Guardant Health, Inc. Price & Performance (GH)

Will now turn the call over to AmirAli for an update on screening. Thanks, Elmi. Turning to Slide 15. Our goal has always been to identify and catch many cancer types early when they are most treatable. We developed our Shield assay as a platform capable of multi cancer detection and cost a range of indications We selected CRC as our first indication [indiscernible] established regulatory and reimbursement pathway. We've made incredible progress in 2024 with Shield becoming the first FDA approved and Medicare covered blood test primary CRC screening. Turning to Slide 16. Upon our FDA approval, Shield was covered for 45,000,000 Medicare beneficiaries at average risk of CRC We are very pleased that Shield was recognized as an important new class of CRC screening and received a favorable Medicare price of $920 We recently received a unique PLA code for Shield. Expect that upon securing advanced diagnostic laboratory test, or ADLTC designation for Shield the Medicare rate will increase to an even more favorable price of $14.95 dollars Moving on to Slide 17. Early August, just a few days after FDA approval, we were thrilled to launch our Shield IVD assay We are seeing outstanding reception from physician and patients and are excited that thousands of patients have been screened using our test.

We are looking forward to scaling our impact quickly. Our strategy is to focus on the convert patient population to drive the high mix of covered reimbursable test. We delivered $4,100,000 of Shield Testing revenue in Q4, driven by a majority of samples coming from covered Medicare beneficiaries. In addition, I'm happy to report that in our first full quarter of launch, we achieved gross margin breakeven for Shield with COGS and ASP of approximately $600 With the current rate of improvement, we are expecting SHILL to be gross margin positive in its first full year Air Force launch much sooner than we originally anticipated This gives us flexibility to reinvest our commercial infrastructure in 2025. While we maintain our annual screening cash burn target of $200,000,000 Turning now to Slide 18. While we are focused on our scale up in The U. S, we are exploring some strategic international interest in our screening platform. Recently, we were excited to announce that the Abu Dhabi Department of Health selected Shield to be a part of their screening program. Currently, the overall compliance to colorectal cancer screening in the region with the current screening modalities, including SIT and colonoscopy, is less than ten percent.

And the majority of colorectal cancers are getting diagnosed at later stages. The introduction of a non invasive blood test as a more pleasant option may encourage greater parts screening and boost early detection of CRS This program initially needs aims to screen approximately 10,000 patients. Now would that be surrounding regions in UAE and may scale to approximately 100,000 annual tests in the later phases. Moving on to Slide 19. We recently announced that Shield has been selected through a highly competitive process by NIH for the Vanguard Multicancer Detection or MCD study. NIH decision to select Shield recognizes Guardant as a leader in the field of MCD and validates our technology. Sam's CD test needed to detect the presence of disease across a variety of cancer types with groups sensitivity, especially for the detection of early stage cancers. As well as accurately predict the cancer site of origin. We are pleased to announce that the performance data of ShieldMCZ in approximately eight hundred patient and 10 cancer tests will be presented in a scientific conference in the second quarter of twenty twenty five. Looking ahead, are excited about our upcoming milestones in 2025. Including presentation of our multicancer data, the potential inclusion of S. E. L. In amortic cancer Society or ACS guidelines and securing ADLQ status.

Which enables improved AS We are also planning to operate our CRC screening test with Shield V2. Will now turn the call over to Mike for more detail on our financials. Thanks, Amarali. Turning to Slide 20, I'll now discuss some select financial highlights for the quarter and year ended December 31, [indiscernible] I'll refer to year over year growth rates unless otherwise noted. [indiscernible] grew 30% to $2.00 $2,000,000 primarily driven by Precision Oncology revenue which also increased 30 percent $185,000,000 Precision Oncology revenue from clinical tests increased 35% one hundred and forty six million dollars Clinical test volume grew 24% to a record 57,300 tests in Q4 twenty twenty four. And was primarily driven by Guardant which grew sequentially in the mid single digits. We continue to see very strong uptake of our upgraded Garden three sixty Liquid, which we launched in our smart liquid biopsy platform at the start of Q3. We also saw continued strong growth in Revealant Tissue during the fourth quarter of twenty twenty four. Guardant360 ASP in the fourth quarter of twenty twenty four approximately $3,000 As we have seen throughout the year, we also had very strong commercial pay collections in the fourth quarter which led to an after period revenue upside of approximately $8,000,000 above our expectations.

