Guardant Health Inc (GH) Q3 2021 Earnings Call Transcript

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Guardant Health Inc (GH -3.60%)
Q3 2021 Earnings Call
Nov 4, 2021, 4:30 p.m. ET

Contents:

• Prepared Remarks
• Questions and Answers
• Call Participants

Prepared Remarks:

Operator

Hello, and welcome to the Guardant Health Q3 2021 Earnings Call. My name is Alex and I will be coordinating the call today. [Operator Instructions] I will now hand over to your host, Carrie Mandeville, Investor Relations to begin. Over to you, Carrie.

Carrie Mendivil -- Investor Relations

Thank you. Earlier today Guardant Health released financial results for the quarter ended September 30, 2021. If you've not received this news release or if you'd like to be added to the company's distribution list, please send an email to [email protected].

Joining me today from Guardant are Helmy Eltoukhy, Co-CEO, AmirAli Talasaz, Co-CEO and Mike Bell, Chief Financial Officer. Before we begin, I'd like to remind you that management will make statements during the 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 of description, please see the Risk Factors section of the company's Annual Report on Form 10-K for the year ended December 31, 2020 and in its other filings with the Securities and Exchange Commission.

This call will also include a discussion of certain financial measures that are not calculated in accordance with Generally Accepted Accounting Principles. Reconciliation to the most directly comparable GAAP financial measure may be found in today's earning -- earnings release submitted to the SEC. 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 4, 2021.

With that I'd like to turn the call over to Helmy.

Helmy Eltoukhy -- Co-Chief Executive Officer

Thanks,, Carrie. Good afternoon and thank you for joining our third quarter 2021 earnings call. I'll start off today's call by highlighting our progress across oncology as we continue to build on our strong foundation as a liquid biopsy leader. I will then turn the call over to AmirAli for an update on our screening program in colorectal cancer and our plans for expansion into multi-cancer screening. And finally, Mike will provide a more detailed to look at our financials and our outlook for the remainder of 2021.

Our mission at Guardant is to conquer cancer with data fueled by a commitment to putting patients first. To this end, we are dedicated to bringing the absolute best products to market that will provide clinically actionable information to inform patient care. Before I provide an update on our progress, I would like this time to call up with a patient story.

This past summer a 64-year-old woman was diagnosed with colorectal cancer. Her oncologists ordered a Guardant360 CDx test which identified her cancer as KRAS negative indicating that she may respond to anti-EGFR therapy. With this information she was enrolled in a clinical trial. As her treatment progress, she began to experience worsening symptoms that led to uncertainty about whether or not she was responding to treatment from the clinical trial. Her oncologist ordered a Guardant360 Response tests, which is the first commercially available, but only liquid biopsy test that detect changes in circulating tumor DNA levels to provide an early indication of a patient's response to treatment. The test confirmed her circulating tumor DNA levels were decreasing, meaning she was indeed responding to treatment and her symptoms are likely a side effect from the therapy. With this her oncologists have the information he needed to continue treatment through this trial and the patient's symptoms have since improved.

This story highlights how Guardant360 can provide powerful information across multiple changes of cancer care, from rather treatment selection with our Guardant360 CDx to early treatment response monitoring with Guardant360 Response. Today, the Guardant 360 product portfolio is increasingly providing oncologists with a set of comprehensive tools to unlock the full potential of precision oncology across the continuum of advanced cancer care.

Now turning to our performance. We realized record revenue during the third quarter of approximately $95 million growing 27% year-over-year. On our earnings call in early August, we share that the resurgence of COVID 19 cases was impacting oncology office visits and sales force access whether in-cash international business particularly impacted. While the environment didn't worsen, these impacts persisted through August and into September.

Despite these continued impacts from COVID our team delivered strong clinical volumes of 22,806 tests, up 9% from the second quarter of this year and 35% compared to the prior year. I continue to be proud of how well our commercial team is executing in this environment and achieving healthy volumes and continued growth. Notably, approximately 60% of our volume in the quarter came from the community setting, which represents over 10% growth over the previous quarter.

We have also continued our strong cadence of clinical evidence supporting Guardant360. In September, we shared new data at iSelect World Conference in lung cancer, it demonstrated advantages of using the Guardant360 liquid biopsy test for clinical decision-making in advanced lung cancer. Shortly after we show data at ESMO highlighting molecular targets of importance treatment resistance patterns and advantages of the Guardant360 liquid biopsy tests to help improve the management of advanced solid cancers. These studies add to the growing evidence demonstrating that Guardant360 is an easy and quick way to identify more patients with actionable biomarkers allowing clinicians to start biomarker informed treatment sooner as compared to tissue biopsy comprehensive genomic profiling.

Turning to recurrence monitoring. We are encouraged by the growing interest in early success of Guardant REVEAL and are continuing to invest heavily in the vast opportunity ahead while leveraging our existing channel with oncologists. We now have a full commercial channel dedicated to REVEAL and have added over 50 employees to the team during the third quarter. Across our oncology portfolio, we have a commercial organization of more than 250 employees across sales, marketing and medical affairs. We are making solid progress toward our multi-cancer growth with data on colorectal cancer as well as bladder, lung and breast indications.

Similar to our approach in therapy selection, we are investing in clinical studies across MRD to demonstrate the clinical utility of our tests. To that end, in October we initiated the Oracle study to evaluate the performance of Guardant REVEAL to predict recurrence across many early stage cancers. Specifically, this is a 1,000 patient prospective observational multicenter study designed to evaluate the performance of REVEAL to predict cancer recurrence after curative intense treatment across 11 solid tumor types. This study in combination with our existing studies would establish clinical evidence for Guardant REVEAL across nearly 80% of all solid tumor cancers. The first patient was enrolled in early October. If successful Oracle will pave the path for reimbursement for Guardant REVEAL across multiple cancer types definitively establishing the blood-only approach for MRD and unlocking the $15 billion total addressable market for MRD across ultimate size.

