The U.S. FDA revealed good news for Guardant Health Inc. Specifically, the agency has given a thumbs up for Guardant360 CDx for tumor mutation profiling, also known as comprehensive genomic profiling (CGP), in patients with any solid malignant neoplasm.

The Redwood City, Calif.-based company noted that this marked the first approval to combine next-generation sequencing (NGS) and liquid biopsy in one diagnostic test to guide treatment decisions. The assay previously was granted a breakthrough device designation.

While it can provide information on multiple solid tumor biomarkers, the approval is focused on identifying EGFR mutations in patients who will benefit from treatment with Cambridge, U.K.-based Astrazeneca plc's Tagrisso (osimertinib), which is used for a form of metastatic non-small-cell lung cancer (NSCLC).

SVB Leerink analyst Puneet Souda saw great potential for the company following the FDA’s action. “We expect this additional validation to help GH [Guardant Health] penetrate the untapped market share, while also establishing themselves as a leader in an increasingly competitive market.”

He continued that the approval for first-line setting and no tissue requirement is a big development. "Based on our conversation, National Coverage Decision (NCD) is likely to follow after addressing some administrative requirements - which should continue to help ASP. We believe eliminating the requirement for assessing [whether] tissue is available or not is an important consideration for broadening the adoption of the assay ultimately.”

Data behind approval

The approval was based on clinical and analytical validation data from more than 5,000 samples. Since being introduced as a laboratory developed test, it has become widely accepted for blood-based CGP, with more than 150 peer-reviewed publications. The test is broadly covered by Medicare and private payers, representing more than 170 million lives.

In a statement, the FDA also highlighted the importance of the nod. “Approval of a companion diagnostic that uses a liquid biopsy and leverages [NGS] marks a new era for mutation testing,” said Tim Stenzel, director of the Office of In Vitro Diagnostics and Radiological Health in the FDA’s Center for Devices and Radiological Health. He added that patients can benefit from less invasive testing and receive a simultaneous mapping of multiple biomarkers of genomic alterations. That can lead to starting treatment more quickly and giving insight into possible resistance mechanisms.

Earnings call

Word of the approval came a day after the company held its second-quarter earnings call, with results impressing analysts.

William Blair’s Brian Weinstein wrote that the results came in higher than expected in terms of total revenue but largely as expected on the clinical volumes front. “Specifically, total revenue came in at $66.3 million (up 23%) versus our $58.5 million target, with development services accounting for all of the upside ($15.3 million versus $7.5 million) as precision oncology met our estimate ($51.0 million, directly in line with our model).”

AmirAli Talasaz, Guardant’s chair, highlighted the performance of the CDx business, noting his organization’s progress in product development and the interest expressed by biopharma partners. In terms of the latter, the company recently revealed two partnerships, including one with Janssen for amivantamab in the treatment of NSCLC patients with EGFR exon 20 insertions. The week before the call, the company unveiled its first companion diagnostic program in breast cancer with Radius Health for elacestrant.

With these impressive results, Souda labeled the company “a best-in-class liquid biopsy (LBx) opportunity in a large $50 [billion] market that is bound to see substantial growth over the next few years.” He acknowledged that direct biopharma customer samples came in below expectations as a result of biopharma’s concentration on COVID-19. Still, he recommended buying stock on weakness resulting from COVID-related impact.

M&A, liquid biopsy space

During the Q&A portion of the earnings call, Cowen’s Doug Schenkel noted that the company’s balance sheet looks good. Given the uptick in industry consolidation, he wondered about the Guardant’s appetite for M&A.

“We obviously have done some small acquisitions in the past, but I think if we think about the commercial channel that we have built, the product portfolio we have, where we're going in terms of the market, there is certainly a place for inorganically adding to that and increasing leverage in terms of the core competencies we have in our business,” said Helmy Eltoukhy, Guardant's co-founder and CEO.

For her part, Ivy Ma from Bank of America noted that a lot of companies are entering the liquid biopsy space and wanted to know if the company was seeing additional competition for Omni. Eltoukhy replied that the liquid biopsy space long has had dozens of players, even when his organization entered it eight years ago.

“I would say from a competitive point of view, Omni is really, I think, really second to none. It's head and shoulders above really any other offering we see in the space. And so that's not something we frankly see a lot of in terms of competitive noise, especially with respect to, to Omni.”

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