On a mission to conquer cancer with data, Guardant Health (NASDAQ:GH) is changing the way oncologists make diagnoses.
The company's "blood-first" paradigm uses a small sample of a patient's blood to detect the presence of circulating tumor DNA, or fragments of a cancerous tumor's DNA moving through the bloodstream. This approach is much simpler than traditional biopsies, which take a tissue specimen directly from the cancerous tumor and often cause unwanted side effects. The results of Guardant's liquid biopsies are also ready much faster, an asset in a field where time is of the essence.
Guardant's focus today is on advanced-stage diagnostics, but its future opportunity could be in detecting earlier-stage cancer. Catching cancer as early as possible is important: People with lung cancer have an average five-year survival rate of only 5% if diagnosed in stage 4, but greater than 70% if diagnosed in stage 1.
The company is still very small, but its innovative approach is quickly winning market share in the $100 billion oncology market. Let's take a closer look at its progress, as reported in its second-quarter results.
Check out the latest earnings call transcript for Guardant Health.
Guardant Health results: The raw numbers
|Metric||Q2 2019||Q2 2018||Change|
|Revenue||$54.0 million||$19.4 million||178%|
|Operating income||($15.3 million)||($22.7 million)||N/A|
|Earnings per share||($0.13)||($1.75)||N/A|
What happened with Guardant Health this quarter?
The company's Guardant360 and GuardantOMNI diagnostic tests are rapidly gaining market adoption, which is causing the top line to grow rapidly.
- Total revenue increased 178% to $54 million, driven by the strong reception of Guardant360 in the field. The 360 test has now been used more on more than 100,000 patients by more than 6,000 oncologists.
- The company reported 11,875 tests were used by clinical customers, which was up 77% over last year. Precision oncology testing revenue rose 136% to $42.1 million.
- Guardant is also used by biopharmaceutical customers as a companion diagnostic to help them develop personalized cancer drugs. Drugmaking partners used 5,285 tests during the quarter, up 112% over the prior-year period. Development services revenue skyrocketed 664% to $11.9 million.
The increasing usage of the tests is also helping Guardant's profitability and financial strength.
- Gross profit nearly quadrupled to $37.1 million, up from $9.4 million in the prior year's second quarter. Gross margin increased to 69%, from 49% last year.
- The company reported an overall net loss of $11.6 million in the second quarter, which was less than the $21.6 million loss in the second quarter of last year.
- The outstanding share count of 89 million has increased significantly from 12 million a year ago. Guardant raised $273 million in its initial public offering last October, and an additional $320 million in a secondary offering in May.
- It now has $545 million of cash and short-term securities on its balance sheet, which appears to be more than enough to fund its operations.
What management had to say
Guardant CEO Helmy Eltoukhy sounded encouraged by the company's progress:
During the quarter, the Guardant team made significant progress across multiple areas of our business in support of our mission to expand unprecedented access to cancer's molecular information throughout all stages of the disease. We are especially encouraged by the strong adoption of Guardant360 and GuardantOMNI which we are seeing, even in the early phases of shifting the market to a blood-first paradigm for genomic testing.
The early success of Guardant's tests in advanced-stage cancer is encouraging, but it appears to still have plenty of room to grow.
At its current run rate, Guardant360 could reach 50,000 patients this year, which would represent approximately 7% of the 700,000 advanced-stage cancer diagnostics run annually in the U.S. There are also more than 1,000 ongoing U.S. Food and Drug Administration trials of new personalized cancer drugs, which collectively will call for the enrollment of 100,000 patients, according to the company.
But the company has even more ambitious goals. Guardant is looking to improve its tests so that they're able to detect early-stage cancer, before an individual is showing symptoms. With the costs of genomic sequencing falling so dramatically, cancer screening could become part of an elderly or higher-risk patient's annual checkup.
The company is already on track to release a diagnostic to detect early-stage colorectal cancer, which could accompany a prospective clinical trial by the end of this year.