Good afternoon, and welcome to the Guardians Health 4th Quarter and Full Year 2018 Earnings Conference Call. At this time, all participants are in a listen only mode. We will be facilitating a question and answer session towards the end of today's call. As a reminder, this call is being recorded for replay purposes. I would now like to turn the call over to Carrie Mendivil from the Gilmartin Group for a few introductory comments.
Thank you. Earlier today, Guardant Health released financial results for the quarter ended December 31, 2018. If you have not received this news release or if you'd like to be added to the company's distribution list, please send an e mail to investorsgardenhealth.com. Before we begin, I'd like to remind you that management will make statements during this call that are forward looking statements within the meaning of federal securities laws. These statements involve material risks and uncertainties that could cause actual results or events to materially differ from those anticipated.
Additional information regarding these risks and uncertainties appear in the section entitled Forward Looking Statements from the press release Guardant issued today. For a more complete list and description, please see the Risk Factors section of the company's Q4 report on Form 10 ks, which the company will file with the Securities and Exchange Commission. Guardant disclaims any intention or obligation to update or revise any financial projections or forward looking statements, whether because of new information, future events or otherwise. This conference call contains time sensitive information and is accurate only as of the live broadcast, March 12, 2019. With that, I would like to turn the call over to Helmy El Toupi, Guardant's Chief Executive Officer.
Helmy?
Thanks, Carrie, and thank you everyone for joining us this afternoon. I am pleased to welcome you to Guardant Health's 4th quarter and full year 2018 earnings call. Joining me today is AmirAli Talazaz, my Co Founder and Guardant's President and Derek Bertocci, our Chief Financial Officer. The mission of Guardant Health is to conquer cancer with data and this mission is fueled by our commitment to the patients we serve. Accordingly, I would like to begin our call today with a brief patient story.
We recently tested a 61 year old non smoking female patient diagnosed with metastatic lung cancer. Tissue testing for only the most common gene mutations known as hotspot testing at her community hospital failed to identify any targetable alterations. She was referred to an academic cancer center in the Midwest for further testing where she was immediately hospitalized. Because her health was declining, there was little to no hope of her ever leaving the hospital. At the academic cancer center, her oncologist immediately ordered Guardant360 because the test is the most rapid means of comprehensive testing for all targetable mutations, including rare ones not commonly tested for.
Just 4 days following the blood draw, the Guardant360 results came back. A pair of rare EGFR mutations that are treatable were found. The patient was immediately placed in ociramatinib, a targeted therapy with a response rate 2 to 3 times higher than chemotherapy or immunotherapy. As a result of this information and this corresponding therapy, she was discharged from the hospital just a few days later. This patient story illustrates how rapid and comprehensive genomic results can be critical to a good outcome when treating advanced cancer patients.
Tissue based genomic testing currently has a turnaround time of 2 to 4 weeks as samples typically have to be sent from the hospital where the biopsy was performed or stored to an outside laboratory capable of doing next generation sequencing. In contrast Guardant360 is a simple blood test with a 7 day turnaround time from any location
in
the U. S. Often oncologists have to initiate treatment within a week to 10 days and unfortunately about 1 third of patients do not get a second chance for another treatment after the first one fails. This case demonstrates the necessity of a blood first genomic testing paradigm predicated in a highly sensitive and well validated comprehensive testing platform with rapid turnaround time. This story tangibly illustrates our belief that with better tools providing better information upfront, clinicians can apply and more effectively utilize precision oncology to better conquer cancer, not only for advanced cancer patients today, but even at the earliest stages of cancer in the future where intervention may be considerably more effective.
With this goal in mind, we have developed a proprietary platform that enables far greater access to the tumors underlying information and are developing tools based on this platform to address the 3 main buckets of cancer care, therapy selection, recurrence monitoring and early detection. To date, we have launched 3 products Guardant360 and GuardantOMNI for the therapy selection market. And most recently in December of 2018, the LUNAR assay for research applications related to recurrence monitoring and residual disease detection. Guardant360 is today the market leading liquid biopsy used over 80,000 times by more than 6,000 oncologists in over 50 pharma companies. Leveraging data and deep biological insights we are gathering from these commercial programs, we are continuing to make important progress with our LUNAR research targeting residual disease recurrence monitoring and early detection.