Moving on to biopharma. We saw a healthy rebound in our biopharma business where volume of 4,839 sample of 32% from the second quarter and up 58% year-over-year. We are seeing growing interest with our biopharma partners for using REVEAL in the adjuvant setting with non-CRC indications such as lung, bladder and breast. Our partners are seeing significant benefit with our blood-only tissue agnostic approach and we look forward to growing usage of REVEAL in the biopharma setting. In addition to increasing sample volumes, the number of customers we serve continues to grow. We now have more than 90 active biopharma partnerships with a healthy pipeline and we expect to have more than 100 partners by the end of the year.

The breadth of our product offering, strong customer service and the clinical market leadership makes us an attractive partner. Outside of the United States, we continue to expand our presence in Europe through established partnerships with the Premier Cancer Organizations. We have partnered with The Royal Marsden, a leading specialist treatment Hospital in London. This is similar to the previously announced Vall d'Hebron partnership in Spain, which established in-house liquid biopsy testing services is running Guardant360 tests and sequencing on site. This service is expected to become operational in 2022 and will be available for clinical research and clinical care providing industry-leading next generation sequencing in the private in self-paying patients with the plan for future expansion for National Health Service patients.

In addition, we continue to make important progress with our JV in Asia, the Middle East and Africa. Specifically in Japan, we are on track for PMDA approval Guardant360 and launching our clinical laboratory outside of Tokyo by early next year. We are also making excellent progress in other countries in the region as well as growing clinical volumes with both biopharma customers and oncology clinics. Accordingly, we have decided to exercise our call right to purchase the remaining 50% of our joint venture from SoftBank. We are working toward the future where all patients with cancer around the world have access to the latest innovations to inform treatment decisions and managed care for the best possible outcomes. This additional partnership in Europe and a redoubled commitment to our efforts in Asia, Africa and the Middle East are important steps toward realizing that vision.

Finally, before I turn the call over to AmirAli I wanted to take a moment to welcome Myrtle Potter to our Board of Directors. Myrtle currently served as Chief Executive Officer and Board Member of Sumitovant Biopharma. Prior to Sumitovant, Myrtle served as the President, Commercial Operations at Genentech. Myrtle has previously served on the Boards of Amazon, Express Scripts, Medical Health Solutions, Everyday Health among others. Her extensive knowledge and experience bringing the world-class healthcare products to market will be invaluable as we still our organization.

As Guardant grows, I continue to be amazed by the incredible talent we are bringing on board joining our efforts to bring the best products to market as we strive to provide patients across all stages of cancer with access to the latest advancements in precision oncology.

I will now turn the call over to AmirAli to provide an update on screening.

AmirAli Talasaz -- President, Co-Chief Executive Officer

Thanks, Helmy. As Guardant, we've always believed that a blood-based screening test during wellness checkups and the potential to guard us against cancer. Blood-based screening is simple, reduces the need for patient follow through. It's much easier to integrate into a health system workflows, expand accessibility to underserved communities and would likely improve the compliance to screening tests. That said, the complexities of malignant disease, the imperfect nature of screening test and the morbidity associated with follow on diagnostics means that early detection does not intrinsically confer positive net health benefit. The net's health benefit of early detection versus potential harm from unnecessary screening and follow-on diagnostic procedures varies for different cancer types. For instance, a large study shows that while it was possible to find ovarian cancer early the long-term outcomes sadly we were no different cancers detected early versus later, at least, based on the current interventions.

In some hematologic malignancies such as chronic lymphocytic leukemia early chemotherapy confers no survival benefit to patients diagnosed in the early stages and may introduce significant psychological and even financial distress for a condition in which no treatment as required. Some investigators have applied blood based screening even low sensitivity test in a one-size-fits-all approach regardless of cancer type with the presumption that early detection is always positive.

In contrast, as Guardant Health, our focus is to develop a highly accurate blood test to screen for cancer types where early detection can offer a clear net population of benefit. We started our screening program with CRC where the patient compliance rates screening remained stubbornly at 66% in a disease where a screening reduces the risk of death by 62%. In addition, we believe that developing a highly sensitive blood test was visible and the regulator approval and reimbursement pathways were clear.

We launched ECLIPSE, our perspective registrational study in November of 2019 and made excellent progress over the past 24 months at midst the backdrop of a global pandemic and its impact on overall colonoscopy screening procedures. I'm so proud of our team who have worked tirelessly to continue patient enrollment and have kept us on track to hit our original timelines sets back into 2019. We expect to hit our target patient enrollment in the coming weeks.

Shortly after target enrollment is achieved, you're planning to start running to collect the samples in our lab while we continue to collect colonoscopy reports and centralized pathology report that in these cases in parallel. We expect to have this trial readout in mid 2022. Through ECLIPSE our team has developed core competencies running a large registrational study, and I believe this expertise will prove invaluable as we move on to add additional cancer types.

We are also making great progress building our commercial infrastructure to launch our screening product and are on track to launch LDT version of our CRC screening assay in the first half of 2022. We expect to launch the IVD version of the assay in 2023 and being successful FDA review and approval. Recently, our collaborators at Samsung Medical Center presented updated data at the American College of Gastroenterology Annual Scientific Meeting. This was the retrospective study that used biobank samples from individuals with non-CRC, we're 37% of individuals where symptomatic. In this study, researchers evaluate the performance of our tests and expanded cohort of 699 patients with non-CRC and found the test achieved an overall sensitivity of 96% with 94% specificity.