Once again, our biopharma business performed incredibly well in the fourth quarter with precision oncology revenue from biopharma test totaling $39,000,000 increasing 15% This strong growth was fueled by another record quarter of tests in the fourth quarter, 11/1950 which was up 16% Finally, development services and other revenue totaled $17,200,000 in Q4 twenty twenty four, and includes $4,100,000 screening revenue generated from the six thousand four hundred Shield test that we reported in the quarter. [indiscernible] the full year 2024, total revenue grew 31% to $739,000,000 with growth again being primarily driven by Precision Oncology revenue increased 34% to $688,000,000 Precision oncology revenues from clinical tests increased 34 percent $543,000,000 Clinical test volume in twenty twenty four two hundred and six thousand seven hundred which represents growth of 20%. As Henry mentioned, clinical volume growth was largely driven by an increase in Guardant360 test volume which grew double digits in twenty twenty four. We saw continued strong growth of Reveal throughout the year despite us managing volumes ahead of Medicare surveillance reimbursement with our fastest growing clinical test in 2024. Finally, tissue also grew strongly throughout 2024. Clinical test revenue growth was also driven by significant improvement to our Guardant360 ASP which increased from approximately $2,750 in the fourth quarter twenty twenty three approximately $3,000 in the second half of twenty twenty four In addition to this tailwind, the significant improvement in reimbursement trends throughout the year led us to collect more cash for our tests we had previously accrued for which resulted in our superior revenue upsides throughout the year.

For the full year 2024, revenue recorded for tests performed in prior years was approximately $35,000,000 Of this $35,000,000 approximately $13,000,000 was consistent with our expectations based on historical experience and payment trends. However, the remaining $22,000,000 was the result of better than expected cash collections and we view this as a non recurring after period revenue upside for 2024. Turning to biopharma. As mentioned earlier, our biopharma business performed incredibly well during 2024. With precision oncology revenue from biopharma tests, totaling $145,000,000 increasing 31% and biopharma test volume growing 35%. To 40,500 tests during the full year 2024. Finally, development services and other revenue totaled $51,100,000 for the full year 2024, and includes $5,100,000 of screening revenue generated from shield tests that were reported between the IVD launch at the August and the end of the year. Our non GAAP gross margin continued to be very strong and was 63% in the fourth quarter of twenty twenty four, compared to 61% in the fourth quarter of twenty twenty three. Also saw an improvement on an annual basis with 2024 non GAAP gross margin of 62% compared to sixty one percent twenty twenty three. Excluding screening, non GAAP gross margin was 64% for both the fourth quarter and full year 2024 an improvement from 63% in the prior year period above the full year guidance range of 61% to 63% we provided on our Q3 earnings call.

Non GAAP operating expenses $215,000,000 in the fourth quarter of twenty twenty four, an increase of 17 percent and $757,000,000 for the full year 2024 an increase of 4%. Our full year non GAAP operating expense was above our guidance range of $720,000,000 to $730,000,000 due to a couple of onetime items the fourth quarter of twenty twenty four. [indiscernible] Firstly, we incurred significant litigation expense related to the November false advertising trial wish the jury unanimously found in favor of Guardant Health on all its claims. Awarded us $293,000,000 Secondly, in Q4, we increased the full year accrual the 2024 company bonus plan in line with the Board approved payout level, which reflects a successful year with respect to bonus performance components just top and bottom line financial measures, the FDA approval of shield, As a result of our increased revenue, gross profit and operating leverage, both our adjusted EBITDA and free cash flow improved year over year in full year 2020 Adjusted EBITDA loss was $258,000,000 for the full year 2024, an improvement of $86,000,000 compared to a loss of $344,000,000 in 2023. We continue to be focused on cash and materially reduced our burn in 2024. Free cash flow burn of $275,000,000 for the full year 2020 in line with the guidance we provided on our Q3 earnings call and represents an improvement of $70,000,000 to $345,000,000 in 2023.

