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

Yes, we can look to get started here. Thank you guys for joining us. I'm Patrick Donnelly, the Tools and Diagnostics Analyst here at Citi. Happy to have the Guardant Health team here with us. We got Mike, the CFO; AmirAli, Co-CEO. So we talked some screening, some numbers, we can cover the whole thing here.

Maybe Mike, probably starting with you, just in terms of the recent quarter -- it was last week. Just in terms of the numbers, the clinical piece came in well. You guys provided the initial guidance, the moving pieces there with clinical looking at 35-plus, but some other stuff, development services, things like that, moving around. So maybe just start in terms of the trends you saw on the clinical side, and we can work our way into the guidance as well.

Yes. I mean on the clinical side, you're right, the volumes that we saw in Q4 were over 40%. And so as we exited the year, we still see very strong volume growth with Guardant360 and also with all of the other products, including Reveal. Reveal for last year grew over 250% year-over-year. I think one of the positives that we've been really pleased to see in this first quarter is we got the FDA approval in breast for Guardant360. And we've seen a really positive response on that. So I think we ended 2022 very well, and we've seen good momentum at the start of the year. So that gives us a lot of confidence. And yes, for the full year, our clinical volume guide was 35%, that's really at the sort of the bottom end of our revenue guidance. So we're hoping that it can be even stronger than that.

Yes. And maybe just thinking about the '23 guide on the clinical piece, again, 35% plus, can you just talk about, I guess, the different levers there? Obviously, Reveal being a piece of it, how do you think about what levels of conservatism are in there, and how it trends throughout the year as well?

Yes. I mean we think 35% as definitely as the minimum. And we're coming off a great year, again, over 40% on the clinical volume. So there's a lot of focus with the commercial team on the reimbursed products. So it's definitely on Guardant360. And as I just mentioned, we see good traction on from the FDA approval. So that's one upside. I think on the -- on Reveal, again, we're seeing very solid volume growth. I think on -- the focus this year for us, mainly especially because we've guided towards a cash burn number, has really got to be on those tests that are reimbursed. So within Reveal, we'll really be focusing on CRC. And although we launched lung and breast at the end of last year, CRC is going to be our main focus. And if anything, we're left to engineer a bit of the nonreimbursed volume because we really want to make sure that we're focusing on top line revenue. But again, yes, we've seen positive also on other new products like tissue, for example, is going very well. We're getting incremental ASP every quarter. We see more and more commercial payers starting to cover tissue. And so that's also a driver for us.

Yes. Maybe on the reimbursement backdrop, maybe we can start with G360. How do you think about the ASPs year-over-year? What are the opportunities to drive that a bit higher? But maybe first, kind of what's implied in the guide and how you think about the upside numbers?

Yes. What's implied in the guide is really a consistent ASP for G360. We've been at 2,600 to 2,700 for the last 18 months or so since we got the 5,000 ADLT rate for Guardant360 CDx. So yes, the guide assumes as a minimum, it stays the same. We are starting to see some positive movements from commercial payers. We just announced a couple of weeks ago that United now covers Guardant360 CDx for lung and breast. So we've been waiting for some of the big payers like United, Anthem and Aetna to start covering our test. And so that was a real positive first move. And ultimately, that will come into the ASP and help improve it. It's going to take some time because we have to look at if we're contracting with United and when those payments start to come through, but I mean that's just the first move. So I think we feel that there's plenty of upside in the ASP. I mean, ultimately, if we get all of the payers covering our tests across all cancers, we definitely could get an ASP bump north of 3,000. But that's going to take time. So that's not this year. But I think over time, as we see more and more traction from these payers, it's just going to incrementally be better.

Yes. And [ with that ] United expansion, I know people kind of ran some numbers to just grab the share United has and put kind of a new ASP, what's the right way to frame up what that means for the revenue side in terms of United announcement?