In patient with Stage one and two CRC, the test offer a 93% overall sensitivity. Additionally, our test identified 90% of patients with asymptomatic stage one or two CRC. Now looking beyond CRC trial opportunity with multi-cancer screening. Our focus is to develop a blood-based screening for cancers where life can be safe. Our differentiated core technology platform which leverages combined analysis of genomic, methylation and fragments signatures within cell-free DNA has the potential to do take many cancers as their earliest stages. We have developed new generation of our high sensitivity sequencing assay for evaluation of cell-free DNA across multiple tumor types. This new assay uses a custom targeted 16 mega-base panel to enrich cell-free DNA across a set up highly informative regions in order to detect the presence of tumor derived signals while maintaining low sequencing cost per sample.

In addition, we don't see it's a lot epigenetic signatures to evaluate tissue of origin RTO of cancer. We evaluated the performance of the assay in a pilot study using a biobank cohort of 191 treatment-naive lung cancer patients and 1,576 cancer-free individuals. The assay demonstrated high sensitivity for detecting in lung cancer cases for both early and late stage disease, while maintaining 95% specificity.

Our sensitivity on detecting stage one and two cancers was 78% and further increased to 93% in late-stage patients stage three and four. Importantly, we observed given higher performance with sensitivity of 95% for stage one, two in lung squamous cell carcinoma cases, which is a more aggressive form of lung cancer free frequently found in smokers. To evaluate the accuracy of tissue of origin prediction, we have developed the classification model distinguishing lung cancer patients from patients with colorectal and breast cancers.

Overall the model correctly identified TOO for 90% of detected lung-cancer patients. We are thrilled by our progress in lung cancer screening. Lung cancer is the leading cause of cancer-related debt in the United States. The evidence-based screening guidelines recommend annual lung cancer screening for high-risk individuals however the screening compliance study demonstrate growth underutilization as only around 14% of people eligible for a screening are up to date with screening recommendations. We believe lung cancer is a great clinical indication candidate for our screening tests.

To validate the performance of our assay in a lung cancer screening cohort we have to design a new perspective registrational study called SHIELD. SHIELD is a single-arm clinical validation study design to provide regulatory great evidence for the accuracy of our blood-based assay in individuals between the ages of 50 to 80 who undergo a standard of care screening for lung cancer using low dose CT scanning. As per USPSTF recommendations all subjects in growth SHIELD will be a high risk for lung cancer and either current or former smokers.

We are targeting enrollment of nearly 10,000 individuals. We expect to begin enrollment in December of 2021 and to complete enrollment within 36 months. We believe the promise of blood based cancer screening is quickly becoming a reality. And we see a brighter future for humanity by improving population health. A successful readout of our ECLIPSE trial, we will open up at $20 billion screening opportunity in colorectal cancer and SHIELD along with other future studies, we will open up opportunities in lung and additional cancer types paving the way toward the total addressable screening market of more than $50 billion.

I am confident about our strategy in developing blood based test for a screening market not just in CRC, but also in multi-cancer screening. With that I will now turn the call over to Mike for more details of our financials and outlook for the remainder of 2021.

Mike Bell -- Chief Financial Officer

Thanks, AmirAli. Total revenue for the 3rd quarter of 2021 was $94.8 million or 27% from $74.6 million in the prior year quarter. This increase was primarily driven by strong growth in both clinical and biopharma sample volumes. Total precision oncology testing revenue for the third quarter is a record high of $79.3 million with a growth of 31% compared to $60.4 million in the prior year quarter.

Precision oncology revenue from clinical tests in the third quarter is $61.3 million of 27% from $48.3 million for the prior year quarter. Third quarter clinical test volume was 22,806, which is an increase of 35% from the prior year quarter. Blended clinical ASP for the third quarter 2021 was $2,689, which was above our estimate due to an improvement in ASP for Guardant360 CDx where the team has done an excellent job ensuring payers were well prepared for the new ADLT code and efficiently process claims.

We are seeing solid traction for our new clinical products REVEAL, TissueNext, Response and we expect the volumes to continue to increase with time. However, we don't expect these new products to significantly contribute to revenue until we received Medicare and private payer reimbursement. Therefore, while we expect Guardant360, LDT and CDx ASPs to continue at similar levels, we expect the blended clinical ASP will be impacted as we reimbursement of the new products.

Precision oncology revenue from biopharma samples in the third quarter totaled $17.9 million of 49% from $12.0 million for the prior year quarter. Biopharma volume was strong and third quarter samples totaling 4,839 of 58% from the prior year quarter. We are very pleased with the healthy rebound and we are still on track for low double-digit volume growth for 2021. Biopharma sample ASP was approximately $3,700 down 5% from approximately $3,900 in the prior-year period, but improved from the second quarter of 2021 due to the only and Guardant360 mix.

Development services and other revenue in the third quarter totaled $15.5 million of 9% from the prior year quarter. While we are continuing to see strong overall demand for development services. Several projects have recently been completed, are soon to be completed and we expect some near-term lumpiness in this revenue line related to the timing of project milestones and other contractual arrangements. As a result, we expect our development services and other revenue may be sequentially lower in the fourth quarter and as new projects take time to ramp up, this is likely to persist into next year.

Gross profit for the third quarter of 2021 was $64.0 million compared to a gross profit of $53.4 million in the same period of the prior year. Gross margin was in line with our expectations and in the third quarter was 67% compared to 68% in the second quarter of 2021% and 72% in the prior year quarter. Operating expenses for the third quarter of 2021 were $171.3 million, an increase of 34% compared to $127.6 million in the third quarter of 2020.

