GRAIL (GRAL) 13 Aug 242024 Q2 Earnings call transcript

Good day, ladies and gentlemen, and welcome to the GRAIL Second Quarter 2024 Earnings Call. [Operator Instructions] Please be advised this conference call is being recorded. GRAIL Investor Relations. Please begin. Thank you, and thank you all for joining us today.

On the call today are Bob Ragusa, our Chief Executive Officer; Aaron Freidin, our Chief Financial Officer; Dr. and Kumar, President; Business President, our Europe. and Ofman, Sir our Harpal Biopharma Joshua

the underway, to made call I'd we get statements intent we Before like other statements, call, making expectations. harbor in is than commercial Exchange statements including that financial current will regarding all will amended. be historical remind forward-looking of on of safe today's results Section the on contained statements this and XX activity, facts, based Act of It our as during provisions be anticipated Act that XXXX, forward-looking everybody statements our by for Section as of amended, Securities XX covered of and XXXX, Securities the

to results forward-looking that and we materially the discussed. GRAIL Forward-looking these Exchange uncertainties Securities projected report section To risks the documents or are you Commission, the may statements assumes those update statements. to of differ, statements refer available including understand and XX-Q. subject recently events better differ Risk could GRAIL with no risks are from information, on quarterly All to most upon and the Factors based currently actual uncertainties. to that files GRAIL's and obligation cause or Actual Form results

also financial which a are to This measures. call adjusted or items. will results and non-GAAP GAAP EBITDA, adjusted include certain Including discussion profit and certain of loss adjusted gross exclude specified

issued comparable your financial today, release are to supplement measures Reconciliations intended understanding measures in the the financial website. to available posted is the measures to GAAP GRAIL's non-GAAP directly our of non-GAAP Our which of are most press financials.

to that, turn With Bob. the over I'll call

good and you, everyone. afternoon, Thank

cancer multi-cancer today. the quarter call, to detection our blood make change our pleased validated paradigm with in progress to early results will the On performance tests, clinically we and Galleri, to detection. discuss are quarter second opportunity for market in the the continue We early second today's our we review you

will our restructuring into announced today, We extends corporate also which runway cash existing the review XXXX.

cancer market screening most when Multi-cancer can found solution detecting is MCED, million eligible recommended evolving, is effective for too in early rapidly the test it for limited cured. individuals than in markets. and on MCED States the and or over detection, Current XXX the be global GRAIL The Galleri is early with screening. population XXX focused for million deadly cancers late. are target is more United

launch of suited significant health and as GRAIL's and commercial the test, one our capacity a or robust meaningful to laboratory address opportunities most clinical well us makes validation LDT, in and laboratory-developed scalability care.

Importantly, the designed was test for screening. Galleri population-scale

an development. We the program, evidence setting MCED which in have standard is expansive clinical

consistently breaking are the a We through ground. key we for years, progressed over period of new And have business. milestones

And we approval We in NHS-Galleri weeks announced a we completed studies. PMA, our visits PATHFINDER ago, study progressed the FDA completed registrational have have or have study. XX,XXX-participant enrollment XXX,XXX X in final participants the the the and study application, premarket few for

XXXX. the We X other data first data supplemental the these to PMA of and trials our in with half submit expect clinical from

the generate Galleri-Medicare announced Medicare XX,XXX we to the for that in participant also in study. annual We beneficiaries REACH data enrolled population. in X real-world Medicare planned enroll study the and study July tests first is the clinical evidence have This to validation utility called additional

Galleri the risk is Medicare commercial more an on year, more GRAIL that analysis support we is care leader an risk detection. been represents intended This Through environment. a are than health this at lives. cancer demand for factors, Galleri prescribed and population enormous We to early are help beneficiaries Medicare June impact among other of study to unmet coverage Galleri that the cancer of having in need for and seeing FDA with due XXX,XXX by this the approval. remain XX,XXX tests we're proud and following XX pre-reimbursement in is patients' age field, the established providers. pleased the most market than have for

in into the for will head our count reprioritizing as review, we our second important provide not that timing that It resources cash and the and X half priorities are the from and note our NHS-Galleri of core a extend towards or anticipated to Following impact on believe submission is submission. XXXX readouts. studies PMA reductions reduce of progress We overall we greater our FDA actions registrational EMA flexibility. spend expect MCED these XXXX or portfolio PATHFINDER our we do runway our completion will spend and

result are reducing of U.S. XX%. we hires resources and count achieving Galleri U.K. broad by a focusing the the on approximately and our XXXX in As head planned existing reimbursement

commercial impacts identified measurable team, our understand our to working greatest been have On from provide successful investments the return we've which strategies. and most

teams affairs activities As our current and a are field-based opportunities. our result, productive sales most the and force high-priority commercial we on and customers focusing medical streamlining

