Guardant Health, Inc. (GH) Earnings Call Transcript & Summary

Okay. Great. We're going to go ahead and kick it off. I'm Tycho Peterson from the Life Sciences team. It's my pleasure to introduce our next company this morning, Guardant. [Operator Instructions] And with that, I'll turn it over to Helmy.

Thank you, Tycho, for the opportunity to present today at the conference. Okay. If we can bring the presentation on. Very good. Well, next slide. Please note our forward-looking statement. Next. A little less than a decade ago, we had a dream that liquid biopsies could be at the center of transforming cancer care across the entire continuum from early cancer screening to recurrence monitoring and to therapy selection, bringing to clinical practice, a powerful new precision oncology paradigm. Indeed, we believe that liquid biopsies could serve as a driving force to unlocking critical data that could accelerate our collective understanding of how tumors grow, evolve and change over time, especially in response to applied interventions. I'm excited to share that we believe this year will be a pivotal one in Guardant's history, where we bring this dream several steps closer to reality. Next slide. The driving force to our work at Guardant is our commitment to putting patients first. And so let me start off by sharing a patient's story. You may recall that we first presented Star's story last year at the conference. As a reminder, she was diagnosed with Stage IV lung cancer and had her first Guardant360 test a little over 2 years ago. She was EGFR exon 19 deletion positive, was prescribed osimertinib and did very well for some time. Her physician ordered a number of Guardant360 tests to continue to monitor her disease. A few months ago, unfortunately, her cancer started to progress again. Guardant360 detected a new EGFR mutation, C797S, one that is known to cause resistance to a previous drug regimen. She was then switched to erlotinib, and I'm happy to report that she's doing well again. Her molecular journey is graphically captured in the figure on the right by what we call a tumor response map. The height represents the relative tumor burden and the various colors represent individual tumor mutations. In short, what you are seeing here is what we believe to be the future standard of advanced cancer patient management, that is the use of Guardant360 to adaptively manage and monitor the course of disease in cancer patients. Next. As was alluded to in Star's story, we believe our platform will soon serve as a critical foundation in transforming cancer management across the continuum of care potentially unlocking a greater than $70 billion market opportunity. Guardant is unique in being the first to pursue building tools to serve all 3 separate but connected areas of cancer care. Starting with therapy selection. Guardant360 addresses the needs of 700,000 advanced cancer patients with identification of effective treatments. This comprises a $6 billion opportunity that is continuing to grow as new applications of molecular response and monitoring start to emerge. Our LUNAR-1 program and associated tests will potentially address the needs of early cancer patients and 15 million cancer survivors with residual disease detection in the adjuvant setting and recurrence monitoring, respectively, a $15 billion market opportunity and an opportunity that will grow as biopharma increasingly invests in drug development efforts in the adjuvant setting. Finally, the third market we are addressing is comprised of over 100 million asymptomatic individuals that could be served with a simple blood test for the early detection of cancer. Specifically, a successful readout of our LUNAR ECLIPSE trial will potentially unlock a $20 billion screening opportunity in colorectal cancer and future studies will open up additional cancer types, paving the way towards a total addressable screening market of $50 billion. Next slide. At Guardant, we have developed a patented digital sequencing technology platform that allows us to extract tiny tumor shed DNA signals with extremely high sensitivity and high specificity from a simple blood draw in what is today called the liquid biopsy. This platform combines a truly differentiated upfront chemistry with a machine learning powered by informatics back end post next-generation sequencing. Our chemistry does more with less by efficiently converting the majority of DNA molecules in a tube of blood into analyzable signal, and our bioinformatics platform is able to improve the accuracy of sequencing by over 1,000 fold. Over time, we have dramatically enhanced the platform, enabling high-performance detection, if not only genomic alterations, but multiple classes of epigenomic signatures as well, which are critical in detecting cancer at its earliest stages. Specifically with our liquid biopsy platform, in the same stretch of DNA, we can simultaneously detect genomic alterations such as mutations, chemical modifications such as methylation and infer structural changes due to nucleosomal positioning, which we refer to as fragmentomics. As we process more samples and more data, now over 150,000 cancer patient samples, our platform gets better and better. Next. Now let's zoom in on therapy selection. Next slide. Today, we have 2 clinical product offerings for therapy selection. In August of last year, we realized a key catalyst with the FDA approval of Guardant360, which we believe will be critical in accelerating adoption of liquid biopsy testing by oncologists that have been on the sidelines with respect to comprehensive genomic profiling. Our FDA approval encompasses genomic profiling for all solid tumor cancers as well as a companion diagnostic for Tagrisso, one of the leading targeted therapies of lung cancer. This product has also has industry-leading turnaround time of 5 to 7 days. We simultaneously launched a next-generation version of Guardant360 that offers higher performance