That one, it's a little bit difficult for us to give a specific number because we do get paid by United, sometimes on appeal. This is only for the CDx piece. And then it's only for, again, lung and breast. So it's definitely going to be an improvement, but it's hard to just specify exactly when that will come. And there's a bit of a nuance with our revenue recognition and that we have to see history of payments. So it's going to take time to come through. But again, it will be an upside, and we'll start to see it maybe in the second half of the year. But we just want to stay conservative on the ASPs for the moment in the guidance.

Yes. And then Reveal, maybe on the ASP side as well, kind of building that reimbursement out. Obviously, big focus, volumes seem to be ramping really well, clearly, as you talked about there. I think you're talking low double-digit millions in terms of rev side.

Yes, that's right.

Maybe just talk about that ASP ramp, what the opportunity set looks like as you kind of capitalize on the volumes there?

Yes. I mean we were pleased last year to get Medicare reimbursement for CRC post surgery. The next milestone for us will be CRC in the surveillance setting, which is roughly about half of the CRC volume for us. And then we launched lung and breast again in late Q3 last year. So breast is probably going to be the first one that we would submit to MolDX to get reimbursement. We look at those with the timing of our expectations on data and submission. We look at those more being in 2024. So I think ASPs for Reveal, at least what we get paid for, will stay relatively consistent in 2023. And hopefully, there's upside then in '24 onwards.

Okay. And then just maybe the development of kind of the smart liquid biopsy upgrade in terms of the MRD side, maybe just talk through what that impact could mean for kind of the franchise there.

Yes. Ali, do you want to?

Sure. So smart liquid biopsy gives some additional technology advantage to Reveal like the performance of this Reveal based on small liquid biopsy, we expect it to be even better than the Reveal platform that we have. There are also some operational advantage that we are going to have after operating Reveal with smart liquid biopsy platform. It generates more synchronization across different assets, different products that we have, R&D synchronization, operational synchronization, investment on the process engineering or different steps that we have in the company would be leverageable across all these brands. So we are excited about that potential operational leverage that we are going to get. And I think the next piece about this smart liquid biopsy is it would also broaden the epigenomic content that we are looking with Reveal, which is going to open up a lot of new kind of opportunities in terms of sharing and providing additional insight to the clinicians because we believe the field of MRD is not just MRD positive, MRD negative. Over time, it's going to become more complicated in terms of, okay, if the patient is MRD positive, what kind of category of MRD positive a patient is going to fall into. And that small liquid biopsy platform is really going to give us the infrastructure to get that information, validate the information and provide that information over the time.

And how do you see kind of the shift you kind of mentioned? How do you see the timing of some of the shift over towards that way of thinking in the MRD market?

So first, only to upgrade the product as [ RUO ] asset. They have Guardant Infinity, which is out there for biopharma companies. So some level of insight started to come up. And for Reveal, we mentioned, as a clinical test, we would operate that based on smart liquid biopsy during 2023. And then the other assets would fall on, including Guardant360. We started doing some kind of IST clinical studies around additional utility, additional clinical utility and value that you can extract when you're looking at a broad epigenomic content. So that's going to take some time to generate that evidence in terms of expansion of the utility of next-generation review for the clinical market.

And maybe just on the base business side, the biopharma piece. I know you guys chatted about it on the call, a little bit of cautiousness, conservatism whatever it may be, thinking about '23 and just what you're hearing from customers, maybe just kind of talk through what you are hearing, what the expectations are as we look at '23 in that biopharma segment?

Yes. No, we sort of guided to biopharma volumes growing sort of low double digit in '23. And that's off the back of a very, very strong year. For the full year, biopharma in 2022 was 40%, which was -- I mean, that was off, again, off the back of COVID-impacted 2021. So we saw a real rebound in '22. And I think as we go into 2023, we can see for the first few months -- first half of the year, a very good order book. So we feel very comfortable with the biopharma business in the first half of the year. But we hear a lot from our pharma partners and biotech partners, really on the budget constraints. So in the pharma settings really on the clinical research, especially when they're using sort of biobank samples and whether they've got some budget squeeze there, and we see with that, with the smaller biotech companies, again, funding issues with them and potential squeezes on what they can spend in the year. And so we just want to be cautious on the growth, especially in the back end of the year, on biopharma. We just don't have that visibility. And so yes, we've been cautious. Hopefully, a lot of those budget constraints don't come through and we can continue to have the strong growth. But yes, we just want to add a level of conservativeness to our numbers for the year.