Non-GAAP operating expenses exclude stock-based compensation and related employer payroll tax payments, acquisition related expenses, amortization of intangible assets and changes in fair value of contingent consideration. Non-GAAP operating expenses for the third quarter of 2021 by $135.1 million, an 88% increase from $71.8 million in the prior year quarter. 2021 has been a year of significant investment and we expect operating expenses to continue to accelerate for the remainder of the year as we invest in our LUNAR program, ECLIPSE study and other development activities, and then our screening business as we prepare for the planned launch of the LDT version of our CRC screening assay in the first half of 2022.

Net loss was $107.5 million or $1.06 per share for the third quarter of 2021 compared to $77.7 million or $0.78 per share in the third quarter of 2020. Non-GAAP net loss was $70.5 million or $0.70 per share for the third quarter of 2021 compared to $15.4 million or $0.15 per share for the third quarter of 2020. Adjusted EBITDA was a loss of $65.2 million in the third quarter of 2021 compared to a $14.1 million loss in the third quarter of 2020. We define adjusted EBITDA as non-GAAP net loss adjusted for interest, income tax, depreciation, amortization and other income and expense.

We ended the third quarter of 2021 with $1.7 billion in cash, cash equivalents and marketable securities. As we mentioned on November 1, 2021 we elected to exercise our call right to purchase the 50% of the Guardant Health EMEA joint venture shows that we do not currently own. As a result, we have initiated the process stipulated in the joint venture agreement to determine the purchase price, which has a minimum will be an amount that yields a 20% internal rate of return on the $41 million capital invested by SoftBank in May 2018.

We currently fully consolidate the joint venture business in our financial statements and a search the effect of exercising the call right will be to adjust the fair value of the redeemable non-controlling interest liability on our balance sheet to be equal to the purchase price of 50% of the joint venture. And so slight adjustment of the income statement. As we exercise the call right on November 1, there was no impact to defer by -- of $54 million as of September 30, 2021. We expect to complete the purchase before the end of the second quarter 2022.

Now, turning to our revenue outlook for the full year 2021. We continue to expect revenue to be between $360 and $370 million, representing growth of approximately 27% over 2020 at the midpoint. We experienced some COVID-related impact to clinical volumes during the third quarter with respect to failed access to oncologists and tighten restrictions internationally. We saw recovering September and into October, as compared to a relatively weak August but continue to see an impact oncology office visits and sales force access in the US and across our global business.

While we expect clinical volumes to grow compared to this quarter, we continue to be cautious given the uncertainty around the impact of COVID 19. Despite this, we are expecting quarterly clinical volumes to finish the year strongly and grow approximately 40% year-over-year in the fourth quarter of this year. We've made great strides this year as we continue to broaden our oncology product portfolio and expand our reach into this cancer screening market. We are aggressively pursuing the best opportunities ahead and we are confident that we will -- that we will be a leader in cancer across the continuum of care. At this point, we will open up the call to questions.

Questions and Answers:

Operator

Thank you. We will now proceed with the Q&A. [Operator Instructions] Please note we will only be taking one question and one follow-up from each person. Thank you. Our first question today comes from Puneet Souda from SVP Leerink. Puneet, your line is now open.

Puneet Souda -- SVP Leerink

Hi Helmy, AmirAli. Thanks for taking the question. So first one on ECLIPSE just wanted to clarify in terms of enrollment versus completion or collection of the samples and also the completion of colonoscopies here, you said you will finish enrollment here in the next few weeks. Is there any reason you would need to increase the enrollment of the trial at this stage? And really, I mean asking that because there are now two CRC screening trials in this space, where they have to increase enrollment to over 20,000 patients and extend their trial timing. So I just want to clarify in terms of completion of samples and collection samples and colonoscopy. I just want to make sure that there is no reason to expand from that -- from what you're seeing currently and also your enrollment is going to stay intact at 13,000 and the event that -- given those answers rate that you're seeing so far.

Helmy Eltoukhy -- Co-Chief Executive Officer

Thank you, Puneet for your question. So, yeah, as you may know, actually, these studies are powered based on the number of CRC that's basically we need so identifying is perspective registrational studies and as we elaborated in our last earning call when we increased the target enrollment from 10,000 to about 13,000 that was based on something intermediate readout of the tax CRC incidents that we've seen so far for a patient that have finished the colonoscopy and we have colonoscopy reports and their CRC were confirmed. And based on all the data that we've seen, we felt comfortable that, actually, we needed to increase enrollments target from 10,000 to 13,000 and same spend still are prevalent and CRC incidents remained the same. So we believe based on all the information we have right now, we feel very comfortable that 13,000 is the right target enrollment for us.

I cannot obviously comment about other companies' trials, but probably actually maybe what's giving experience is maybe how well this site had been selected for the trials, what is expected prevalence of CRC in different location, different geo. I think there are bunch of factors there that potentially helps Guardant. As you may remember during early days of COVID in fact, we've doubled down on our screening study instead of slowing it down and during those days. In fact, went and we secured some additional high throughput, high prevalence kind of sites since our study. But, I know well -- are the data that we are seeing at Guardant and, jut likely I cannot comments about other trials out there.

Puneet Souda -- SVP Leerink

That's great and very helpful. And for my follow-up, I know it's early to talk about the reimbursement in this year for the field trial or the field assay when it emerges out of the trial. But could you maybe just talk about where, potentially, how are you thinking about sort of the pricing of this assay and what is the regulatory pathway there and the guidelines inclusion pathway that you need in order to get this a screening test onto the market? Thank you.