and a larger scope of analysis, including HRD genes, coverage of NTRK2 and 3 and what we believe to be a best-in-class blood-based tumor mutational burden score. We believe that these 2 product offerings allow us to address the barrier of confidence in liquid biopsy among some late adopters with an FDA approval and the opportunity to provide enhanced features to customers who are already regularly using liquid biopsy in clinical practice. Next. Realizing the large liquid biopsy market opportunity is easier said than done, however. It takes investment in several areas beyond just having a best-in-class technology platform to enable commercial adoption. Take, for example, our first market opportunity, the $6 billion therapy selection market. With Guardant360, we invested very heavily in clinical evidence from day 1, and now have over 60 outcome studies and 200 publications. In addition, we have invested heavily on the regulatory fronts with respect to our first of its kind FDA approval and in relation to several companion diagnostic collaborations. All of this has led to now over 200 million covered lives on the reimbursement front and pan-cancer Medicare coverage. Finally, we have built world-class operations offering market-leading turnaround time and a high-touch commercial organization that has enabled adoption of Guardant360 by over 9,000 oncologists and over 60 biopharma companies. Next slide. Now I'll present a snapshot of our clinical adoption for Guardant360 for the first 3 quarters of 2020. If we compare those periods to the same periods in 2019, we have achieved robust 60%, 15% and 28% year-over-year increases, respectively, in test volumes, growing to just under 17,000 tests in Q3 of 2020. All of this, despite the headwinds we faced and are still facing with respect to COVID. Drivers of continued adoption are further shifting the market to a blood-first paradigm, expanded repeat testing and upcoming targeted therapy approvals. Next slide. As much progress as we have made over the last few years in the advanced cancer setting, it’s still clear that we are still very much in the early innings of adoption for our products. For the 700,000 patients that have metastatic disease of solid tumors, the sad reality is that most patients in clinical practice are not receiving guideline recommended genomic testing. What you see depicted here is a breakdown of our clinical testing volume by tumor type. And while we have made rapid progress since our launch several years ago, our annual run rate for each cancer type is still a very small percentage of the available testing opportunity, only 13% for lung cancer, for example. Indeed, the gap between clinical practice and clinical guidelines remains far too wide, and there is ample room for our products to continue to fill this gap. Next slide. One of the hallmarks of Guardant is our commitment to investment in clinical evidence. We now have over 200 publications detailing the use of Guardant360 for tumor profiling. And while tumor profiling is an important application of liquid biopsy, it's true power lies in its temporal dimension. Specifically, Guardant360 can be used for molecular response, that is assessing the efficacy of treatment using changes in ctDNA before and after treatment initiation. You can imagine this as the blood test equivalent of a CT scan and can potentially predict progression-free survival and overall survival many weeks earlier than radiographic imaging. Out of the said 200 publications, we now have over 40 publications that speak to the clinical evidence of Guardant360 in this setting. Another application is longitudinal monitoring, whereby changes in ctDNA concentration can be used to assess tumor burden in a patient. We have over 10 publications now detailing evidence for this use of Guardant360. These are exciting days for liquid biopsy, and it's clear that more of these tools become part of the standard of care that such usage will span even more applications, many that perhaps we cannot even imagine today. Next slide. Diving deeper into the use of Guardant360 for molecular response, we have data across multiple tumor types, including lung, breast, gastric and bladder cancers and multiple classes of therapies, both targeted and immunotherapies that demonstrate that a second Guardant360 test a few weeks after treatment initiation, can segment responders versus nonresponders, at least as well as resist but 8 weeks earlier on average. This is an exciting application that has the power to, one day soon, usher in a new era of adaptive management of treatments and disease, all within the reach of any oncologist through the use of a simple blood draw. Next. Guardant has built a leading comprehensive liquid biopsy platform for oncologists in the advanced cancer patient market with both Guardant360 CDx and Guardant360. Since the launch of Guardant360 several years ago, we have made tremendous progress in bringing the promise of liquid biopsy to fruition and our primary focus to date has been on pioneering breakthrough innovations that will enable liquid biopsy to change the paradigm of precision oncology across the care continuum. Now that these goals are within reach, we have set our sights in addressing the existing challenges with the advanced cancer testing field. The reality is that for a subset of tests and patients, tissue biopsy profiling will still be required part of the standard of care. Yet tissue testing today is far from perfect with tissue-based workflows missing 15% to 20% of actionable alterations, very long turnaround times of 21 to 28 days and difficulty with challenging specimen types. Next. Today, we are proud to announce that Guardant will soon be launching our own next-generation tissue test for comprehensive genomic profiling of advanced solid tumor cancer patients. This test will cover all guideline recommended biomarkers, including TMB, HRD and MSI and be well integrated with our