Yes. I mean in terms of conservativeness, things you're hearing now, I know I think Helmy called out even like potential IRA impact in terms of what that could mean in the later half. So is it just flagging some risks and kind of layering that in? Are you already hearing kind of some cautious tone from even areas like that? What's the right way to think?

Yes. No. I mean we have a lot of -- we have over 150 customers on the biopharma side. We're talking to them constantly. So we hear a lot of that. And we hear concern from the people in the companies that are our customers. So I'd say, we've not seen any specific impact to date. And again, we had a really strong fourth quarter, and things are looking good at the start of the year. But yes, I mean we hear it, and so we just want to be cautious of it.

Yes. And I guess what's your perspective in terms of how long that type of headwind could linger? I mean, is it just a matter of kind of digesting the funding pullback and then things normalize? What's the way to think about that biopharma business as a whole?

Well, I mean I think some of it is down to the sort of the macroeconomic environment and how long that lasts. I think, again, we see the potential for this in the back half of the year. And if that did come in the back half of this year, it could push into next year. So I think we'll just have to see. It's difficult to sit here and say it's going to impact the business in the long term. And again, we're hopeful that we don't see any impact at all, but we just want to make sure that we're flagging it, and we're aware of it. And we don't want to get too optimistic or ahead of our skis in our guidance at the start of the year.

Yes. Okay. And then I think in the biopharma business, you talked about Infinity being a little over 20% of volumes now. Maybe just talk about that kind of progress. How we should think about that piece, moving forward?

So saw our pharma companies, actually, they started incorporating Infinity, which has this effectively upgraded version of OMNI into some of their studies, of the biobank studies and some additional conversation around future studies that they want to underpower of the epigenomics I talked about earlier. There are additional features that Guardant Infinity has, like, for instance, we're looking at HLA typing. We are looking at -- test different kind of modules in terms of information sharing, which all of those information you can get with just in the same biobank plasma sample. That has generated a bunch of excitement, and that's why we are seeing this relatively quick uptake that very few months after this launch, 20% of this growing volume has been converted today in Infinity.

Okay. Where do you see that going long term? Has Infinity become a bigger piece of the pie? What's the right way to think about that?

So still, there are some of our customers and some of these studies that they are still just based on Guardant360, smaller panels and they are different like when you think about segmentation of market, a different level of pricing that we have for different assets. Based on the biomarkers they are studying, they are just interested in Guardant360, which has lower ASP, lower pricing relative to OMNI or Infinity. But there are definitely some applications, some interest, which is convincing our customers to invest more money and really try to extract additional information that Infinity can give to them. We expect this percentage over time increase, but not that it would take all of the volume as we are seeing still Guardant360 is a material fraction of our volume, even today.

Yes. Okay. And then last one on the guide and then we'll hop into the screening side. Just on the development services, I think you talked about $50 million. I know that tends to move around a little bit. I guess, maybe just what are the moving pieces there and kind of visibility into that? How should we think about that, going forward? I know it's gone from $50 million to $60 million, kind of bounced around [ 100 ].

Yes, we look at this year as being at least $50 million. It is a pretty -- it's a lumpy revenue line. In some ways, it's hard to predict because there's quite a few things in there, there's the companion diagnostics projects that we do with partners. And within there, there's milestones, and so that's just the timing of the revenues can vary. And if new projects are ramping up or completed ones are ramping down, there's fluctuations in the revenue there. There's also partnerships that we have with companies. For example, if we're doing a tech transfer of our -- into a third-party lab, these milestones, and so the timing of the -- and there's even third-party royalty revenues as well, which are a little bit out of our control. And for us, sometimes it's a positive if those royalties are going down. So there's a lot of dynamics in there. I think when we look at what we're planning to be doing over the next 12 months or so, I think, yes, we're pretty confident on the $50 million, maybe that could be higher if some new things come on faster than we expect. But yes, I think we're comfortable with that. And for a cadence, because some people have asked that, I think it's -- if you just basically divide the 50 by 4, nothing is going to be too back-ended. I think it will be relatively even during the year, with a bit of lumpiness.