I'm also pleased to report that our core therapy selection business was free cash flow positive in 2024 and that we successfully managed our cash burn for screening be in line with our guidance target approximately $175,000,000 Turning to the balance sheet on Slide 22. We ended the year with approximately $944,000,000 in cash cash equivalents, restricted cash marketable debt securities. Earlier this month, we successfully completed a private convertible debt [indiscernible] we extended the maturity on $600,000,000 of convertible debt with favorable terms. Which we believe helps to mitigate potential balance sheet risk while at the same time provides greater optionality to optimize our capital structure the future. The $600,000,000 of new convertible debt is now due in 02/1931 and comes with a 1.25% annual coupon a 35% conversion premium which represents a conversion price of $62.22 As a result of the transaction, our total debt was reduced from 1,150,000,000.00 to $1,090,000,000 of which $491,000,000 is our zero coupon convertible debt is due in November 2027. We also structured a concurrent stock repurchase of $45,000,000 to help mitigate dilution. Following these transactions, our pro form a cash position was approximately $887,000,000 We continue to expect that we'll reach cash flow breakeven in 2028, which cumulative free cash outflow of $450 to $550,000,000 over the next three years Turning to Slide '23.

Before discussing our outlook and assumptions for 2025, we want to take a moment to preview how we intend to present our revenue going forward. Rather than splitting revenue into Precision Oncology and Development Services and other changing the presentation better reflect our different business lines. And to provide clarity on the performance of Shield. As such, the 2025 was down breakout revenue to four components. Which are shown in the slide with 2023 and 2024 full year numbers, In summary, the new revenue components are: oncology, which represents clinical, which we previously reported as clinical testing revenue, were [indiscernible] biopharma data, represents the total revenue we generate from our biopharma customers namely biopharma sample testing revenue that we previously reported in Precision Oncology. As well as biopharma companion diagnostic and data services revenue that we previously reported as development services. Licensing and other which was previously reported as other revenue, and finally, screening, which will represent shield testing revenues Moving to Slide 24, for our outlook and assumptions for full year 2025. We expect full year 2025 revenue be in the range of $850,000,000 to $860,000,000 This range implies total revenue growth of 19% to 20% in 2025. [indiscernible] breaking down the key assumptions in our revenue guidance.

We expect oncology revenue to grow approximately 15% year over year in '20 Again, excluding the non recurring asset period upside in 2024, this represents oncology revenue growth of approximately 20% Given the positive traction we're seeing from our launch of Guardant360 LED, on small liquid biopsy. Our recent Medicare CRC surveillance coverage for Revere and the upgrades we're making to our tissue test expect volumes across all oncology clinical products to accelerate in 2025 and total oncology clinical volume growth to be approximately 25%. We expect our biopharm business to continue to perform well in 2025 and are forecasting low double digit growth for biopharma and data revenue. Finally, although it's still very early into the launch, we want to provide some initial guidance for screening revenue. Which we expect to be in the range of $25,000,000 to $30,000,000 driven by forty five thousand to fifty thousand ShieldF. We expect this full year volume to be significantly back end loaded due to the time it will take to ramp up the productivity of newly hired reps throughout the year, Also, our guidance does not include any ASP impact from receiving ADLT designation We continue to expect this to occur in 2025 and we'll update our guidance accordingly at the appropriate time. [indiscernible] made great progress in reducing our COGS over the last few months.

With both REVEAL and Shield, reaching gross margin breakeven. For 2025, we're confident that we can deliver full year non GAAP gross margins in the range of 62% to 63% despite the impact of changes in product mix that we expect during the year, We expect total non GAAP operating expenses to be in the range of $815,000,000 to $825,000,000 representing an 8% to 9% increase compared to 2024. We will continue to gain significant operating leverage during 2025. Expect R and D and G and A expenses be relatively flat compared to 2024, coming mainly from investments in screening sales and marketing, as we continue to ramp up our commercial efforts to Shield. Lastly, we continue to be committed to reducing our cash burn each year in order to reach company wide cash flow breakeven in 2028. Full year 2025 we expect free cash flow burn be in the range of $2.25 $235,000,000 an improvement compared to $275,000,000 for 2024. Burn in 2025 will consist of approximately $200,000,000 related to screening As we scale our Shield business, and maximize our first mover advantage, [indiscernible] excluding screening, expect the remainder of the business to burn approximately $25,000,000 to $35,000,000 during the year, and to reach cash flow breakeven in the fourth quarter of twenty twenty five. [indiscernible] Finally, turning to Slide 25.