current liquid biopsy products. We expect this offering to address many of the existing challenges with tissue biopsy testing, providing for a much faster and much more robust solution. This marks an evolution in our portfolio, whereby we believe we cannot only continue to be a leader in the liquid biopsy market, but a leader in the overall cancer testing space. Next. Now I'll present recent progress on our recurrence monitoring work. Next slide. We recently presented early stage colorectal cancer data showing the ability of our LUNAR-1 assay to detect those patients that will recur following curative-intent intervention versus those that have long-term recurrence-free survival. This data demonstrated what we believe to be our leading industry -- industry-leading performance that is sensitivity of 91% and specificity of 100% for recurrence detection prior to detection by radiographic imaging. As a reminder, our LUNAR-1 assay incorporates simultaneous detection of genomic and methylation signatures, giving it the ability to provide best-in-class performance without the need for tissue, such as is required by other liquid biopsy assays. This is important as the need for a tissue biopsy sample can serve as a major bottleneck in the adjuvant setting. Next slide. Just like we did with Guardant360, we are investing very heavily in establishing clinical utility for the use of our LUNAR-1 assay in the adjuvant treatment settings. Last year, we launched 3 important trials. COBRA, a randomized controlled study comprising over 1,400 Stage II colon cancer patients. ACT-3, comprising over 500 Stage III colorectal cancer patients. And PEGASUS for de-escalation of therapy, encompassing over 140 Stage II and Stage III colon cancer patients. If successful, we expect to readout from these trials in the next couple of years to support our efforts in moving forward the standard of care. In advance of the readout of these studies, it has become clear that there exists an unmet need in the management of early-stage colorectal cancer patients, an unmet need that can be addressed with our technology today. Next slide. It is for this reason that I'm very happy to announce the launch of Guardant Reveal this quarter. Guardant Reveal will be what we believe to be the world's first blood-only liquid biopsy for residual disease detection and recurrence monitoring. It is vastly in a class of its own with industry-leading sensitivity and specificity and a turnaround time of only 7 days on average. This compares to other tests that require tissue biopsy and have turnaround times of 4 to 8 weeks. Guardant Reveal is based on the LUNAR-1 assay and analyzes thousands of positions in both the genomic and epigenomic domains to provide a highly actionable and reliable result to oncologists for their early-stage cancer patients and cancer survivors. It will initially be launched for testing of early-stage colorectal cancer patients with additional cancer types to follow. Next. Now I'll discuss our progress in early cancer screening. Next slide. Unfortunately, there are many challenges with existing techniques for screening for many cancer types. While we believe our technology can address many of these challenges across multiple cancers, we have placed our initial focus on colorectal cancer, specifically for CRC screening, low compliance has been a challenge for many of the available tools. In fact, the most recent data shows that CRC's screening compliance rates have plateaued in the high 60s, far from the CDC goal of 80% compliance. Despite colorectal cancer being the #2 cause of cancer deaths in the United States, 1 in 3 Americans over the age of 50 are still not compliant with screening recommendations. And unfortunately, things are getting worse as the incidence of colorectal cancer is growing in those under 50. This represents a significant unmet need and an opportunity for a new tool that can potentially improve compliance rates, such as through a blood test that can be easily administered during an office visit. Indeed, we believe we can very nicely address the gap that exists with CRC screening today with our technology platform and specifically with our LUNAR-2 assay. Next slide. Last year, we presented additional data detailing the performance of our LUNAR-2 assay for early colorectal cancer detection. Our LUNAR-2 assay incorporates 3 separate dimensions of DNA signatures: genomic, methylation and fragmentomic, into a single blood-based test in a cohort comprising 113 recently diagnosed colorectal cancer patients and 88 cancer free age matched controls, our LUNAR-2 assay was able to detect 90% of colorectal cancers with 97% specificity. As illustrated by the bar graph on the right, the addition of epigenomic signatures greatly boost sensitivity to early-stage cancers. Next slide. As a reminder, we launched our 10,000 patient ECLIPSE study in Q4 of 2019. ECLIPSE is a prospective blood-based trial comparing the performance of screening colonoscopy to our LUNAR-2 blood test and individuals of average risk for CRC aged 45 to 84. We are currently enrolling in over 150 sites in the United States and believe despite the impact we faced due to COVID, that we are still on track to complete enrollment within the 24 months we indicated when we launched the study. If successful, ECLIPSE will play a pivotal role in a potential FDA submission. We are also pleased with the recent draft NCD proposed by CMS for blood-based CRC screening that sets up testing bar of 74% sensitivity with 90% specificity. Given the performance of the LUNAR-2 data that I just shared, we are optimistic that our ECLIPSE trial will confirm that our LUNAR-2 assay will meet the requirements of the NCD. Next. Now I'll shift gears and discuss our biopharma business. Next slide. Our biopharma opportunity is a substantial portion of the $6 billion therapy selection market, which we estimate at over $2 billion. This estimate comes from a bottoms-up analysis