Okay. So I'll probably circle back to you on some of the profitability in OpEx. But early, maybe just to touch on the screening side, a lot of focus on ECLIPSE and SHIELD, had the Eclipse readout late last year, and we're all anxiously awaiting the PMA submission. So maybe just a quick update in terms of -- I think you talked about this quarter, it seems imminent. Anything left to cover before that happens? And then maybe the path forward from there just in terms of thinking about approval and the next steps?

PMA submission would be this quarter. So it's going to be this quarter, and we are confident about that it's going to be this quarter. And we are excited to go through that review cycle with agency and with the help of many stakeholders, KOLs, and I think partners that we have that they see the value in this blood-based cancer screening to really take it to the finish line of approval and make sure people get access to it. So exciting stuff.

Yes. Maybe just in terms of the timeline, obviously, the submission, we all know, those come in this quarter. How do you think about approval, commercialization? Obviously, kind of we can talk about some of the guidelines as well.

Once we submit our PMA package to the FDA, the official FDA review cycle starts. As we mentioned before, we submitted our package to FDA in a modular submission, meaning some earlier modules have been under review, and those are all closed. It's just this data package, which is left, which we are going to submit this quarter. In terms of the exact timing for that FDA approval, we have to go through that review cycle. We are going to have a better sense. For some of the -- like comparative products, it took like 16 months to go through that FDA review. For this one, it could be a little bit faster, based on the experience that the agency have gone through, could be a little bit slower. But we think if we submitted that, we are going to submit at the end of this quarter. Sometime early 2024 is the right ballpark for the FDA approval. But we are going to have a better sense of the timeline once we start hearing the first round of feedback from the agency. And we expect that kind of feedback probably around early summer time after they review our package.

Yes. So kind of assuming the approval early '24, I guess how does that then ramp in terms of -- obviously, there's been a lot of noise around USPSTF, different guidelines, reimbursement. Maybe just talk about how you think about kind of that ramp towards commercialization of the asset.

So the exciting thing about like the screening asset these days is once we get FDA approval, that would open up the Medicare reimbursement since there's NCD for blood-based colorectal cancer spring, which requires FDA approval and minimum performance for CRC detection, which we are meeting that minimum performance. We just need FDA approval. Once we get the Medicare coverage post-FDA, which should be shortly after that, we would apply for what's called Advanced Diagnostic Lab Test status, or ADLT status. The reason that ADLT status is important is we are going to get favorable Medicare pricing. We believe after we get ADLT status, the pricing for SHIELD, for Medicare, which is going to get translated to Medicare Advantage claims, would be around 895. When we look at the blended like ASP for our tests, at that time, since we expect about half of our claims should be Medicare, Medicare Advantage, we should have an ASP of about $500. The reason I kind of emphasized that to -- for instance, Cologuard until end of their USPSTF site to get to their $500 ASP versus for us a year post-FDA, we can potentially get to this favorable ASP. Just the landscape is what it is today versus what it was 8 years ago. That gives us a lot of opportunity to generate actually favorable gross profit with this brand a year post-FDA. Major milestone for us after FDA approval is USPSTF guideline inclusion that effectively, based on ACA, there would be national mandate for all commercial payers to cover the test. And before that, ACS, American Cancer Society, guideline inclusion is also a milestone. As there are a few states in the United States that they have state-level mandates that payers in those states need to cover ACS guideline-recommended colorectal cancer screening tests. So that's we expect about 20% of the lives of U.S. are living in those states that have some level of mandates at the state level. So this kind of favorable reimbursement, we are kind of taking into account as we are justifying additional investment on our commercial channel and commercial development of this asset.

Okay. And I guess just in terms of the data itself on ECLIPSE, came out, obviously, 83%, there was a big focus on numbers, the AA data as well was discussed. I guess, what is the initial feedback then from -- I know you guys do a lot of different survey work. And then also kind of that the confidence level that that's enough to get into certainly approval and then some of the guidelines as well.