Have a rich pipeline of catalysts across our business segments. Are excited about the opportunities ahead. With that, we will now open the call to questions. Thank you.

We will now begin the question and answer session. The first comes from Puneet Souda with Leerink Partners. [indiscernible] Thanks for taking my questions. First one on screening and I'll try to wrap one on Reveal as well. Shield guide of $25,000,000 to $30,000,000 was well ahead of us and I believe Street as well. I appreciate the second half loaded, but could you talk about the sales force expansion that you expect is going to contribute here the second half? Any other drivers and the feedback that you're getting from field that gives you confidence in this $30,000,000 on the upper end? And maybe what are you contemplating And on Reveal, congrats on the surveillance coverage. But can you square the NCCN? Unfortunately, NCCN recommended against surveillance. So could you balance those two? I know it's still early days of this market.

How do you expect the adoption and Reveal to go as a result of that?

Thank you, Puneet. Maybe I'll start with the ShieldPlus and then I give it to Tommy about Reveal. So we continue to be very pleased with what we're hearing in the field, physician response, patient response, Now connecting it to our guidance, I make few points. One is we launched it back in August with 50 reps in the field We increased it to 100 as we ended the last year 2024 vast majority of the people we added they came late, very late in 2024 in fact. And it's going to take them some time to contribute in productivity. As a result, we are believe that actually our ramp rate is going to be more back ended The other thing to consider is this is our first full year of launch. So obviously in the launch here is this kind of growth is always when you look at it just numerically, it's more backhanded too. In terms of total number of reps that we are going to have we mentioned in our Investor Day follow-up 23 that we are planning to have about maybe 150 people in the field by end of twenty twenty five. Some stuff went better than what we expected mainly the Mediture pricing.

As a result, we will have maybe a little bit more people in the field but again, a bunch of these newly hired reps are not going to contribute meaningfully till like three, six months after their hire date. Maybe I'll leave it like that and give it to Telmecorriya. Hey, Puneet. Good question. We actually were fairly encouraged when we saw the update in NCCM guidelines. I think on the whole it's actually a step forward in terms of recognizing the value of [indiscernible] Really in the sort of adjuvant setting, And this is not too dissimilar from the sort of cadence we saw with NCCN guidelines for three sixty in terms of liquid biopsy testing. The guidelines tend to be a little bit behind where clinical practice is, but I think all in all, we're encouraged in terms of this moving in the right direction and we're very confident given the utility we see with surveillance testing as a whole and especially with Reveal that we'll get to the right place in the coming years. From a guideline perspective. Thank you. The next question comes from Bill Bonilla with Craig Hallum.

Capital Group. You may proceed.

Hey, guys. Thanks for the call.

Another one on Shield. I'm just curious if you are having any times of preliminary discussions with payers as about Shield. I mean, obviously, the thinking has been you have to wait on USPS, T F and whatnot, but I wasn't sure if if there was activity you might be trying to accomplish ahead of that. [indiscernible] in very kind of early conversation with Sam Ehlin. In terms of like having advisory boards, getting some initial feedback from them, we are planning to ramp up some of those engagement after we go in to guidelines and right after ACS guideline inclusion that we are up [indiscernible] We will ramp up those activities.

Thank you. The next question comes from Ticho Peterson with Jefferies. You may proceed. [indiscernible] Hey, thanks. A couple on Shields. So you're guiding for to move a little bit lower here, dollars $5.80 at the midpoint versus $6.25 in the fourth quarter.

Is that just Medicare fee for service dynamics or is that Abu Dhabi and maybe maybe subsidized samples? And can you maybe just confirm whether the Shield volume guide includes Abu Dhabi And then any risk to ADLP status And then lastly, just ACS guidelines, do you expect that in the second quarter? And how do you think about the lift that could come? I assume that's not baked into the guide?

