NEW YORK – As its current precision oncology business continues to grow, Guardant Health is ready to shift its resources to new frontiers after taking the plunge to apply for US Food and Drug Administration approval for its colorectal cancer screening test, Guardant Shield.
The firm featured a slate of researchers, including scientists associated with the American Cancer Society and US Preventive Services Taskforce, to shore up confidence in the path forward for the blood-based assay after the first official presentation of data from its ECLIPSE study at a research meeting on Tuesday.
Guardant co-CEO AmirAli Talasaz said during a call discussing the firm's first quarter financial results that it has completed its application to the FDA for premarket approval of the test based on the ECLIPSE trial data and the review process is already underway.
He argued that the test's performance, with additional details now made public, meets not only the requirements of regulators and payors but also the necessary bar for "robust commercial success post-FDA approval."
In the meantime, the company has seen continued growth for its other precision oncology products. Guardant reported after the close of the market on Tuesday that its Q1 revenues rose 34 percent year over year to $128.7 million from $96.1 million in Q1 2022, beating the consensus Wall Street estimate of $117.9 million.
Guardant's precision oncology testing revenues grew 35 percent to $113.4 million from $84.1 million in the prior year's quarter, while its development services and other revenues rose 28 percent to $15.3 million from $12.0 million.
During the quarter, the company reported 39,100 tests to clinical customers, representing an increase of 45 percent over the same period last year.
As with an earlier preview of the ECLIPSE data — which showed that Shield most likely meets criteria set out by regulators and payors for blood-based CRC screening, but with performance falling short of earlier expectations — the new data had a mixed reception among investors, with some maintaining that the test is being overly critiqued, and others admitting that the assay's low sensitivity in stage I tumors is disappointing, albeit mitigated by its high sensitivity for mid- and late-stage disease.
The early data from the trial, announced in December, showed that Guardant Shield had demonstrated 83 percent sensitivity and 90 percent specificity for detection of CRC across stages. In the new data, presented at the Digestive Disease Week conference in Chicago, investigators offered a more detailed view.
Grouping stages I through III, Shield had 81 percent sensitivity. For stages I and II combined, sensitivity was 72 percent. Interestingly, the report revealed that all of this lost sensitivity going from later to earlier stages was attributed to performance in stage I tumors, which dropped to 55 percent; in all other cases (stage II, III, and IV), sensitivity was 100 percent.
During a conference call discussing the data on Tuesday morning, investigators from the trial and outside scientists, including Len Lichtenfeld, former chief medical officer at the American Cancer Society, repeatedly characterized Shield's performance in the study as both comparable to existing stool-based screening tests and sufficient to meet requirements of both the FDA and Medicare.
The terms "comparable" and "on par" were repeated at least 10 times by various speakers during the 30-minute call.
Though specific competitors were not named, the two most important stool-based tests on the market today are Exact Sciences' Cologuard, and fecal immunohistochemical testing, or FIT. Guardant Shield's 83 percent sensitivity exceeds the 74 percent reported for FIT but falls short of the 92 percent that Exact has demonstrated for Cologuard.
The current version of Shield also falls short of Cologuard in detecting advanced adenomas, a type of high-risk precancerous lesion.
Guardant has pushed back on questions about its second place standing on these measures by stressing that, because its test is performed on blood and not stool, it is more patient-acceptable. Better patient adherence, even with lower sensitivity, should lead to better outcomes, the company has argued.
Discussants on the company's call echoed this, as well. "Screening programs require consideration of test performance under real-world conditions that integrates patient adherence rate in order to establish clinical effectiveness. And in real-world clinical use, this assay has had a patient adherence rate [of] greater than 85 percent, which far exceeds that of stool-based testing … and colonoscopy," said ECLIPSE PI and Harvard Medical School professor Daniel Chung.
According to Lichtenfeld, organizations like ACS, which develop guidelines for the early detection of cancer "look very carefully at the evidence regarding screening tests, including sensitivity, specificity, and adherence," all contributors to "how any given test will effectively help reduce the cancer burden."
Lichtenfeld said that ACS has previously shared public comments to the Centers for Medicare and Medicaid Services suggesting that adherence should be part of coverage decisions for CMS.
"For this reason, it's my opinion that a test like Shield … will be seriously considered by ACS for guideline inclusion," he said.
According to Talasaz, Guardant also doesn't intend to simply rest on the ECLIPSE data. The company is already working on correcting for factors that led to the poorer performance in stage I tumors and adenomas.
"The missed stage one cancers [in ECLIPSE] were predominantly malignant polyps excised during colonoscopy procedures that were not well represented in our development cohorts and have lower level of signals in blood," he said.
"Since locking our PMA device last year, we've captured more data through both commercial testing and analyzing more screening relevant cohorts," Talasaz added. "I'm very pleased with the progress we have already made in upgrading our platform technology performance. Powered by this additional data and insights, we are working on developing a second-generation Shield with the aim of improving very early-stage sensitivity."
Guardant hasn't discussed what revenue impacts it might expect from Shield if it is able to launch the test with Medicare coverage after FDA approval. But Talasaz did say that the company would expect FDA approval to indicate the test for use in screening every three years.
"When you look at the literature in terms of how long it takes for CRC to go from one stage to the next … you are going to see that actually a minority of stage I tumors are going to become late-stage even three years after," Talasaz said. "We believe as long as this test is getting done every three years with high compliance, we'll be able to detect almost all CRCs at curable stage."
Based on the firm's early experience with the laboratory-developed version of the Shield test, Talasaz argued that the 90 percent compliance the firm is seeing suggests that in practice, the rate at which tests are converted to billable tests will turn out to be much higher than other modalities. "This gives us confidence that in order to meet the revenue milestones that we have in mind, we don't need to go to hundreds and hundreds of people in the commercial team," he said.
In other Q1 financial results, net loss attributable to Guardant's shareholders was $133.5 million, or $1.30 per share, compared to $123.2 million, or $1.21 per share, in the same period last year. Analysts, on average, had predicted a loss per share of $1.31.
The company's SG&A expenses rose 14 percent to $116.5 million from $105.7 million in the prior-year period. Its R&D expenses grew just over 10 percent year over year to $93.1 million from $81.8 million.
Guardant ended the quarter with $223.6 million in cash and cash equivalents, and $713.4 million in short-term marketable debt securities.
In early morning trade on the Nasdaq, the firm's shares were up 9 percent at $26.24.