So we believe the performance that we've seen, and this is actually what we hear from our KOL and all stakeholders that we've been in touch with, that, that meets the minimum bar for FDA approval, that meets the minimum bar for CMS approval. And based on conversations we had with the former members of USPSTF, including the former Scientific Director of Task Work, in fact, we heard a lot of positivity in terms of the performance that we've seen and the fact that the unmet need right now is a test that patient complete or effectively get the test done. And that's the promise of a new modality like blood-based test. So we think we are meeting those milestones. Really, like the first thing that we need to secure is FDA approval. I think, frankly, a lot of the other milestone would be tactical execution going through the processes.

Okay. And then -- I know there's a lot of focus on the staging data. I know we've shared a lot about that. I guess what are you thinking in terms of peer review publication? Is that when we'll see it? Maybe just talk through that piece, given the level of focus.

So in conferences, scientific conferences, especially like oncology-related one, we expect that always Guardant has some kind of data presentation. We are going to continue to submit the abstract in those conferences. And if those abstracts get accepted, we would have presentation. In terms of publication, and we are expecting our publication to come out sometime this year, too, depending on the review cycle and the review that we are -- the publication is going to go through. So that's our plan. We have to see what happens during the review cycle. But talking about this kind of staging performance, I think one point that -- since there are many conversations around it, this is the way we look at it. We are talking about unscreened patient populations mainly. And what's the effective sensitivity of detecting CRC in patients who are unscreened? They are unscreened, like it's just nothing, right? So I think there are anxieties and concerns that what if like if the performance is kind of very low in the early stage, how could you get FDA approval or get -- have a competitive assay? First, FDA approval, based on everything that we know, is just based on the sensitivity, blended sensitivity. If you look at even the performance of an FDA-approved Epi proColon, you can look at those numbers in terms of performance of early stage. So FDA approval is based on early sensitivity -- based on a blended sensitivity. In terms of the biggest unmet need, there is 50 million people which are unscreened, 16 million annual testing opportunity. And right now, there is no CRC getting detected in that. This does, in fact, when you look at the effective sensitivity, which is based on adherence, adjusted sensitivity, could be very competitive to even the current standard-of-care screening tests. But again, when you just only focus on [ unscreened ] patient population, there are zero CRCs getting detected in those patient population. So I just wanted to make sure you guys know the way we look at it and like the bars that we think should be the right expectation for this test.

That's helpful. And you kind of mentioned the adherence helps, obviously. Maybe just talk about how you see this market developing over years. Obviously, there's a big unscreened population. There's colonoscopy, there's Cologuard. There's other -- FIT, things like that. So where do you see this test fitting in, given where the data is and where kind of some of those shares go over the long term?

I believe it's going to be a new modality for colorectal cancer screen, and doctor and physicians would have the option, like now they can pick colonoscopy or a stool-based test, different versions of stool-based tests. Now blood is going to get added to a menu that physicians can pick or choose by them [ suffering ] consultation with consumers/patients. So that will be the future. We are in market with our, SHIELD LDT, small kind of a field effort, but we are getting a lot of feedback from the real customers that the unmet need is big. The level of ordering that we have per account, per month for SHIELD LDT is more than the depth of ordering for stool tests, which, frankly, is not an endorsement of we are doing a great job on commercialization of the test. It's more an endorsement of such a huge unmet need and tens of millions of people, which they are not getting any other screening done, and lot finally can take them to the finish line of getting the screening done. So I think the unmet need is clear for a physician. It's not that we need to educate them. This unmet need is out there, based on the experience that we have in LDT front. We just, again, need to get the FDA approval and go from there.

Yes. And in the trial -- we got a few questions, just after you had kind of the 2 assays in the trial, was that always the plan? Is that something you had to talk to the FDA about before? Maybe just talk through kind of that process and how that played out.