We our sales are prescribers. force and for the maintaining active of Galleri volume majority coverage current

are employer businesses. of in the commercial Reductions this life enterprise investments business, include organization and responsibilities. sales approach, commercial we in layers without which insurance also our As roles management streamlining part includes and our

teams we Galleri commercial, in addition U.S. engagement. In reductions to with making provider affairs in involved are reductions medical

and in related investment programs. aid for We residual to cancer diagnostic minimum disease are our substantially R&D our decreasing

making MCED in are our G&A we opportunity. addition, to reflect the In on reductions focus

employees and partnerships our methylation are proprietary to will partners continue in oncology leverage to and invest working worked our date we difficult, an our applications. GRAIL's This staff committed resulting restructuring in idea to MCED transition wish from have biopharmaceutical precision are with helped technology impacted to We to GRAIL's to We into grateful a reductions all of well. reality. our enable who immensely and are hard success employees to

results, Financial I'll Chief Freidin. it hand Aaron To discuss our to quarter over second Officer, financial GRAIL's

afternoon, second good and quarter. present to our for Bob, pleased results I'm Thanks, everyone. the

of $XX.X XX% million, revenue as million to the of compared XXXX. quarter Second $X.X of Total XXXX. XX% or half revenue was results increase the same to the of strong, up $XX year first an in as were compared with QX period million, for

screening million and we research of services of to including is of therapy and customers, for support testing, service of development. clinical revenue provide services million comprised clinical Development revenue Total includes pilot studies, biopharmaceutical revenue. revenue and the $XX.X $X.X quarter development

demand compared quarter continued period the Galleri an for was first for sold as of with quarter tests $XX.X see test $XX.X and last Screening second quarter. same We half XXXX. up our the second in of revenue approximately the of with XXXX XX% as increase second XX,XXX compared XX% revenue Screening of the million, the in million was year.

related to increase was increase as goodwill to $X.XX was employee and awards. professional XXXX. expenses compared impairment higher divestiture $X.XX with count long-term by to employee The of of an increase general XXX% in billion head QX an and services compensation expenses due of incentive Net the increased and loss for quarter the driven and a legal addition intangible associated billion, in and to administrative an

We additionally second Illumina's to report non-GAAP with of between GRAIL. presentations GAAP carefully in impacts reconciliation and measures release. quarter results our enhance profit earnings and supplemental information encourage or adjusted under consider gross of non-GAAP these understanding to press the in our related business. EBITDA available adjusted financial conjunction to We loss investors the investors' our include and acquisition measures These exclude accounting

of was million, mix compared as adjusted related million increased drivers $X.X $XX an or with increase Non-GAAP XX% XXXX. of profit Galleri margin efficiencies to of gross of quarter Primary were for QX scale increased and XXXX the the second revenue volume.

as driven or period. increased EBITDA EBITDA X% decrease operating revenue representing of was expenses, million, for expenses, the second an offset was higher of loss year $X.X by growth XXXX Adjusted of QX including quarter compared adjusted transaction million prior partially the XXXX. onetime The negative $XXX.X to by over in

$XXX.X an work today recognize of the Galleri FDA process runway XX, and the cash of position toward broad the to flexibility health importance as the and as we taken million difficult of June reimbursement XXXX. approval company. ensure ending financial and through of We preserving some steps progress cash have have We

enable In significant expect our in XXXX, these and runway of burn reduction net million expect costs. we extend cash in $XX a severance to into cost We benefit existing XXXX. beyond anticipated XXXX and reductions savings, in

to guidance. Turning

$XXX expect $XXX the will estimate in approximately announced million. reductions With of burn cash the to in today, half down come XXXX expense we of million second our previous

compared $XXX million. approximately in burn come with XXXX, to XXXX be expect We significantly full down to year XXXX to burn expected of

our expect to revenue XX% We XXXX that will line growth XX% with U.S. be May in in Galleri our XXXX. of over guidance

in However, we reductions our XXXX and revenue grow for today, reimbursement. receive until moderately more years broad subsequent we Galleri with to plan announced

it priorities. our to speak ahead. to go I turn will Bob Bob, to back strategic

Thank you, Aaron.