of the over 1,200 targeted therapy, PARP and IO programs currently underway and have an estimated need for enrollment of over 130,000 patients per year. This testing opportunity provided by these trials covers 4 categories, including prospective screening, retrospective analysis, companion diagnostic development and commercial collaboration opportunities. In each of these 4 areas, we have and continue to make major strides in deepening our relationships with many of the now over 60 biopharma companies we serve. Next slide. In collaboration with the National Cancer Center in Japan, an important study in nature of medicine was published, highlighting the power of Guardant360 to accelerate clinical trials over a traditional tissue biopsy-based approach. In the nearly 7,000 patient analysis, Guardant360 was an impressive 3x faster in providing a genomic screening result than tissue biopsy-based profiling, and as a result, helped to more than double clinical trial enrollment rates. All of this was achieved with comparable rates to tissue testing for overall response rates and progression-free survival. In short, this study concretely demonstrates that Guardant360 can potentially help our biopharma partners significantly find more patients much faster for their trials. Next slide. We are also seeing significant interest in our companion diagnostics business especially after the FDA approval of Guardant360 and successful approval of Guardant360 as a companion diagnostic for osimertinib. We are pleased to announce that we have submitted supplemental PMAs for our collaborations with Janssen and Amgen for their targeted therapies. We additionally have a rapidly growing pipeline of other collaborations, leveraging the capabilities of our Guardant360 CDx platform. Next slide. Closing out our biopharma update, we are also happy to report that we are continuing to make great progress with GuardantINFORM, our real-world clinical genomic platform. GuardantINFORM combines a robust genomic data from each Guardant360 test with the identified clinical information for each patient. It now encompasses over 135,000 patient profiles, comprising over 60 cancer types, 2,400 distinct cancer treatments, 6,000 distinct cancer-related procedures and is unique in that the genomic profiles it contains are often in the resistance and progression settings. Additionally, over 15,000 patients have longitudinal genomic data from multiple Guardant360 tests. Our biopharma partners are finding significant value for the use of real-world evidence for targeted drug development, clinical trial optimization and post-marketing studies. We are very pleased by the number of deals we have signed to date and by the number of active discussions that are ongoing with additional customers. Next slide. Now I'll briefly highlight some of the progress we are making ex-U.S. Next, we are increasingly investing in programs to expand the global access to our liquid biopsy program. In Europe, we are happy to announce that we have partnered with one of the premier cancer centers, Vall d'Hebron, to help build a liquid biopsy laboratory that will more fully bring our technology to Spain and beyond. We have also achieved critical regulatory accreditations, including CE marking for Guardant360 CDx and important ISO certifications. With our JV, which is focused on Asia, Middle East and Africa, we are also making excellent progress expanding our commercial reach with testing being provided in over 40 countries and making great headway in Japan with a submission to the PMDA expected in the first half of this year, and our laboratory in Japan expected to be operational later this year. Next. Now I'll close out by discussing some of the drivers we expect to see for our business this year and beyond. Next slide. First, I'll summarize our recent financial performance. Comparing the first 3 quarters of 2020 to the same periods 1 year earlier, we have achieved 84%, 23% and 23% year-over-year increases in revenue, respectively, growing to $75 million in Q3 of 2020. Furthermore, we saw this growth despite the tangible headwinds of the COVID pandemic we faced. Additionally, a particular note, we completed equity and convertible note offerings last year bringing our cash balance to approximately $2 billion as the end of 2020. We expect to use our strong balance sheet to continue to aggressively invest in commercialization of our product offerings and development of our pipeline, while potentially pursuing inorganic opportunities that are synergistic with our business. Next, in sum, 2021 will be nothing short of a transformational year for Guardant. In screening, we expect to complete enrollment with our ECLIPSE CRC screening trial and expand our focus to other cancer types. In recurrence monitoring, we are breaking new ground, just like we did with Guardant360 several years ago, ushering in a new era of precision oncology with the launch of Guardant Reveal this quarter. In our therapy selection business, we expect to continue to expand the utility of Guardant360 with additional approvals, clinical data as well as expanding use of the test in the molecular response and monitoring settings. We are also very excited for our upcoming launch of our first tissue product, which we believe will address the unmet need that continues to exist in the therapy selection market. In closing, we started Guardant with a bold vision for the future of cancer care and a dream of transforming such care across the entire continuum into something vastly better for patients. Star's story depicted part of this vision and how it is already a reality for some advanced cancer patients today. As you see from the tumor response map depicted in the bottom of this slide, the coming launches of Guardant Reveal and the success of the LUNAR-2 ECLIPSE trial will soon usher in what we believe to be a new era of precision oncology and bring the rest of this vision to fruition. Thank you.