Helmy Eltoukhy -- Co-Chief Executive Officer

Yes. On the lung screening side, that's been something that we very well studied during the last couple of years in all ways the criteria that we use for selecting our next indication has multi-factor and really biology technology but also reimbursement background regulates very passive way. As such, we believe lung impact is a great second candidate for us obviously not the only candidate but a great one.

As we make more progress toward this program and initiatives, that time we would keep you posted. But based on conversations that we had research that we have done, we believe, we know actually what we have to do to really take such device through hopeful -- hopefully successful FDA review and also for Medicare review. So, but as we make more progress that time will keep you guys posted.

Puneet Souda -- SVP Leerink

Thank you.

Operator

Thank you, Puneet. Our next question comes from Brian Weinstein from William Blair. Brian, your line is now open.

Brian Weinstein -- William Blair

Great, thank you so much and thanks for taking the questions guys. Good afternoon, AmirAli we've kind of talked about this in the past, but given the -- the recent data a couple of weeks ago from ESG, I just wanted to go back into the -- the concept of the representation of sensitivity in that trial versus what we should be thinking about relative to your bar for ECLIPSE not the bar for the FDA, but kind of where you think things are going to come in relative to thinking about degradation in the in the pivotal versus the case control. So how representative do you think that case control study really was when thinking about what we should be thinking about relative to ECLIPSE? Hopefully that makes sense.

AmirAli Talasaz -- President, Co-Chief Executive Officer

Yeah, absolutely. So let me start with said, ECLIPSE is like one kind of steady and other kinds of analysis biobank studies could really completely show the performance that we are going to see in ECLIPSE. We don't need to do this perspective, two years steady sample collection of ECLIPSE and run it. Having said that throughout the year is actually since 2019, we've tried to de-risk the technology on our assay in the cohorts that can manage as closely to the screening population that we are going to get in ECLIPSE. I think the closest, although it's not exactly the same the closeness are indeed asymptomatic patients with early stage CRC that we are basically seeing the performance of our assay. We talked about the limitation of those data. That's why we are very excited and actually thrilled with the performance of our assay and we are kind of very optimistic about what we are going to see in ECLIPSE but according to the comments I always mentioned ECLIPSE is ECLIPSE. So we have to just wait and we are just very few months away from really getting this data from ECLIPSE. All the signs that we are seeing so far, in general, gives us a lot of confidence. But we have to see what ECLIPSE is going to have for us at the end when we run that forward.

Brian Weinstein -- William Blair

Okay, great. And then as a follow-up. We've been monitoring the job posting sites and you guys clearly building organization in advance of the launch of that product is an LDT next year. Can you just give us any idea about the type of sales force that you're working to have here, be it size, be it qualifications where you're going to be giving people from any kind of information on that I think would be helpful? Thank you.

Helmy Eltoukhy -- Co-Chief Executive Officer

Yeah, absolutely. So we are very excited about actually 2022. It's going to be a year for us that we are going to go after bunch of market shaping activities. Really, our goal is to do the right investment that once you have FDA approval in 2023, we can maximize the market adoption at that time. And we are building sales channel and accordingly to meet the objectives that we have in this market shaping phase of our commercialize phase. It ranges from engagement with bunch of high value stakeholders that can basically help set the right framework for blood-based screening to be used in proper way in health system and also bunch of early adopters on the PCP side.

Also, we are going to engage heavily with bunch of health system and try to get bunch of engagements, when we are really the post LDT validation of our test to really integrate the light-based screening assay into procedures, workflows and systems that these healthcare systems have. So that would be our activity in 2022, and we are going to appropriate the investments to our sizable commercial channel to really go after those opportunities for us.

Operator

Okay. thank you, Brian. Our next question is from Derik De Bruin from Bank of America. Derik, your line is now open.

Derik De Bruin -- Bank of America

Hi, good afternoon. Just the first question I think is on the OUS expansion. I mean you're making some big pushes into Spain and U.K. and obviously there is the -- the JV purchase. How should we think about the, particularly in the Spain and UK situations what were sort of the volumes -- what liquid biopsy reviewing now, what was your volume through year, how do you sort of think this changes the utilization going forward and -- and when do you see the OUS revenues becoming material?

Helmy Eltoukhy -- Co-Chief Executive Officer

I think, Derik, thanks for the question. I think a lot of what you're seeing is we're laying the groundwork for what we believe is the critical -- or the critical inflection points for OUS volume, which is a specific purpose -- specifically public reimbursement in each country, in each respectively country and though -- we believe that the approach that we're taking where we partner with some of the leading institutions and product leaders in each region is an approach -- is an approach that accelerate that progress toward that goal.

And so we're seeing fantastic I think traction with the studies that we're doing, with the volumes that we are doing and key academic centers, the EU5 and a lot of Latin America and certainly with our joint venture in Japan and many other countries in the region. But I think you're going to see more of that as we really turn our focus from being a largely U.S. clinical volume driven companies alone that really has a global leadership up in this space.

Derik De Bruin -- Bank of America

And speaking of clinical volumes. Can you discuss what the contribution was from REVEAL this quarter?

Mike Bell -- Chief Financial Officer

Yeah, hi, it's Mike here. We're not, we're not breaking out the volumes between the different products now and as we get more products just can be more impact from those from those newly launched products. But now I think we've been really pleased with REVEAL from the start of the launch back in -- back in February. So, I know it's going as well as out better than we expected. So we're really pleased with that. But yeah we're not breaking out those volumes at the moment.

Derik De Bruin -- Bank of America

Thank you.

Operator

Thank you, Derik. Our next question is from Jack Meehan from Nephron. Jack, your line is now open.