We are making exciting advancements in these programs and estimate the market opportunity for our commercial and pipeline products is over $35,000,000,000 in the United States alone. During 2018, we have made significant progress in multiple fronts with driving continued adoption of our liquid biopsy platform by providers, biopharmaceutical customers and payers exited the year with 82% year over year revenue growth or $90,600,000 Revenue for the 4th quarter totaled $32,900,000 representing growth of 64% over the prior year quarter. Clinical volumes grew 24% year over year in the Q4 to 8,596 clinical tests and pharmaceutical volumes grew 14% year over year to 3,009 tests. Despite our position as the market leader and encouraging progress in the comprehensive liquid biopsy setting, we are still in the very early innings of this exciting opportunity. Looking ahead in 2019, we are committed to advancing our entire product platform.
On the therapy selection front, we will accomplish this by building out proof points in order to move towards a blood first paradigm for genotyping of advanced cancer patients, which we believe will further accelerate adoption of testing. As was evident in our patient story, delaying care that may result from tissue testing could be detrimental to the patient's treatment options, not to mention the average lung biopsy costs over $14,000 and has a 19% complication rate. This is part of the reason why only a staggeringly low 8% of lung cancer patients are tested to the standards recommended by guidelines. In our last earnings call, we outlined 3 elements which will be key drivers for this shift. The first is the readout from our NILE study, a prospective multicenter clinical trial measuring Guardant360 head to head versus tissue in approximately 300 non small cell lung cancer patients.
2nd is FDA approval of Guardant360 with a pan cancer tumor profiling label. And finally, the third is pan cancer Medicare coverage based on FDA approval that will be granted under the recently finalized National Coverage Determination or NCD for next generation sequencing tests. In late February, we were very proud to announce that the abstract detailing the readout from our NILE study was published ahead of its presentation at the American Association For Cancer Research or AACR Annual Meeting in late March. In this study, landmark data demonstrated that Guardant360 detected targetable genomic biomarkers at a similar rate to tissue, meeting the study's primary endpoints and supporting the use of blood based biomarker testing ahead of tissue based testing for all newly diagnosed advanced non small cell lung cancer patients. Investigators found that Guardant360 identified guideline recommended biomarkers in 77 patients.
Tissue testing identified them in 60. Importantly, for each patient in whom Guardant360 identified a target of an FDA approved drug EGFR ALK, BRAF or ROS1, tissue also detected the same alteration. Importantly, the median time to results for Guardant360 was much shorter than for tissue testing, a key component as time to treatment is a critical factor in the care of a lung cancer patient that typically has a median survival of less than 1 year. Guardant360 results were reported an average of 9 days versus 15 days for tissue. The NILE data indicates that it is a compelling option to use liquid first ahead of tissue for molecular testing and newly diagnosed advanced non small lung cancer patients, given that Guardant360 finds mutations at a similar rate to tissue based testing while ensuring patients receive guideline complete testing with a faster turnaround time.
This data marks a big step forward in establishing a blood first paradigm. This is an important new data set for oncologists and taking together with other recent independent investigations into Guardant360 in this clinical setting supports the first line use of Guardant360 for treatment selection ahead of tissue testing. Even ahead of the other two elements, FDA approval and pan cancer Medicare coverage, the sheer volume of analytical and clinical data that we have generated to date combined with our support from clinicians has led to what we believe is an unparalleled number of positive coverage decisions in this space from commercial payers. Guardant360 is currently covered by Medicare and many private payers including Cigna and many Blues plans, which have all adopted reimbursement policies that specifically cover Guardant360 for non small cell lung cancer. In the Q4 of 2018, we were endorsed by the Blue Cross Blue Shield Association, which has led to a sharp step function increase in the number of Blues plans adopting positive policies for Guardant360 such as Blue Cross Blue Shield of Florida, Horizon Blue of New Jersey and Blue Shield of California to name a few.