Okay. We'll jump into Q&A. Helmy, obviously a number of updates today. Let's maybe start with the tissue assay. How will you differentiate from existing options in the market? Obviously, you've got Foundation, Caris and others. So what are the opportunities to kind of create value in tissue? And can you really give us some color on the launch timing as well?

And maybe I'll start and have others jump in. We see a lot of challenges with tissue testing today. When you think about -- tissue testing has frankly done this service to comprehensive genomic profiling, I think, over the last few years, the turnaround time of 21 -- 3 to 4 weeks is just really a nonstarter for the first-line setting. And so that's why we believe that many patients continue to be left on the sidelines in terms of comprehensive testing. And so the way that we're going to be integrating our offerings and the way we're going to be providing it, we think that our tissue solution will be able to solve a lot of those challenges in terms of lack of sensitivity, turnaround time and really robustness of the offering. So I think more to come on that in the future, but we're very excited for this addition to our portfolio. I'll let others chime in if there's anything to add.

Will it include the same number of genes as the 360 companion diagnostic? Or what's the makeup?

It will be very, I think, compatible with it. And maybe I'll AmirAli chime in there.

Yes. In terms of the panel and feature, it's going to be very close to actually the products that we have right now. And we are focused on integrating the experience for oncologists across liquid and tissue. So the panel content and feature sets would be very comparable.