Jack Meehan -- Nephron

Thank you. Good afternoon. Wanted to dig in a little bit more on the recent data at ACG just comparing that versus the dataset that was presented at ASCO and think it was similar group at the sensitivity improved from 91% to 95%. I was curious if you could just elaborate on what drove the performance improvement? Was it just related to the incremental samples that were included? Have you made any performance improvements the test? Again just trying to think about how this translates to the prospective data?

Helmy Eltoukhy -- Co-Chief Executive Officer

Yes, sure. I assume the cohort that's got presenting ACG by our partners and Samsung Medical Center where the expanded cohort that some of the earlier data submitted earlier in the year and was presented in ASCO as the single biggest cohort data that basically data got published so far by one of our partners. In terms of whether the factors that went into the performance improvements, I look at all of these numbers are basically in the same ballpark, from my perspective that's just any the cohort size was expanded and one thing that we have in our assay, although our assay is the same on the algorithm side everything is based on training and learning so that's not over time when we generate more and more data and historical data just solved the performances guided improved over time just -- that's been nature of learning based systems.

But, I mean all those kinds of improvements would be really at best margin also. I don't expect like you know, even from now until at the time we run ECLIPSE here guys should be this significant jump in the performance. But over time as more data gets generated that get into our algorithms side this time training is based on more I know samples representation of all kind of smaller stuff population and there you can expect maybe performance gets better slightly but very marginally from my perspective.

Jack Meehan -- Nephron

Got it. As a follow-up. There were some headlines in the quarter around M&A. I was curious if you could just weigh in on your thoughts around continuing to forge ahead with the organic strategy versus maybe the benefits of doing something in terms of that -- in terms of more of a big deal.

Helmy Eltoukhy -- Co-Chief Executive Officer

Yeah, Thanks for the question. We have extensive team we've built around corporate development. We are obviously have a lot of cash in the bank. And I think we'd like to use it for something that makes sense potentially. But as you -- as you mentioned our bar is very high. We're very excited about the organic opportunities we have, better pipeline on of other progress we we're making. We've launched a whole host of products over the last 12 months into the market and have obviously some pretty rates of products that planned for the coming quarters and years.

And so the bar is understandably very high, but at the same time we're open to anything that can enhance our technology platform, that can enhance our commercial channel and enhance our data offerings. And we're always going to be focused on those things the make sense for the long term that continue to really bolster and enhance our growth prospects. And so we're not really going to compromise on that.

Jack Meehan -- Nephron

Thank you.

Operator

Thank you, Jack. Our next question comes from Matt Sacks[Phonetic] from Goldman Sachs. Matt, your line is now open.

Matt Sacks -- Goldman Sachs

Thank you. Thanks for taking my questions to everybody, I just have one question follow-up. I'll do it all in one go, but just on opex, maybe for you, Mike, obviously a step up year-over-year and sequentially. You guys talked about where some of that is going in terms of the commercial capabilities? I'm just wondering in terms of trends that you can kind of call out in terms of what we should expect as an elevated level of capex? I know Mike, you said it will likely continue through this year. But as we enter into this year was anything pulled forward or accelerated and that aspect? And then secondarily on that, can you kind of talk about labor cost component as a portion of that opex increase if that's material if at all? Thanks.

Mike Bell -- Chief Financial Officer

Yeah, I would say first of all, Matt, I mean, nothing has really been brought forward. I think everything that we've done in our opex through the year has been, has been well planned out and throughout the year, we plan to increase the size of the commercial team on the oncology and we've mentioned that that's now at over 250 people. So that's more than doubled in the last 12 months. And as we come in toward the back end of the year and into into next year, we start to build up our commercial team on the -- on the screening side. Got it ready for the LDT launch.

So commercially that's been really the driver of our opex increase the share and it will do going into next year. On the -- on the research and development side because that's also been a big driver of the increase on opex. Obviously we've got ongoing studies with ECLIPSE. We announced here now the Oracle study and the SHIELD study that are -- that are commencing. So there'll be, they'll commence a factor next year.

And then we continue to innovate and develop new products and again we launched three new products this year. So we're continuing on that spend. So we expect, research and development spend also just to continue to drive those initiatives next year. On the personnel piece, when I'm breaking that out specifically on the percentage. Yeah, I mean we've obviously seen that increase and again I mentioned that the additional people on the commercial on both oncology and non-screening. So that's becoming a grower for us and we are investing in people and growing the size of the organization. We're also building out the infrastructure of the business as well.

So, yeah, that's also a driving force for our opex increase.

Matt Sacks -- Goldman Sachs

Great, thanks very much. I'll hop back in the queue.

Operator

Thank you, Matt. Our next question comes from Patrick Donnelly from Citi. Patrick. Your line is now open.

Patrick Donnelly -- Citi

Thank you. Helmy maybe one for you, just on the volume side. It sounds like September and October recover pretty nicely from August. I mean, you're talking about 40% volume increase in 4Q. Can you just talk about the cadence as we went through the quarter and even even in October, your confidence level things are stable to obviously pointing up here as we enter into '22 is trying to get comfortable with the volume piece, it sounds like you guys are a little more confident relative to last quarter, certainly.

Helmy Eltoukhy -- Co-Chief Executive Officer

Yeah. No. Thanks for the question. Yeah, yeah, I think, I think the good news was some of the early learnings signs with a, I think in the last call kind of dissipated or at least stabilized, and it seems like there has been a sort of new normal out there with Delta obviously is still a concern, but I'm not really causing any kind of increase closures or increases of restricted access. So sort of still restricted, still not like it was pre-COVID. But the good news is it's not getting worse. And we just have seen great traction with our sales teams with our products and so on. So we are hopeful this means that momentum going into 2022.