As a result, we are pleased to update the number of covered lives to over 115,000,000 up from 77,000,000 lives at the end of Q3. Looking ahead to 2019, we aim to take advantage of these tailwinds and upcoming potential catalysts by continuing to invest in areas of substantial growth. Specifically, as we mentioned in our last earnings call, we are in the process of expanding our commercial team to approximately 60 sales representatives and already seeing early return on investments there. We are making tremendous progress with our LUNAR program and intend to further accelerate our research and development efforts towards earlier cancer detection. Finally, we are making excellent progress with our SoftBank joint venture and will accordingly accelerate some of our regulatory and commercial activities there to capitalize in the large market opportunity for liquid biopsy in Japan.
In sum, we are very encouraged by the strong growth across our business and as a result are projecting 2019 revenue $130,000,000 to $135,000,000 With that, I will now turn the call over to AmirAli Talasaz for more details on our recent progress of our business and product portfolio. AmirAli?
Thanks, Elmi. In parallel to our efforts of accelerating adoption of clinical testing, we are also deepening our relationships across more than 50 pharma partnerships, which use our services in drug discovery and development programs. In the Q4, we continue to make progress on our companion diagnostic pipeline and announced a multiyear agreement with AstraZeneca to develop blood based companion diagnostic tests supporting the commercialization of AstraZeneca's oncology portfolio based on our industry leading comprehensive liquid biopsy platform. The first component of this partnership is a collaboration around Guardant360 to utilize it as a companion diagnostic for progression. Today, Tagrisso is the leading target therapy by revenue in the non small cell lung cancer space.
We are excited to leverage our Guardant360 technology to help find more eligible patients who could benefit from this breakthrough therapy. The second component is a collaboration around AstraZeneca's lead immuno oncology asset, Imfinzi. Under this collaboration, GuardantOMNI will be used as a companion diagnostic to identify patients that may more likely respond to immuno oncology agents based on tumor mutational burden or TMB. At European Society For Medical Oncology or ESMO Immuno Oncology 2018 Congress, AstraZeneca presented TMB data using GuardantOMNI from the Phase 3 MYSTIC trial. In an exploratory analysis, GuardantOMNI was able to successfully call TMB from blood on almost twice as many patients versus tissue based TMB approaches.
Our proprietary method of calling TMB resulted in a dramatic improvement in overall survival of AstraZeneca's combo I originin over standard chemotherapy for those patients that were TMB high, 39% overall survival at 2 years compared to only 18% overall survival for chemotherapy. The data presented at ESMO's IO Congress builds recent data that show Guardant's liquid biopsy technology can increase the number of patients who are tested for important biomarkers relative to tissue. AstraZeneca's working target therapy and immuno oncology has already benefited thousands of advanced cancer patients and we are proud to support expansion of the impact of AstraZeneca's assets. GuardantOMNI will be the 2nd test that we are taking through the FDA and as a result, we will be eligible for Medicare coverage under the NCD. In support of these efforts, we recently received breakthrough device designation for GuardantOMNI, which will enable an accelerated review process.
Between Guardant360 and GuardantOMNI, we are building a highly differentiated and broad companion diagnostic liquid portfolio. We believe this portfolio will streamline the clinical development and commercialization process for new drugs and increase the adoption rates of new biomarker driven therapies post approval. Accordingly, we are continuing to see growing interest from many of our biopharmaceutical partners in leveraging our companion diagnostic development capabilities for their programs. We also believe that the significant increase in companion diagnostic opportunities we are pursuing, including those around GuardantOMNI should only minimally impact the previously mentioned first half of twenty nineteen timeline for our FDA submission of Guardant360. And finally, turning to our LUNAR program.
We are excited about the progress towards recurrence monitoring for cancer survivors and early detection. In early 2019, we announced the launch of the LUNAR assay for research use by biopharmaceutical and academic researchers. Through our we have we have captured data over a number of years that provides us with deep insight into the circulating tumor DNA biology of cancer patients. The LUNAR assay leverages these insights in order to overcome a variety of challenges that have confounded prior approaches for the detection of early stage cancers, including inadequate tissue, biological noise and the limited sensitivity of genomic only tests. With a single blood drop, the assay is simultaneously able to detect both genomic alteration and epigenomic signatures, which are combined and reported as a single quantitative measure of tumor burden.
