things, can you remind me what the question was? Sorry, I forgot? -------------------------------------------------------------------------------- Tejas Rajeev Savant, Morgan Stanley, Research Division - Equity Analyst [52] -------------------------------------------------------------------------------- Yes. So I was just asking around your plans for the commercial channel build-out. I mean, given that the other partnerships that have just been struck in the space? -------------------------------------------------------------------------------- Helmy Eltoukhy, Guardant Health, Inc. - Co-Founder, CEO & Director [53] -------------------------------------------------------------------------------- Yes. So we're certainly open to the types partnerships. We partner with many of our pharma companies on the therapy selection side in terms of companion diagnostic component of our test. And that's going to be no different on the early detection side. That being said, I think we are in the early stages of planning in terms of the -- building out that commercial channel. It is a very different commercial channel in terms of the primary care setting. It's one of the reasons we did this recent fundraising a couple of quarters ago as to really be able to invest in building out a really a differentiated and leading commercial channel in that space. And doing so in a way that's aggressive, that is timed with the potential launch of a product for colorectal screening. So -- it's something we're very committed to, and we believe that really making sure that we engage all channels, not just personal promotion, but digital promotion, direct-to-consumer, as well as partnering with other stakeholders is -- those are all on the table and are all going to be components of our commercial framework. -------------------------------------------------------------------------------- Operator [54] -------------------------------------------------------------------------------- (Operator Instructions) Your next question comes from Sung Ji Nam, BTIG. -------------------------------------------------------------------------------- Sung Ji Nam, [55] -------------------------------------------------------------------------------- Just a couple of quick ones. Firstly, I was curious, what's the rationale of the enhanced Guardant360 versus, I guess, more broadly using GuardantOMNI. Are there different use cases? And also, I mean, are there price sensitivity factors involved? Because I've always thought that OMNI was kind of the next-generation 360. And then the follow-up question is totally different. It's -- I know it's not a core business, but was there contribution from COVID testing this quarter? And do you anticipate meaningful contribution, given, I think, the capacity you guys have is pretty sizable in the coming quarters? -------------------------------------------------------------------------------- Helmy Eltoukhy, Guardant Health, Inc. - Co-Founder, CEO & Director [56] -------------------------------------------------------------------------------- AmirAli, do you want to take this? -------------------------------------------------------------------------------- AmirAli Talasaz, Guardant Health, Inc. - President, COO & Chairman [57] -------------------------------------------------------------------------------- Yes. Regarding Guardant360, you see the next-generation version of it, what -- in the market that we are actually in, not many doctors, in fact, would enjoy, I think, a lot of information that a 500-gene panel like GuardantOMNI producers, and in fact, it could be net negative for them. So that's from customer side. And on the reimbursement side, there are definitely some anxiety of using extremely broad panels in terms of potential off-label drug users for biomarkers that may be they're clinical relevance of those biomarkers. At this time, it's not proven yet. So we think the next-generation Guardant360 for clinical testing, that this product is what we put in the market, one side. And the 2-megabase panel similar to OMNI that we have for pharma and basically does the TMB calling based on that content. And also look at 80-plus genes, which are very clean and clearly relevant. And also, we enhanced that panel, as Helmy mentioned, on the NTRK side, HRD sides to really match all the biomarkers that based on guidelines you are interested to test. And regarding COVID -- yes, so regarding COVID, actually, there'll be -- maybe I'll let Derek comment about our COVID revenue in Q3. But since it's not really the focus of our business, we are not really expecting COVID revenue to play a material role in our revenue in Q4 and the quarters to come. Because, really, like we are laser focusing the oncology area. Having said that, we are excited about this EUA approval that we got, really, like the offering of the test of Guardant employees and partners and really making our working environment as safe as we can has been very important for us to keep the productivity level high during this pandemic with a state of mind that a vast majority of our employees have now that we are doing this testing for Guardant employees. Also, we will sign it up with a bunch of partners, but we are not commercially pushing it in a significant way, Derek? -------------------------------------------------------------------------------- Derek A. Bertocci, Guardant Health, Inc. - CFO [58] -------------------------------------------------------------------------------- Yes. So Sung Ji, we recorded $1 million worth of revenue for our COVID-19 tests. And we report it in the development services line item because we don't want to confuse or combine it with our oncology testing, which is a precision oncology testing. So that has stayed clean and it's really small sitting in the development services. And we don't, as AmirAli suggested, we are not working on it to become a big element, and we don't expect it to become a big element. -------------------------------------------------------------------------------- Operator [59] -------------------------------------------------------------------------------- There are no further questions at this time. And this concludes today's conference call. You may now disconnect.