Patrick Donnelly -- Citi

Okay, that's helpful. And then on SHIELD might be one for Mike. I apologize if I missed it, but do you guys break out what you think the study will cost, I know you talked about 10,000 patients, maybe three years enrollment. But if you just talk about the cost side would be helpful. Thank you.

Mike Bell -- Chief Financial Officer

Yeah, no, we don't, we don't break out the costs of individual -- individual studies. But obviously, this is a multi-year study large number of patients and so it will be, it will be a sizable amount over that spend over the next few years and a similar level to ECLIPSE but yeah we not sort of breaking out each individual study and given those costs.

Patrick Donnelly -- Citi

Understood. Thanks guys.

Operator

Thank you, Patrick. Our next question is from Julia Quinn from JP Morgan. Julia, your line is now open.

Julia Quinn -- JP Morgan

Hi, good afternoon. Just a follow-up on REVEAL. I know you're not ready to quantify the volume contribution in a quarter, but just qualitatively if REVEAL uptake so far mainly within biopharma users? Are you seeing equal traction for clinical customers? And are you still expecting LCD coverage by year-end?

Helmy Eltoukhy -- Co-Chief Executive Officer

And in terms of last piece, yeah, I think were -- that's still our expectation. And then as it pertains to reimbursement. I would say for volume, we're seeing good traction in both size, we're seeing clinical volumes really grow nicely and the same thing on the biopharma side we're seeing really the platform and the tests, really I think resonate with a lot of our pharma customers. And obviously as we continue to grow our user base and customer base on the biopharma side we see ample opportunity ahead for good traction for all of our products including REVEAL.

Julia Quinn -- JP Morgan

Got it. And then on an M&A front, just dovetailing on a previous question. I know you didn't really rule out the potential to grow your sales channel inorganically, but just thinking about your priorities like how important is it for you guys to acquire a channel in the community oncology setting at this point in time versus you know building it out organically during this time period where you're waiting for our guidelines and reimbursement to fall in place?

Helmy Eltoukhy -- Co-Chief Executive Officer

I mean I think we broke out our growth in the community setting I think in this -- in the prepared remarks. And we're growing faster than the community than we are and academic. That's really the area of most suppressed for us and something we're very, very confident about. You can see the great performance we had in Q3 and heading into the end of Q4 we believe on the clinical side.

So we're very confident about that, like I said I think in the previous question when we think about different M&A opportunities, potentially, It's not about the short term or what's happening in the business now, but what it means for the business three to fives years from now. But, yeah, right now we're very confident with both the mix of products we have, our offering and the success we're having in our commercial channel.

Operator

Thank you, Julia. Our next question comes from TJ Sutherland[Phonetic] from Morgan Stanley. TJ, your line is now open.

Edmond -- Morgan Stanley

Hey guys, this is Edmond[Phonetic] on for TJ. Thank you for taking my questions. I guess a couple on biopharma volume from me. Volume trends appear to be looking very strong, but I was wondering if you guys can benchmark what you're seeing in terms of sample volumes relative to pre-pandemic levels? And what is your backlog of -- backlog of work looking like heading into 2022?

Mike Bell -- Chief Financial Officer

Yeah, it's Mike here. Yeah, I think we're sort of recovering now from the -- from the depths of the pandemic impact and I think you know where we are back to levels where we were before that. As we forecast going out toward the end of the year, I think we just see that rebound, getting stronger and stronger. So that's very positive frozen. I think we are yet back about the pre-pandemic levels.

Edmond -- Morgan Stanley

And in terms of backlog of work heading into next year? Can you give some color on what that looks like?

Helmy Eltoukhy -- Co-Chief Executive Officer

Backlog of work, I mean we don't generally break out a dollar value of backlog of work, but I think on the biopharma side, then it definitely a backlog and we look at the pipeline and we're looking at going into -- into 2022. So I think we, we look at that as being us continued strong volume coming out of Q4 into Q1. But specifically breaking out that and giving a number, we don't, we don't cover to do that.

Edmond -- Morgan Stanley

That's helpful. And then a follow-up for you, Mike. On the mix skew, you saw in terms of volume shifting away from [Indecipherable] I'm not sure if we explained this. But what drove that? it seems to be normalizing. But just want to understand what happened here, and if it's going to be something we should be looking out for in the future?

Helmy Eltoukhy -- Co-Chief Executive Officer

Could you repeat the question from the start. I missed the first space.

Edmond -- Morgan Stanley

Sorry about that. On the volume mix skewing away from OMNI in the second quarter that seems of normalized a bit this quarter. But I was just wondering what was the underlying driver for that.

Helmy Eltoukhy -- Co-Chief Executive Officer

There. No, that I mean that German -- that's sort of changes every quarter and if you look, if you look at our ASP on the biopharma side, it does -- it does fluctuate quarter to quarter and obviously just depend on what's what's been sort of process and what samples we receive for that quarter. So yeah, we had a, we had a shift this quarter versus last toward more toward omni but there is no, there is no sort of definitive driver that's changed that. There is no, there's no real trend to look at, I think it's just fluctuates on a quarterly basis.

Edmond -- Morgan Stanley

Got it. Thank you very much.

Operator

Thank you, TJ. Our next question comes from David Westenberg from Guggenheim Securities. David, your line is now open.

David Westenberg -- Guggenheim Securities

Hi, thank you for taking the question. So I wanted to focus on the community oncologists you -- you highlighted the growth there. Are there any initiatives there that you want to highlight. And then as we look to the next three to five years, what do you think the magnitude of growth is going -- is going to be in the community oncologists versus the academic setting? And that's all the questions I have.