Using somatic genomic alteration alone has issues with clinical sensitivity of detecting cancer in early stage patients. We believe that the incorporation of biologically relevant epigenomic signatures is critical in increasing the sensitivity of the assay. Multiple top tier academic research networks and biopharma companies will utilize the LUNAR assay in studies involving adjuvant therapy decision making, recurrence monitoring and minimal residual disease detection. The clinical version of the test for investigational use in prospective studies is expected to launch in the second half of twenty nineteen. Earlier intervention using precision medicine oncology could potentially improve outcomes for substantial number of cancer patients.
Based on the LUNAR technical performance we are seeing through the addition of epigenomics, we've been exploring use of the assay for screening in early stage cancers. We are encouraged by the early promising LUNAR clinical data and look forward to presenting further details on its performance in detection of early stage colon cancer at the AACR Annual Meeting in late March. With that, I will now turn the call over to Derek Bertocci for more detail on our financials. Derek?
Thank you, AmirAli. Revenue for the Q4 of 2018 totaled $32,900,000 up 64% from $20,000,000 in the same period of the prior year. This growth was driven by precision oncology testing revenue, which increased 98% due to a combination of higher testing volume and increased revenue per test. 4th quarter clinical precision oncology volume totaled 8,596 tests, up 24% from 6,940 tests in the prior year quarter, due mainly to an increase in the number of physicians ordering Guardant360 tests. Average revenue recognized per test in the Q4 was more than double the Q4 of the prior year due to higher payments from commercial payers that were beneficially affected by the Protecting Access to Medicare Act of 2014 plus payments that we began to receive in the Q4 from Medicare under our LCD.
Of the $4,300,000 we received from Medicare in the Q4, dollars 2,100,000 was paid for samples tested in the Q3 of 2018. Excluding this $2,100,000 ongoing precision oncology revenue from clinical tests in the Q4 totaled $15,100,000 up 124 percent from $6,800,000 for the prior year quarter. 4th quarter biopharmaceutical precision oncology volume totaled 3,009 tests, up 14% from 2,630 tests in the prior year quarter due to an increase in demand for GuardantOMNI tests. Precision oncology revenue from biopharmaceutical tests in the 4th quarter totaled $10,800,000 up 46% from $7,400,000 for the prior year quarter due to an increase in volume and the higher price for GuardantOMNI tests. Development services revenue in the 4th quarter totaled $4,800,000 down 18% from the prior year quarter, which included $5,100,000 of revenue recognized from completion of a laboratory development project in 2017.
Development services revenue from biopharmaceutical customers is subject to quarter to quarter variability as drug discovery and development programs start and complete. Development services revenue of $12,200,000 for the full year 2018 was up 58% from $7,800,000 in the prior year. Along with the high growth in biopharmaceutical precision oncology revenue, this demonstrates the increasing demand from biopharmaceutical customers for Guardant Health tests and services. Gross profit is total revenue less cost of precision oncology testing and cost of development services. Gross profit for the Q4 of 2018 was $18,900,000 compared to the gross profit of $10,900,000 in the same period as the prior year.
The gross margin or gross profit divided by total revenue in the 4th quarter was 57.6% as compared to 54.3% during the Q4 of 2017. Gross margin improvement was primarily due to extra revenue booked from Medicare payments as well as an increase in precision oncology ASP and a nominal increase in precision oncology nominal decrease in precision oncology cost per sample. Total operating expenses for the Q4 of 2018 were $46,300,000 or 75% or a 75% increase from $26,500,000 in the Q4 of 2017. With significant progress in several areas, including improving reimbursement for clinical precision oncology testing, growing demand from biopharmaceutical customers and encouraging early results from our LUNAR assay. We have increased our investment in key functions to optimize Guardant Health's ability to capture the leadership position in our target markets and provide the best benefits to patients, customers and our shareholders.
We have approximately doubled R and D spending to drive our LUNAR programs, prepare for our Guardant360 submission to the FDA and continue to improve our Guardant360 and GuardantOMNI products. In sales and marketing, staff and programs have been increased to pursue opportunities in several areas. First, in our joint venture with SoftBank, we have established the initial teams to pursue opportunities in Asia, Middle East and Africa, with particular emphasis on Japan, where we are already involved in large clinical studies. 2nd, given our significant improvements in reimbursement, we increased our staff and programs to drive clinical adoption in the U. S.