Yes. So, Tycho, thanks for a great question. We are very pleased with the ASP that we printed for Q4. We just don't want to get ahead of our skew that was first full quarter data that we had and we want to be very thoughtful with the ASPs that we are going to put in the first full year of the launch. We are going to continue to monitor our AR mix that would impact the ASP. I think, again, I emphasize that this bump up ADLT improved Medicare rates is not kind of embedded in our guide. Going to get to that point and then look at our payer mix at a time and then revise the guidance accordingly. Based on everything that we know, we are very confident about this ADLT process We know how it works. It's just a matter of the mechanics of the timing. It's a quarterly process. When exactly it's going to activate it for us, it's something that's not very clear. So we just want to make sure we derisk it before we include that upside to our guidance and our ASP. And Abu Dhabi very briefly, it's not [indiscernible] without going into more details of it, we are very pleased with the engagement that we have [indiscernible] Department of Health there.

Thank you. The next question comes from Dan Brennan with TD Cowen. You may proceed.

Great. Thanks for the questions. I'm going to focus on Reveal.

Could you help us think through kind of what's baked in for 2025 We show you guys did like 35,000 tests 'twenty four, maybe ramping to like 5525. I know you're not going to give specifics, but how do we think about what the impact of surveillance could be And then B, when you think about the additional indications breast and monitoring, could you just give us some color about timelines of when we might hear back on that? Thank you.

Maybe I'll start and then if maybe Mike wants to fill in some of the sort of cadence there on volumes. But as we said in the prepared remarks, we see across each of our product lines on oncology in terms of volume growth. And certainly, we're very pleased with how the Servieris started, not just for Avel, but for all our products. That being said, in terms of kind of additional indications, as we said, we submitted data for publication for both breast and monitoring. Late last year and as soon as those are published and accepted in respective journal, we'll be submitting that to Muldix. And so we think sometime second half of this year, the earliest we could see potential indication expansion for AVEAL.

Yes. Maybe I'll ask.

Yes. As Helane mentioned, we expect Torrevio volume acceleration. You're right, Dan.

We're not breaking out the the reveal volumes or the volumes across all of the clinical oncology lines. Yes, we expect Reveal is going to accelerate It'll take some time and we think this will be more again back end loaded for the acceleration increase during the year.

That's really because we're just sort of getting the field now ramped up to be very much focused on CRC. So we had our national sales meeting kick off just two or three weeks ago.

The team is very excited and energized to go out and sell Reveal CRC, but it's going to take time for that trash into take hold. But yes, we're looking very much forward accelerating the volumes throughout the year.

Thank you. The following question comes from Subbu Nimbie with Guggenheim. You may proceed. Hey, guys. Thank you for taking my question. Two questions. On Shield, Shield COGS reductions have already been impressive.

Is it fair to assume that you're achieving the Shield COGS reduction via a similar approach like the view? And what is embedded in the 2025 guide And for Rebuild, what ASP is embedded in your guidance with respect to ramp, mix, ADLT timing?

Thank you.

Yes. So actually a bunch of R and D activities that we are doing at Guardant is highly leveraged and especially for the platforms that are based on IP epigenomics mainly there is a lot of synergy So on REVEAL, which is a LBC product, you guys have seen what we have achieved by reducing the cost through some of the improvements and technology stack and process improvements that we had.

Shield is an IBD product, so implementing some of these changes takes a bit longer, but there is bunch of synergy and cross learning, cross deployment that we are doing across both Shield and ReVille.

Yes. And maybe I'll take the Reveal ASP. Yes. So of course, we were very pleased to get the CRC Medicare CRC surveillance Medicare coverage at 1644 starting at the start of the year. That's going to have a positive impact on ASP. We ended 2024 with an ASP roughly between $400 and $500 And so we're going to have an impact, positive impacts of the Medicare coverage. There is a big sort of mix impact in all of Brazil because we have CRC surveillance, CRC adjuvant and then we have breast and lung and then of course there's Medicare, Medicare patching commercial. So there's a lot that we have to sort of deal with from a mix perspective. But yes, we would expect the ASP in our guide roughly to increase to something like $600 We haven't included any impact for ADLT in that $600 It's our intention to to apply for ADLT rate. And so similar to Shield, if and when we get that, we would expect an increase on the Medicare rates and we would change our guidance in line with receiving that.