Great. And then maybe we could just touch on Reveal. How do you think about competitive positioning in that market versus Natera and others? And I mean, it's a rising tide obviously for MRD monitoring. So maybe that's answer. But can you just talk a little bit about how you think about positioning?

Yes. The way we look at it is when we launched Guardant360, 360 wasn't the first liquid biopsy, there are many liquid biopsies that came before us, but we felt that none of them really had product market fit for what oncologists were looking for. In this way, we also feel that this product is without comparison. You just -- if you have a test that has a turnaround time of 6 weeks on average, it's really a nonstarter for physicians, especially in the adjuvant setting, where these are earlier stage patients, but times of treatment is still vitally important. There's a belief that if you wait too long, you're letting the cancer spread without starting adjuvant treatment or subsequent initiation of therapy or intervention. And so having a test that has fast turnaround time that really removes the bottlenecks of tissue. We really don't look at tests that require a tissue informed approach as necessarily a true liquid biopsy. It's really a hybrid solution. And so we still think this is really a very differentiated product. Frankly, and the other tests that are out there are fairly simplistic. They're looking at a handful of mutations in the genome. This is just completely different technology stack. We're looking at thousands of locations in genomic and the epigenomic domains and so we think that this is a test without compromising in terms of performance. We think it's second to none in terms of turnaround time and customer experience. We think it's going to marry up to the necessities of the market that we're targeting today, much better than any of the other products out there.

And then maybe shifting over to LUNAR-2 and the ECLIPSE study, a couple questions here. I think there is -- at ASCO GI, there's going to be some data. Is that tied to ECLIPSE? I think the abstracts had come out. So can you maybe just touch on that? And then we've had a lot of people ask whether enrollment will finish early. I know you reiterated the -- by the end of '21 time line, but what are the odds you can finish it up by the summer?

AmirAli, want to take that?

Yes. So ECLIPSE actually samples are -- have -- we are just [ curing ] them and biobanking them and we are going to process them. Also, ASCO GI is not going to be based on ECLIPSE samples. In ECLIPSE, as we mentioned, total, we expect maybe between 50 to 100 CRC cases. So there is no rational way of cutting the cohort into multiple pieces and get still statistically powered data. So we have to be patient and finish the study. But we are excited about different pilot data that we have generated and our KOLs continue to generate based on the platform technology that we have any different congress as we are going to show different pilot data on some biobank samples or some retrospectively samples that we got access to. Regarding the time line for last patient in of ECLIPSE, we are very happy with the progress we made. We have now over 150 sites, and we are on track to finish it by the time line that we always mentioned, which is by October of 2021. If it's going to finish earlier, let's stay tuned and see even what potential impact COVID could have, but we feel very comfortable that by the time frame that we mentioned, we would finish this date.

How should we think about other cancer indications in terms of trials? I think a couple of people have picked up on the fact on clinicaltrials.gov, there's a lung trial. So can you maybe just touch on follow-on studies?

Yes, sure. So now that the CRC journey hopefully is reaching to some kind of a finish point for us in terms of clinical development part of it, we are gearing up to looking to some other cancer type. It's been a conversation that we had for long time and we are developing a good clinical study to go after those cancer types. More information about those to come. One of the reasons that contributed our -- some of our financing activities during 2020 was to make sure we have a strong balance sheet that we can go after all these giant opportunities ahead of us, really liquid biopsy has the opportunity to go well beyond CRC, but we are going to go after it in a methodical way.

And I think on CRC, that we get a lot of questions about what the bar is. And you mentioned the NCD bar being relatively low, 74% sensitivity, 94% specificity. But as we think about what kind of the real-world adoption bar would be is kind of low 90s, the right bar around sensitivity? Or how do you think about what it would take on that data to drive broader adoption?

So criteria that we have now is for reimbursement and regulatory, which they are like high 70s or 80s. But definitely, the -- you're going to have different kind of commercial success, if you can even potentially outperform some other tests, which are out in the market or will be very similar to them. We have to see what's going to happen. At the end, still, we -- as we mentioned, we expect 50 to 100 CRC. So we have to see, even within the confidence interval of the study where we are going to land in that bar. But we feel very confident -- comfortable that the lower bound 95% confidence interval would be well positioned relative to everything FDA and CMS requires.