3rd, we are expanding our biopharmaceutical commercial team to handle the significant increase in demand for testing and more recently companion diagnostic services from biopharmaceutical customers. General and administrative expenses were increased as a result of additional requirements of the public our international joint venture with SoftBank and to support our overall growth. Net loss for the period was $25,300,000 compared to a net loss of 15 $100,000 in the Q4 of 2017. Net loss per share attributable to Guardant Health common stockholders was $0.30 in the Q4 of 2018 as compared to $1.27 in the corresponding period of the prior year. Turning to the full year 2018, revenues were $90,600,000 an 82% increase from $49,800,000 in 2017.
Precision oncology revenue increased $36,300,000 or 86% with clinical and biopharmaceutical each contributing similar amounts to the growth. Clinical volume for the year grew to 29,592 tests, up 15% year over year from 25,626 tests, due mainly to an increase in the number of physicians ordering Guardant360 tests. The average revenue recognized per test in 2018 rose 54% from the prior year as a result of factors noted previously for the Q4. Combined, volume and price increase drove a 78% increase in clinical testing revenue in 2018 to $43,700,000 from $24,500,000 in 2017. Biopharmaceutical volume grew 65% year over year to 10,370 tests due to introduction of GuardantOMNI at the end of 2017, plus an increase in the number of biopharmaceutical customers and their contracted projects.
Precision oncology testing revenue for biopharmaceutical customers increased 98% in 2018 to $34,700,000 dollars from $17,600,000 in 2017 due to the increase in test volume plus the higher price charge for GuardantOMNI. Development services revenue grew 58 percent to $12,200,000 due to new projects in 2018 mainly earned from biopharmaceutical customers for companion diagnostic development and regulatory approval services, plus completion of the lab installation project, which was primarily performed in 2017. Gross profit for 2018 was $47,400,000 compared to a gross profit of $18,200,000 in 2017. The gross margin or gross profit divided by total revenue in 2018 was 52.3% as compared to 36.6% in 2017. Gross margin improvement was due to several factors.
One, we began to be paid in the Q4 for testing Medicare patients as a result of the issuance of our LCD in late August 2018. 2, commercial payers made higher payments that we believe were beneficially affected by the protecting access to Medicare Act of 2014. 3, the average selling price of biopharmaceutical tests increased due to introduction at the end of 2017 of the GuardantOMNI test, which has a higher selling price test. And 4, the overall increase in volume of tests, which supports more efficient use of our production facilities. Total operating expenses in 2018 were $140,400,000 a 48 percent year over year and $94,800,000 in 2017.
R and D expenses for 2018 were $50,700,000 compared to $25,600,000 in 2017. Net loss for the period was $84,300,000 compared to a loss of $83,200,000 in 20.17. Net loss per share attributable to Guardant Health common stockholders was $2.80 in 20.18 as compared to $7.07 in 2017. We ended the Q4 of 2018 with $496,500,000 in cash, cash equivalents and marketable securities. For the full year 2019, we forecast revenue to be in the range of 100 and $30,000,000 to $135,000,000 representing growth of 43% to 49% over 2018.
We expect this growth to be more heavily weighted to the first half of twenty nineteen as a result of revenue contributions from companion diagnostic programs. We expect net loss in the range of $126,000,000 to $129,000,000 We also expect clinical sample volume for 2019 to be in the range of 35,000 to 37,000 tests. At this point, I would like to turn the call back to Helmy for closing comments.
Thank you, Derek. In closing, we believe we have a unique opportunity at Guardant to expand unprecedented access to cancer's molecular information throughout all stages of the disease. We are making significant progress in our goals and look forward to presenting data from our NILE study and LUNAR program at AACR. With that, we will now open it up to questions. Operator?
Thank you, sir. Our first question is going to come from Tycho Peterson from JPMorgan. Your line is now open.
