What we think about Guardant Health (GH)
Guardant in Three Words: Proactive, Personalized, Preventative
Breaking Update: On Monday, January 21, Guardant received reimbursement coverage for Shield from local Medicare provider Palmetto GBA.
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Background
There's quite a lot going on at Guardant Health these days.
The health care innovator aims to change the world by providing oncologists with liquid biopsies to diagnose cancer in its earliest stages. This is a fast-moving field with rapidly-changing technology, lots of competitors, volatile institutional interest, and political attention. Let's dig in to what's taking shape.
The first update worth noticing is that Softbank's (Nasdaq: SFTBF) Vision Fund has sold out of its stake in Guardant. Masayoshi Son and his visionary team have redirected their interest and their funds to Invitae (NYSE: NVTA) and PacBio (Nasdaq: PACB). Not coincidentally, Invitae and PacBio have an ongoing partnership to develop broader based diagnostics.
Yet unlike several of Invitae's genetic tests, which can be ordered directly online by consumers, Guardant is focusing on regulated products that require full FDA approval. Its liquid biopsies can detect tiny fragments of a cancerous tumor's DNA called ctDNA that is floating around in the patient's bloodstream. Once detected using Guardant's test, oncologists can use that information to characterize the tumor and immediately guide their therapy decisions. That is extremely medically valuable, especially in cancer cases where time is of the essence and days or weeks can be very important.
In addition to guiding treatment decisions, Guardant's liquid biopsies can also be used as more preventative, proactive screens. Rather than going in to the doctor after you're already showing symptoms, a proactive diagnostic done every few years might be able to detect earlier-stage cancer. More tests would mean higher volumes and greater revenue for Guardant.
Uncle Sam Shows His Support
The US government is also very supportive of progress for earlier-stage cancer screening. President Biden's recent State of the Union highlighted how he's doubling-down on his cancer moonshot and supporting research to reduce the prevalence of cancer by 50% during the next 25 years. If you're a cancer diagnostic company like Guardant, it's great to have the tailwind of government support at your back like this.
Guardant also continues to win Medicare coverage approvals. Most recently, it won another local coverage determination from Palmetto GBA for its Guardant360 TissueNext test. Palmetto is one of the nation's largest Medicare claims processors who serves much of the southeast United States.
And a recent partnership with Epic Systems means that several of Guardant's tests will now be available for doctors to order directly through MyChart. MyChart is the electronic health record of preference for doctors who serve more than 250 million patients. This makes it even easier for its tests to be ordered and shipped directly to the clinic.
Upcoming Trials and Competitive Activity
One thing investors should be well-aware of is that Guardant has just signed up a boatload of patients for a massive upcoming FDA trial. The company's ECLIPSE study has now fully completed enrollment for 12,750 patients, who will be participating using its LUNAR-2 blood test to detect colorectal cancer. That is a massive study -- on par with the number of patients Exact Sciences enrolled for its own Cologuard colorectal cancer diagnostic as well.
On the competitive front, Illumina's (Nasdaq: ILMN) recent re-acquisition of GRAIL continues to face regulatory headwinds. The European Commission still has yet to formally approval the deal.
Illumina closed its acquisition in late 2021, although it's still running GRAIL as a separate company until regulators formally give their blessing. One of the concerns is that many diagnostic companies use Illumina's sequencers for their tests. So if GRAIL -- who is also providing diagnostic tests -- is owned by Illumina, that could create anti-competitive behavior. The Illumina/GRAIL acquisition not going through would be a huge win for Guardant.
Guardant is a fantastic company that is led by smart scientists and is making an impact in one of health care's most important sectors. The company is executing quite well in developing its products and getting them approved by Medicare, yet this remains a fast-moving and highly-competitive space which will require agility in order to stay a step ahead.
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