And then maybe on the other studies, I've had some people ask if we could get an interim update on COBRA. Is that something we could see this year? Or will we not get something in the interim?

Still we are a couple of years, at least more into getting some kind of readouts from these MRD studies. Many of them are based on actually improvements of overall survival and the clinical outcome of the patient. In these early-stage patients post-intervention, we have to be patient, monitor the patients for a few years. But whenever we have some meaningful data through our KOLs, they are going to get published in Congress or peer-reviewed journals.

Got it. Maybe you could talk on -- buildout of the PCP sales force. You highlighted the $2 billion in cash. Obviously, a lot of that's going to go to the build to commercial channel. Maybe talk to, a, the build versus buy thought process, why it would make sense to build on your own versus acquiring? And how do we think about how long it takes to kind of scale up the sales channel?

Yes. No, I mean, definitely, that's the reason we shore up the balance sheet is to be able to invest, not just the commercial channel, but other pipeline activities. We certainly debate that in every part of our business build versus buy. If we can move faster, we will, through acquisitions. But I think it's also fairly limited in terms of the types of commercial channels that could be bought from the primary care setting. There is -- certainly, if you can build it, there's a lot we've learned on the oncology side in terms of commercialization that we think we can essentially implement on the primary care setting. We think that it's not just the cost of the test in terms of thinking about the operating margins for that business, it's the cost of selling that test. And so we're extremely laser-focused on making sure we build a highly efficient organization. And certainly, a blood-based modality is going to help considerably with that. We think the compliance rates will be much, much higher, which means you're selling less test to actually make revenue from a greater amount of them than other test that are out there.

Got it. Question came in on the international launches, can you talk to turnaround time? And then are all those products offered in local labs? What are the kind of the logistics?

Yes. No. I think we mentioned that we're building our first 2 labs internationally. One with -- that we just announced with -- in Spain with Vall d'Hebron, which is one of the premier cancer centers in Europe, there are 7 cancer centers that are part of the cancer core network. And so we're very proud of that collaboration. And obviously, in Japan, we've been working on some time in Yokohama, we're building a lab there as well. So those 2 will be operational, hopefully, later this year. And the turnaround time, we've been providing testing for, I think, probably over 50 countries now globally. And it's usually just another 12 to 24 hours in terms of turnaround time is shipping time, additional shipping time from those locals to our central laboratory in Redwood City. So we've been able to service international customers extremely well even without having local laboratories.

Maybe a question on G360 kind of the base business. Obviously, with the FDA approval, we've got a nice tailwind here. How should we think about pricing over the course of '21? And then how meaningful has the FDA approval been to kind of penetrating new accounts?

Yes. So that's -- FDA approval, I think, is certainly very important in terms of getting those laggard oncologist on board, getting those dabbled with liquid biopsy. Liquid biopsy for many is still science fiction, getting information from blood that you can actually initiate treatment on is still a leap of faith for many oncologist. And that's where FDA approval, I think, is going to go a long way over the medium to long term to get those laggards on board. In terms of pricing, yes, we see some really positive, I think, tailwinds as we qualify under ADLT status, we'll be able to, we believe, move our Medicare price from around $3,500 to at least $4,000 or above. So there should be a positive tailwind there. There may be some disruption short term as you change codes. There are often some kinks in terms of being able to actually get the right billing in place with some of these payers and some of these systems. But we think over the -- certainly over the -- not too long, medium term, we'll be able to get to a much better place in terms of ASP.

And just maybe last one over what time frame do you think for the private payers to convert from lung to pan-cancer coverage? How long does that process take for the remaining?

Yes. We've made a lot of progress there. We have over 200 million covered lives now on the lung side. We're seeing a bunch of private payers come on board, for instance, Cigna really expanded their policy is now covering most solid tumor cancers for Guardant360. And so it's a process, but we're very pleased with the progress so far in that conversion.

Great. We're hitting the end of the session here. So I want to thank you for taking the time. Enjoy the rest of the conference.

Thanks, Tycho.

Thanks.