Hey, guys. This is Tejas on for Tycho. Thanks for the questions here and congrats on the quarter. Just wanted to get a better understanding, Helmy, if your 2019 guidance, I believe I just heard Derek say it's going to be weighted towards the first half due to companion diagnostic milestones. Is the upside relative to where most street numbers were driven more by the companion diagnostic piece or is it sort of fundamental clinical strength?
And if you could talk a little bit about your underlying volume assumptions for clinical versus biopharma, that would be super helpful as well.
Yes. Maybe I'll start and then maybe Derek can jump in. I think we're seeing very good progress in all aspects of our business. I think if you think about the numbers we're guiding towards in terms of 35000 to 37000 clinical tests, I think we're seeing good progress with some of the clinical data releases, some of the investments we've made in the commercial team. And so we're, I think, thoroughly encouraged by, I think, the early signs that we're seeing in our business.
I think we see similar growth to that on the biopharmaceutical side as well. So I would say that both sides are seeing that backbone of growth. And then overlaid onto that are some of these companion diagnostic deals that we believe will be front half weighted in terms of the revenue contribution?
Yes. As Helmy said, we are seeing good growth in both. And as mentioned, the development services deal that we announced are accelerating our growth in that area. So that would be what we're expecting to particularly impact the first half of the year.
Got it. And then a quick follow-up here on the NILE study. Helmy, do you over what timeframe should we start thinking of perhaps an upside or a lift in volumes based upon some of this concordance data? And any color you can share on outcomes here? I mean comparing sort of liquid versus tissue.
I remember in the past, you've spoken about sort of clinical outcomes being the true gold standard. So beyond just sort of concordance for test sensitivity and specificity, any efforts along those lines that you have in the pipeline here?
Yes. So both good questions. Maybe I'll start with the second one. So secondary endpoint of the study is clinical outcomes that will read out and that's still ongoing. So we will get that as part of the NILE study.
But we believe that a lot of the importance of NILE is really this idea that can you trust liquid at the first line setting? Can you sequence it before tissue testing? And I think the positive readout and the meeting of the primary endpoint of NILE, I think proves that out. And so we believe that there are a couple of steps that are needed. NILE is obviously the first critical catalyst we believe to initiating and establishing a blood first paradigm in liquid.
But we think that needs to be obviously paired up with FDA approval to have that stamp of quality and the 3rd party stamp of kind of approval by an agency that clinicians trust in. And the 3rd piece and equally important is the expansion of Medicare coverage from lung cancer that we currently have to pan cancer. And so this is why we are building up the commercial team at this point. We've made good progress there. But we believe to fully realize I think true acceleration and adoption all those three catalysts are coming in.
That being said, I think we saw some positive uplift from the JAMA Oncology study in Q4 of last year and you can see that we had a fairly strong Q4 in terms of clinical volume. So some of these things will help. How much each one helps individually? I think it's hard to predetermine, but we do believe the combination of all three, we have very high confidence that that would lead to a turning point and inflection point in terms of adoption of liquid testing.
Got it. And then one final one for me or for perhaps Amurali. I think Amurali towards the end of your comments you mentioned some exciting data in colon And one of the AACR abstracts that really jumped out showed that in this retrospective analysis, you had a 95% detection rate in stage 12 colon. I think it was a little bit higher in stage 3, if you include stage 3. So could we see you perhaps launch a standalone assay for early detection in colon, given some of the success others have had with alternatives to colonoscopy?
And how and do you have any plans for a prospective cohort that looks at the performance of the assay in this setting as well?
Yes, sure. So, this is actually we are excited with some of the early and promising data that we are seeing in our LUNAR R and D activities. What you highlighted this LUNAR abstract which is going to get presented in an oral setting in AACR. It's a promising early data for us that really shows the potential of liquid biopsies in impacting early cancer management, specifically like early cancer detection. Based on that, we are basically increasing our investments in the R and D activity around LUNAR.
Still it's a small number of patients that are basically tested in that abstract. Definitely, we are over time are increasing the number of patients and also match control patients to better understand the performance of the assay that we have developed. But we believe it's a very unique differentiated assay and early promising data shows that really liquid biopsy could have that potential. So we are going to give it its course. And in future, we would keep you guys posted and the whole field about how LUNAR can play a role in early cancer detection.