Thank you. Next comes from Mark Massaro with BTIG. You may proceed.

Hey guys, thanks for the questions. Congrats on a strong 2024 The first one is for you, Helmi. I think about a year ago, there was Probably an investor misconception that your G360 business was either saturating or about to go into diesel. But your prepared comments today, you indicated you plan to accelerate volumes across all your products this year. I was curious if you could just give us some anecdotes about what you're seeing in the field with the upgraded G360 liquid product And then one for Emerilie, I recognize that the majority of your revenue came from Medicare in Q4. But I would be curious about what level of interest you're seeing build from the non Medicare population and whether or not you think you'll be well addressed to equip those orders when commercial payer coverage comes in? Thanks, Mark. Appreciate the question. I can tell you, international sales meeting, Obviously, I've been going to them every year. This is probably the most excited I've seen the team given the sort of products we have out there in smart liquid biopsy with three sixty and Reveal and then some of the ones that we have upcoming especially with tissue.

And so we are seeing that momentum. We saw that momentum since we launched three sixty in Smart Liquid Biopsy. It's been really nice uptake from existing physicians and new physicians alike. And we really haven't even turned on a lot of the exciting features yet. And so we have extremely high confidence, just given how this year has started, how the last year ended that three sixty we'll continue to do well and there's a lot of room for growth over the next [indiscernible] In this market. I outlined some of the growth drivers. It's not just sort of increased penetration, it's more applications going in sort of the long tail of tumor types that only really epigenomics can address. Some of the new findings we have as well as where the field is going in terms of testing patients at each progression. And so there are we are really at this sort of very early innings in terms of where liquid biopsy for therapeutic cell selection Guardant Shield on the younger patient on commercial side, Our experience during Shield LVT when we didn't have proactive workflow adjustment to really focus on covered patient We are experiencing that in fact, the 65 and above was a minority of our ordering and payer mix, And our workflow changes actually has worked that now vast, vast majority of our volume coming from this covered patient But totally we have that market feedback and data that once the Coverage get expanded and access get expanded to younger patient population There is a huge demand and opportunity for Shield to go to younger patients.

Right now though, we are just focused on reimbursable covered case like Medicare and some of our instance initiatives that we have internationally in Abu Dhabi, I maybe take this opportunity. There was a earlier question I forgot to answer about what's the level of assumption of contribution of this Abu Dhabi partnership that program in the first one year the expectation of Department of Health there is to test about 10,000 patients Having said that, since the program need to go through the ramp, logistics we don't know exactly how quickly they're going to ramp. At this time, we are just assuming a fraction of those patients would get tested by Shield till we get more visibility over That's right.

Thank you. The next question comes from Patrick Donnelly with Citi.

Hi, guys. Thanks for taking the questions. Helmy, maybe one on Reveal. Just I know before the reimbursement you're holding back a little bit kind of pursuing the volumes. Can you talk about just the change in strategy, how that will go? I know Mike mentioned maybe a little more of a second half ramp as we go through that. And then a quick one for AmirAli, just on V2 for Shield. Can you just talk through what the expectation there should be on the catalyst set front for V2?

Yes. As we have said before, we're sort of limiting in some ways of how much we are servicing the demand that was out there from our sales team and one of the big sort of kind of exciting initiatives we had at our national sales meeting this year was really training on Reveal, really getting the sales team sort of I think motivated and they were very excited in terms of being able to now offer this product a lot more robustly, a lot and really accelerate our efforts. There. So yes, there's there's a lot of room to grow. Especially with tissue free MRD, it's really the surveillance setting. Where you sort of get most of the juice out of the market and where most of the opportunity is. And that's not really been an area that we've been targeting, given the fact we didn't have reimbursement there. And so the team is ready to go and very, very excited what this means for our oncology business.