So in terms of this 2 configuration of the tests that have been tests-- that have been utilized in this study, we had an umbrella, kind of umbrella protocol for this study, which described how the clinical study is done, what are the endpoints and statistical analysis plan that get connected to that umbrella protocol. We started with a cell-free DNA-only device a while back. And then we added proteomics mainly to see some advantage and benefit from proteomics to detect some more advanced adenomas. And what we saw at the end, that proteomic arm did not really help with increased sensitivity of advanced adenoma. In fact, it was even a notch lower than what we saw with just cell-free DNA. So effectively, there was no utility up having that proteomic in the device versus just cell-free DNA, only version of the test that has good CRC performance and like 13% advanced adenoma. So that's the kind of story of this kind of device testing. We believe we've done it in a proper way, in terms of like defining all the thresholds and the parameters that goes to this device before unblinding any kind of database. And there are a bunch of other examples like this to -- on the IVD CDx side, we've done some similar kind of studies on other kind of assays, also. Some manufacturers test multiple hypothesis for multiple devices in those studies before. So it's not the first of kind. So it's been done before.

Yes. Okay. And then maybe just on the rest of the screening portfolio, obviously, colon is not the end game for you guys. Obviously, already started the process on lung. Maybe talk through that strategy and kind of where we are and what the timelines look like on that piece.

So CRC was our lead indication because of favorable reimbursement. We talked about the ADLT favorable, like ASPs that we can build, and we kind of open up other indication on the same device. That's been our strategy for some time. And I think over time, we are just getting benefit from that strategy in terms of favorable reimbursement pathway. Lung is, in fact, is the leading cause of death, in terms of cancer-related death. So it's a strategic cancer type for us. It's -- we started at a 10,000 patient screening study a year ago, we are in the second year of enrollment. The enrollment would take 3 years for that study. And hopefully, we are going to get a good data in few years from that study in terms of evaluating the performance of the lung indication. The lung would not be the last indication either. We are going to add a panel of cancers to the same device. We are not going to do indication by indication trials. We don't need to do that. But we are doing this kind of screening studies at this time just for CRC and lung. And then we would add an indication of detection of a panel of cancer types to the same device in the future.

Okay. And just in terms of the timeline on lung, how we should think about key data readouts, what we should be keeping an eye out for on the catalyst set there?

So we presented some case control lung data before, which we are seeing actually pretty good performance relative to actually low-dose CT scan. Again, this is a field that even compliance to low-dose CT scanning is less than 15% effectively. Not many people are doing any kind of screening. And the performance in case control has been good. Since 2017, we were doing like small-scale screening study with SFA and UCSA that, that cohort, after all these 5 years, is becoming mature now. We expect that screening cohort from that study to be processed, and we get to the data readout later this year or early next year. The reason that that's important is we are reaching from a case control data to a screening cohort data, which should be much closer to the performance that hopefully we are going to see with our pivotal screening, 10,000-patient study at the end. So I'm excited to see that data, which hopefully is going to come later this year or early next year.

Okay. Makes sense. And then, Mike, maybe back to you, obviously, these trials are not cheap. You're kind of managing the expenses over there. I think it was nice to see '23, the guidance for OpEx to be down year-over-year, a pleasant surprise there. Maybe just talk through kind of the different pieces of the P&L, where you're pulling the levers, where you're continuing to invest. Obviously, things like lung in the trials there.

Yes. I mean, first, I would say, over the last sort of 2 or 3 years, we've significantly invested across the business. On the R&D front, with multiple product launches across therapy selection, recurrence monitoring and screening, so we've invested heavily in R&D. We've built out an oncology commercial team. Last year, we launched SHIELD LDT and built out the initial commercial team on screening. So the last 3 years have been heavy investment years. And I think we are now at a point where we can start to leverage a lot of that. The levers we're really pulling on the OpEx side, first, we did a workforce reduction of about 7% across all sort of lines on the P&L. So we'll start to see the impact of that as we go forward. And really, the main savings that we'll get this year and what's really bringing down the OpEx is in the R&D line. So firstly, we talked about the smart liquid biopsy platform. Moving to a single platform across all of the business is going to allow us -- we've been able to reorganize and drive a lot of synergies in the R&D cost. And then secondly, ECLIPSE has been a heavy lift for us over the last few years. We continue enrolling in ECLIPSE probably until the middle of the year, we're really building out the biobank. But we should start to see the cost on the R&D side start to drop off in the second half of the year. So ECLIPSE will come to an end. We'll be winding down the SHIELD lung study. And so we'll really get the savings coming in the second half on the R&D line.