aggressive and Real-world has cancers broad use focused head and are on improving and detected stomach cancer of the early cancers. many esophageal, mission-driven most of company, liver We including care use stages, are Galleri neck, of Galleri. pancreatic, a in and enabling we

available. screening cancer For of majority the options other types, are these there no

passionate energized We and about implementing are systems benefited into Galleri their patients our and stories and powerful heard from are Galleri we practice. have by physicians that from who successfully from have mission health the

mission, we our are looking We to committed with progress operating being discipline and with are forward spend. continuing to our to and prudent

access the to in study, commercial REACH This advance and continue drive research partnerships. to we expect Galleri or Galleri-Medicare and year, enrollment our

September. and at to scientific will in continue including We release meetings, ESMO at data medical

half study in results participants XXXX. PATHFINDER first the X We also XX,XXX anticipate from the second in the of

Galleri of we'll our pursuing Operator, tightly focused and go reimbursement that, are With ahead. the for we FDA please approval broad over seeking turn strategic beyond, Looking call Galleri. to Q&A. on goals,

Nixon first is question Instructions] [Operator Our from Canaccord. at Kyle

call. Thanks for update this doing

detection and to level of precision kind gives investment product? like a to you're test past, So I in other been now oncology this burn enough confidence this early guess this is there commercialize What you that getting scale multi-cancer levels of the of cash of hasn't type like companies. down

for recognized to then reimbursement key focusing of getting inflection us. is our and approval question. really our and really looked particularly PMA the portfolio the the path thanks broad We've on to and carefully that for FDA on at MCED points, critical Kyle, by

driven the so lot by. And were what of that's a changes

what there. We careful takes it review did to get very a of

to quite in pulled to on the relatively area. back changes. our really elements DAC, that area that go We in few around It's And staying we're so consistent successfully. -- that that on resources the commercial applying we're actually We're the we down comfortable time of we made areas have aligned other MCED, that MCED able some that from. pathway and we be to consistent line. effort We're around staying

That's helpful.

Yes.

comfortable. So we're

off. for Sorry cutting you

cost related but When these will I just -- inflecting of these guess, this in? follow-up. where and kind I it's how a of midyear. will reductions be now, based So kind understand

curious back? come company's And and investments for it how And when then long, the DAC are long-term growth So like this into profile? for MRD about year? phases and important burn the next targets how just those will

Yes.

immediately. occur will actions the So

generate to we're outlining. now right action the cost taking savings we're So that

In terms opportunities those. we of in both for methylation think MRD we believe DAC, technology of well We is have very great those. and our suited

oncology our precision side, supporting that. the in on partners biopharma continuing And we're

continue. So that work will

pure point. areas at really the we focus through MRD though, line in pausing and haven't DAC to in for inflection reinvesting kind those drive On the And future we're of time a set areas. points. work, MCED those developments is key this Again,

Savant is next Tejas Morgan from The Stanley. at question

can Guys, you hear me okay?

Yes.

right. Perfect. Okay. All

on the just the follow-up be quick highlighted call. from could areas know color Kyle's question. will magnitude you the But all come largest cost the there each would just contributions where a area, give there terms sense a the from? great. some of better So us I of saves in for in Aaron, you

some sense, give I up little maybe a can with Yes, you color. then jump and more Aaron can

come there's as overall, million. but head a benefit we planned a XX% about a burn count planned we from reqs. as $XX existing And requisitions to That's XXXX, down for well of million existing we XXXX cash in expect $XXX XXXX. and mentioned, reduction to see get in to both going So as

done major already third finished the of July rolling study the NHS-Galleri our terms of that, in we're announced of some that study had year we Importantly, off in moves we've visits.

PATHFINDER Similarly, of And in XX,XXX we completed so PATHFINDER follow-up the we're X. enrollment people doing now with X, on that. just

And of so stage follow-up the that. we're in

our of going Galleri lower at finishing which scale. to is up really ongoing COGS We're assay, version updated an drive

significant moment programs, a we're we are activities those that's already application, labs a DAC in the reductions then has have are centralizing that primarily there in of Triangle to focused And and facility where think the have where, Research Triangle conserve the Some R&D into RTP. our MRD currently excellent in Menlo CLIA at but we Research Park Park, to again, going just technology lot resources. we're pause of and order for on we

where time efficient over commercial years -- really in lot of the we effective Now on we and understanding the side, commercial can be spent last where most efforts. our X a we've the

at use be to on going continue areas really we're commercial and sales, more to probably to so as focus moderated those of the really drive learnings productive Aaron a And most to able mentioned, pace.

in Because across for pre-reimbursement reductions an similarly, and going we're the is that that balanced more a element. look reimbursement we investment broad be the this of to with organization phase just line will getting well think reductions really then, in that. G&A be other at market, And to with ready

Yes, Got it. Aaron, That's helpful. go sorry, ahead.