Regarding SHIELD V2, it's active program for us right now. Stay tuned. And we are planning to have hopefully to approve our launch of that version of the test by end of the year.

Thank you. Following comes from Dan Arias with Stifel. You may proceed.

Good afternoon, guys. Thanks.

Help me on MRD and maybe just piggybacking off your last comment there. The way that the field is evolving here, as companies increasingly shooting for both tumor informed and tumor naive approaches, As you think about your own portfolio and just the way to best serve the community, how interested are you in that idea and having both then just quickly and early, I had someone ask for a clarification on Tycho's question whether Abu Dhabi volumes are considered in the 45,000 to 50,000 outlook for test volumes. Thanks.

Yes. I mean, look, we ultimately think that tissue free MRD is going to be the largest portion of the market. It's simplest from a product market fit to use that addresses the twelve million cancer survivors that are more than five years out out of the $18,000,000 in the market But that doesn't mean that a tumor informed product would at some point not be part of our portfolio as well. We have to listen to the market understand what the needs are of our customers and we'll continue to do that. We obviously launched Garden three sixty Tissue Next a couple of years ago. We have a major upgrade of that test this year And so we're going to continue to listen to the needs of the market and adapt as as required. [indiscernible] So the contract and the program aim is to approximately test 10,000 patients within the first year. Having said that, since we don't have really visibility over how quickly they can ramp it up, and each adult they can screen is approximately 10,000 patients who are not At this time, we are just at CMA fraction of that. So effectively, [indiscernible] really material part of our guide, it's just that of that 10,000 is included.

Okay.

Thank you.

Thank you. Next question comes from Tejas Sabat with Morgan Stanley. Your line is open.

Hey, guys. Good evening. So just a quick follow-up there on one of Tycho's Is ACS guideline inclusion second half twenty five catalyst for use delaminarily? And then with that Supreme Court case looming here, I know there's offsets via ACS states and the Medicare opportunities, obviously, inflated from that situation. But would the decision require any sort of rejigging on your commercial effort on Shield or perhaps need In the past, you've talked about this activation energy sort of phenomenon. Will that be sort of a bigger gating factor for you? Will that decision to go against US PSTF?

Okay. So maybe I start with ACS about some of the stuff maybe and it's to clarify a little bit more.

Tejas. So in terms of ACS, we are pleased with the conversation that we continue to have with that team and we are optimistic that they would consider Shield in the CRC guidance review that they started working on. So, exact timing, we are not sure, but we are confident based on what we know it should be sometime in 2025. In terms of the Supreme case, We are right now focused mainly Medicare patient population and the covered patient population, which is not going to get impact [indiscernible] It's kind of good for the field, the fact that Trump administration is continuing to kind of the on the opposite side on kind of work against the sexes of that law case, but we'll see what happens. There is a lot of business actually for us on Medicare to mine while we are waiting for building the pathway access for younger patient population in in future.

I'm not sure if I got the last question. Maybe we just move on.

Thank you. Following comes from Rachel Vasnal with JPMorgan. You may proceed. Perfect. Good afternoon and thanks so much for taking the questions.

I wanted to dig into ASP assumptions this year, specific the 2024, can you walk us through your assumptions embedded for 2025 And what are the levers this year that you can see for continued growth in ASP on that front for core therapy Thanks. Yes, Rafe, it's Mike. I'll take that one.

Yes, no, I think just to reiterate, we had we had a very, very impressive increase in our ASP on Guardant360 in 2024. The main driver at the start of the year was increasing the Guardant360 LDT rate from 3,500 to 5,000 And then throughout the year, we saw sort of the Medicare Advantage pull through bringing them up to that rate. And so yes, our Garden three sixty ASP went from 2,750 at Q4 $23,000 to $3,000 in the back half of 2024. Also on top of that, we had these out of period upsides just because we were getting receiving a lot more cash. Than we previously accrued for. I think when we look at 2025, definitely the $3,000 ASP we believe is here to stay.