Okay. That's helpful. And then I guess, just thinking about kind of the out years, obviously, OpEx is down this year, is this kind of now a new base? What's the right way to think about just OpEx growth in the next few years? Obviously, you have some trials going. To your point, ECLIPSE comes out of it. You're going to have to commercialize, assuming the FDA approval on the SHIELD side, maybe a build out there. So what's the right way to think about just OpEx growth coming off this newly established base?

Yes. I think we'll end the year on a on a much lower base than we ended 2022. So 2022 base, on a non-GAAP level, was about $800 million run rate, so $200 million in Q4. We will probably end this year on a $700 million run rate. So we'll bring the base down to start with by the end of this year. And if you look at the oncology business, again, we've sort of -- we're eking out the synergies on the R&D side, and we've built out the commercial team. So we shouldn't expect OpEx to be growing significantly over the next few years on the oncology side of the business. I talked about R&D and screening. So really, where we will be investing, going forward, will be in SHIELD for an FDA-approved product. And so we're really focused on managing our cash that when we get to an FDA approval point, we're in a very strong position to have a full launch. And then going forward, we've talked about building out that commercial team on the screening side on sort of milestone basis. So as we get FDA approval, medical reimbursement, as we start to see private payer reimbursement come through, we'll be using that, the profits that we generate to fund the growth in the -- on the commercial side.

Okay. And then on the back of that, just in terms of the cash runway, I think you guys have talked about 3-plus years. How do you think about managing that? How opportunistic will you be in terms of kind of supplementing that with -- whether it's a raise or whatever it might be? What's the right way to think about kind of the balance sheet?

Yes. I mean I think you're right, we've got -- we ended the year with $1 billion in cash. That's a runway of at least 3 years. And the therapy selection business now is getting close to breakeven. We said, within 12 months, sort of by the end of this year, that business will be breakeven, and then it can start to generate positive cash. And so we look at that $1 billion funding, at least for the next 3 years, the investments we need to make on MRD and also then on screening, like I was just talking about, building out the commercial team. And our focus at the moment is really managing our expenses and managing our cash burns again. So when we get to an FDA point of approval for SHIELD, we're in a very strong position, and we've got the cash in place to really able to fund that. Over the long term, we've talked about being breakeven at a company-wide level 1 to 2 years after being in guidelines. But yes, our key focus at the moment is to get to an FDA approval and have a very strong launch.

Okay. And maybe just wrapping up, I know we only have a couple of minutes. Maybe just on the international opportunity, I know areas like Japan have been talked about quite a bit with you guys. Maybe just talk about kind of your strategy there, what it is now? And then again, what that could be as we look out a little bit into the future?

Do you want to go on?

Yes.

Go ahead.

Yes. Well, I think the biggest opportunity for us that we've spoken about is Japan. We got regulatory approval roughly 12 months ago. We've been in reimbursement discussions in Japan since then. So we're hopeful that we'll get national reimbursement at some point this year. And Japan is a very large market. We look at that as being sort of half the size of the U.S. market with good reimbursement. So that's something we're very focused on. And we've also mentioned China is an opportunity for us on the biopharma side of the business. We've -- in partnership with Adicon in China, which is, I think, the third largest lab company in China, and what that will do is open up China to us for many of our large pharma customers. They need presence, local presence in China, to be able to run their local studies in China. And so they've been asking us for a long time, when are we going to be there in China? So hopefully, by the end of the year, we've got an operational lab, and that will just open the biopharma market much wider for us.

I think we're just about out of time. AmirAli, Mike, thank you guys so much.

Thanks.

Thanks for having us.

Thank you, guys.