Aaron, you got...

I think No, good. we're

to little noninferior Okay. read out? big bit All since, progress drives that's current goes to around ultimately, into would that does question the Great. so great. be version? launch. panel My color to Could X.X need And version? be was update NHS could the right. are a then of Galleri the PMA and what older we narrower sort trial bridging So your FDA you the a on How around about that, trials any second the the that's really a PATHFINDER when will that version confidence that just study and that that commence on talk be and going see be

question. great No, Yes.

the of we've on PMA the doing PMA of our on and work a clearly So lot version been test.

Another number that We is population really scale Galleri for testing. One is the of elements. scalability. geared great recognize

we make population scalability. cost so the as And scale. We're set wanted sure both well structure the as to for

line lot and then if getting the about effort So studies? talk spend time want in place. of of Josh, the a to and progression that And piece maybe, you time

Sure.

I think and existing us the real-world assay to which a in benefits the collect confidence on Markets comparable our the panel, described said, one a of a our produce market a been ability smaller lot for Bob as assay been performance assay, the us helped data, of of in our our version to being as with lot has of ability gives with of the scalable really Day. train to has version Capital new of

So going version have that get think able now we're solidified we that to I confidence great that right be to and out. next

relates registrational ongoing studies, through and the to 'XX filing new obviously first designation. are to breakthrough FDA, validation under able data bridging and half FDA we're discussions with believe clinical the from it As FDA -- We're the we're going those our our the working of version. with bridging in with to plan to studies, be we our the complete our including

is Sung from Nam Ji Scotiabank. our question And final at

couple a questions for of Just clarification me.

define clarify, X -- like study, IV For you just in how the Stage REACH it give reduction maybe that's Would could a following looks sufficient to cover the primary of test? endpoint And also, that clearance? or And test for true be the to a is of define positive within a confirmed us that FDA assay could you be would Medicare cancers. you year sense test positive implementation? the

want do Josh, you take to those?

Good question. Sure.

XX,XXX Medicare systems. from evidence This said, and synthetic control REACH cancer. of study that absolute endpoint, deriving said, The FDA. of a an the study, you beneficiaries we'll as real-world is EMRs X consecutive is years, in a with you is be reduction health late-stage post-approval tested the a study as primary So for

So it we've used part the to be supplement data really of will PMA. our submitted that as

kind of no there's registrational So endpoint.

Medicare As to it coverage. relates

data stakeholders by ensure make Galleri. ongoing happens to the that authority First, the deal in will have undertake Medicare And to it in have safety national in then have happen. to coverage Medicare clinical population. provide both the there's is utility of passed in the and a effort will upon CMS analysis. will for data data Medicare obviously And legislation it have data, that performance FDA to D.C. will beneficiaries, if Medicare coverage And approval, great has a Washington, that these beneficiaries,

make we really coverage. that compelling to determination will sufficient so believe be and And CMS about for that

existing a it. much particular order possibility? for DAC, a that, have assay are helpful. patient? Galleri that but given looking test you that of pocket, on yet, still to I portfolio would they the out could could rationale Got guys. symptomatic Obviously, the obviously, the not rationalization, just That's to be order you're for with they related then MRD, this But or still then the And the for sense. pay a prescription And makes think might studies patients, symptomatic that from leverageable

Yes.

really as published of you with presented product, and we we value. a the recall, great in set. positive strong -- So negative and And and both simplified predictive the shows published we data, It power predictive was DAC-type value and the that. last really results

And as very, the out technology. very required the at the that to we level really about investment broad-scale to looking feel of So just right product it's market. now, good a bring

And we forward pause to the as looked with of the again, in pushing the major MCED portfolio DAC at portfolio, focus. so really part of favor when chose the we

will There to back remarks. GRAIL at are further questions no I call now for this time. closing turn the

thank I everyone today's for call. want to joining