And the opportunity for us over the next sort of twelve months and longer is really to focus on the commercial payers and expanding the coverage that we have for Guardant360. So we've got very good coverage now. All the national payers cover Guardant three sixty, but they don't cover every time that we run the test. So So some cover for their LVT version, some for the CDX L and the invites [indiscernible] And in certain cases only for certain cancer types.

Like lung or breast FDA approved indications.

And so yes, that's really going to be the focus for us to expand coverage over time. What's built into our guidance is really just the $3,000 ASP for Gannon three sixty.

So if we can accelerate that and the expansion of the coverage, that will be upside If we continue to get any more of these out of period upsides above our expectation, then again that would be an incremental to our guidance. But yes, we're feeling bullish about where we've got to with our Guardant ASPs and looking forward.

Thank you. Next question comes from Kyle Miksen with Canaccord.

Hey, guys. Thanks for the questions. Helmin, could you talk about the contribution from G360 tissue in 2025 and how important that's going to be longer term in the portfolio? Just given that could extend your opportunity, enhance your competitor position and maybe lengthen the runway for that that franchise in G360? And secondly, maybe early, could you just clarify the volume with Vershield this year in terms of demographics, locations and their insurance? Is that going to be different from the '24?

I mean, we've seen the items.

Pretty strong growth from our tissue franchise over the last few years since we launched it. But this is going to be, I think, a significant upgrade for that test. We think it will be sort of bar none, one of the most competitive offerings in this space from a capabilities point of view. And one that is really going to resonate with physicians. Are expecting that this is a product that is going to be very important pillar for our therapy selection business and major contributor over the next couple of years and I think it's really important to as a sort of pillar of what physicians use when they're seeing a patient really doing both tests upfront and then continuing to sort of monitor the patient with three sixty going forward.

And Shield volume Q4 was vast majority from Medicare beneficiaries and what we assume in 2025 is still majority of the volume would come from the targeted covered patients, meaning Medicare beneficiaries. So the commercial insurance, like younger patients are [indiscernible] [indiscernible] Thank you.

The next question comes from Mason Carico with Stephens.

May proceed. [indiscernible] thanks. Sorry if this has been asked and jump in between a few tonight, but on the growth you're seeing, for G360 in The U. S, you just give us some insight into where exactly that incremental growth is coming from capturing an incremental share from competitors? Is it higher utilization in tumor types where penetration was lower? [indiscernible] Any color there would be helpful.

I would say it's largely from greater depth from existing accounts. As you know, we have majority of U. S. Oncologists order Guardant360 today. And so it's a lot more about getting greater depth. So some of it is sort of taking back share from some of the competitors out there But it's also just greater utilization as well. There are still a lot of physicians that don't test all of their patients. A comprehensive genomic profiling test and having a test like this that has capabilities that going on just a standard genomic test. I think it's been exciting. It's been resonating with a lot of physicians. And we see a lot more of that to come as we roll out these applications, these apps. Onto the platform.

Thank you. Our final question comes from Matt Sykes with Goldman Sachs. May proceed.

Thanks for taking my questions.

Maybe just quickly, Amarali, just on sales force expansion for Shield, you a little bit earlier in the call about maybe being a little bit bigger than what you originally expected, but year or two ago, you talked about gating factors that you would consider at any given point.

In terms of building that out. Could you just maybe kind of walk through what those gating factors today are? Is it ACS guidelines, competitive launches in the future? Just how you're thinking about sizing that investment over this year and maybe in the '26?

Yes, everything that we are talking about in terms of Shield investment is gated by continued execution and continue to believe this brand is going to have a huge opportunity for us at Guardant that remains constant The other part which is constant like what we mentioned now for some time that our annual net burn is going to be ring fence at around this $200,000,000 So we are executing we are continuing to execute based on that financial discipline. So what's embedded there is continued execution on the commercial showing that the volume is coming, the P and L, unit economics makes sense and The point I made here about commercial expansion was just based on the fact that unit economics is more favorable to date than what we have because of multiple reasons. The main factor, we did an $920 a year and a half ago and what we are going to expect with ADLC is going to be $14.95 dollars versus one point five years ago, it was lower cash pay price. So this would give us some additional gross profit that we can reinvest in building the commercial infrastructure.

Thank you. This concludes today's conference call.

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