Helmy Eltoukhy -- Co-Chief Executive Officer

I think when you think about how the market is segmented is often thought to be about 80% in the community. Our mix is well over I think 60% community announced that there is more growth to be had there. So it's certainly an area of focus for us. I think there are a number of reasons why I think we're doing well there, I think it's being a critical mass to be able to address, really the distributed nature of the community setting. So we really expanded commercial team over the last year, and especially with the launch of REVEAL. It's not just the commercial team, but it's also the medical affairs team that is very critical on really having that -- those genomic specialists and medical of partners to be able to help with interpretation of results and the feedback on test reports. And so that's something that we invested in very early on, continue to invest in as well.

And then finally it's the service offering really being able to provide customer service experience, a white glove service that really makes our portfolio in our Company an extension of the offices that better out there and that's something we're very committed to. And as you can see as we continue to expand the types of products we offer, the nature of the products we have, they all started working together. We believe, will be more and more sticky in the community setting especially where blood is really much, much simpler to be able to offer the best possible precision medicine and care without meaningfully[Phonetic] the logistical hassles that tissue represents in terms of working with a whole host of other medical professionals that may not be on site.

And so blood really doesn't power the community oncologists and help keep patients close to home as they desired to do.

David Westenberg -- Guggenheim Securities

Thank you.

Operator

Thank you, David. Our next question comes from Lou Lee[Phonetic] from Wells Fargo. Lou, your line is now open.

Lou Lee -- Wells Fargo

Thank you for taking my questions. And I think just one question, can you please on possible to frame like the early impact of the Guardant Response on the volumes of sales, and then what's your expectation for 2022?

Helmy Eltoukhy -- Co-Chief Executive Officer

Probably take again, I think -- I think like for -- for REVEAL and TissueNext all of the -- the products that we've launched this year, we're really pleased with -- with how they've been received and how they're been utilized. And so again the volume that we're seeing, we're very pleased with and it's in line with our expectations. But again, you know, we have this now multi -- multi-products on the clinical side and we're not breaking out the volumes, but obviously the main growth driver for us continues to be Guardant360, LDT and CDx. And from a revenue perspective, the vast majority of our revenues coming from those two sort of fully reimbursed products.

Lou Lee -- Wells Fargo

Got it. Makes sense. And just maybe just final question on. How do you thinking about like the market share at this point? Any impact from competition from other players? Just wanted to get a sense about how you're thinking about the market dynamics. Thank you.

Helmy Eltoukhy -- Co-Chief Executive Officer

Yeah, it's a good question. In terms of all the metrics we track, we believe we've never really been in a better position than we have now. We continue to make great progress, we think we have great performance from our share of voice perspective and we continue to invest not just in our products, but our commercial operating and commercial channel as well. And we feel very good in all the areas that we can see today and we are, and we're going to continue to invest more as we have -- as we continue to have success.

Lou Lee -- Wells Fargo

Thank you.

Operator

Thank you, Lou. Our final question comes from Dan Arias from Stifel. Dan, your line is now open.

Daniel Meza -- Stifel

Hi guys, this is Daniel Meza[Phonetic] come for Dan Arias. First just clarification for AmirAli, I think I heard the ECLIPSE readout is expected in the first half of the year. I just want to make sure I heard that right. And then if, so I'm just curious if there is a possibility of that reading out sooner? And then for Mike on ASPs. We expected, are you expected returns -- the blended average is lower with new products, but is your expectation that the issue with the private payers and our new ADLT code is largely worked through? I know you mentioned you said that your teams are working on that. So I'm just trying to get a feel for maybe that's something that is less of an issue going forward. Thanks.

AmirAli Talasaz -- President, Co-Chief Executive Officer

Okay. This is AmirAli, I'm starting first question. So we expect actually the target -- target enrollment ECLIPSE in very next few weeks, very, we are just almost done so kindly of shortly. We are kind to get to our target enrollment. In terms of the data readout, we expect it to be mid 2022. So I mean a lot of next year and then give it to Mike.

Mike Bell -- Chief Financial Officer

Yeah. On the ASPs. I mean, yes, firstly with LDT and CDx actually we had very, very strong ASPs this quarter. I think we've guided to 2600 and it was getting closer to 2700 basically made up the blended ASP was $0.20, 89. So really strong and yet to the ADLT issues, I would say that pretty much push through now and the team has done a great job in actually getting payers prepared for that code. And so we've seen a lot less friction in the system than we thought that we would, that we would see. So, so that was strong ASPs.

I think as we go into the end of the year and we sort of flagged that in the remarks earlier as new product start to gain traction, we'll see some impact on that overall blended ASP. So what we see LDT and CDx rate above the 2600 level probably on the blended level, we'll start to see that overall come down a little bit each quarter and it will take time to get the full reimbursement from Medicare and private payers before we can start seeing the uplift. But I think the message -- the messages for CDx and LDT those issues are such driven by very strong ASPs.

Daniel Meza -- Stifel

Okay. I appreciate it guys. Thanks.

Operator

Thank you, Dan. [Operator Closing Remarks]

Duration: 66 minutes

Call participants:

Carrie Mendivil -- Investor Relations

Helmy Eltoukhy -- Co-Chief Executive Officer

AmirAli Talasaz -- President, Co-Chief Executive Officer

Mike Bell -- Chief Financial Officer

Puneet Souda -- SVP Leerink

Brian Weinstein -- William Blair

Derik De Bruin -- Bank of America

Jack Meehan -- Nephron

Matt Sacks -- Goldman Sachs

Patrick Donnelly -- Citi

Julia Quinn -- JP Morgan

Edmond -- Morgan Stanley

David Westenberg -- Guggenheim Securities

Lou Lee -- Wells Fargo

Daniel Meza -- Stifel

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