And prospective studies is definitely a part of it.
Got it. Thanks so much guys.
Yes. Thanks, David.
Thank you. And our next question comes from Derik DeBruheme from Bank of America. Your line is now open.
Hello, good afternoon.
Hi Derik. Hey.
A couple of questions. So, the pan cancer label, obviously, an important milestone coming up. Can you sort can you walk us through, it's like the what the FDA needs to see to make sure that you get the pan cancer label? And I think there's just the question being is there some sort of what's the risk around not getting that designation?
Yes. So I'll let Emery Ali jump in
and answer that. Yes. So Derek, as you may know, in the FDA packages, there are different kind of documents that you have to provide to FDA in terms of your quality system, in terms of the analytical validation of the assay and clinical validation of the assay. So we are well into those programs and both in terms of quality system, analytical data and clinical validation. The partnership that we announced with AstraZeneca around Guardant360 and Tagrisso is related to that FDA package, which is basically on the clinical validation is running the retrospective patient samples that have been part of that clinical trial before.
So everything is retrospective testing or model samples that we have to test and submit the data to FDA. Since we have breakthrough device designation, we are projecting that that review cycle would take 6 months post our PMA submission later in the first half of twenty nineteen or with some maybe minimal impact right after that.
Great. But is there anything specific though, anything included in the assay that you have to get so specifically to get the pan cancer? I mean, I think it's pretty obvious you'll get a late stage non small cell lung cancer approval. I mean, the data is very strong. I'm just curious if there's something incremental you need to show for pan cancer.
Yes. So in terms of studies, they are kind of all pre agreed with the agency. And there are a lot of similarities with type of analytical studies that they wanted to see even for tissue based testing. So effectively, many different cancer type are going to get tested as part of the analytical validation in order to get the tumor profiling claim across pan cancer types. And all of those kinds of studies are already planned and ongoing.
Great.
In the Japan, the SoftBank and sort of that expansion to that market, how long should we when should we start to see a sort of a contribution to that? I mean, I think we have some pickup in that program and contributing to the second half of twenty nineteen. Is that still a good way to look at significant as this pickup in sales to Japan?
I think we obviously are seeing some growth there in terms of volume. A lot of that is us working with a lot of the hospitals there. But I would say for a real pickup, it's going to come after regulatory approval and MHLW reimbursement and that's going to take some time. The review cycle is long, but we're making very good progress on that. There's a lot of excitement in Japan around this type of testing and providing this type of testing for cancer patients there.
Great. And just a question on the when you start to think about using liquid biopsy as a first line in the lung cancer, sort of how do you think about the market on that? I mean, the if it did go first line, how should we think about the number of biopsies? And obviously, there's also the recurrence of the use of its assay. And I'm just sort of curious in sort of like how you're thinking about the TAM and how you think about the modeling of the first line non small cell lung cancer for Guardant360?
As you know from the drug space, getting the first line is the biggest market opportunity. And so that's why we see this jumping over from progression use case that we first launched in to really solidly showing that this can be used in the first line setting without compromising patient care. That being said, there are 700,000 metastatic or advanced cancer patients in the market and those are the first line setting. So I think it's consistent with our TAM, the $6,000,000,000 opportunity in the therapy selection market. And we believe this is part of the roadmap of realizing that TAM is moving towards first line use of Guardant360 testing.
And Merrill will jump in and add something.
And just to make one comment, NILE has been focused on lung cancer and really trying to make the statement blood first paradigm in non small cell lung cancer. But we don't believe this is this blood first paradigm is just applicable to lung cancer. That's definitely what NILE proves today. If you just look at our publication now, about half of our publications are outside lung cancer and there are many different cancer types that standard of care based on tissue testing are not the best diagnostic paradigm of choice as the first testing modality. So we are expecting that the same kind of finding and blood first paradigm could get expanded into other cancer types as well.
Yes. We're seeing that same gap between clinical guidelines and clinical practice and other cancer types. So stay tuned.
Great. And just a quick one for Derek. The revenue split, just sort of thinking about buckets between the clinical and biopharma split in the 130 to 135 guide?
Yes. So in terms of that split, just a second. It is going to be probably getting close to a similar revenue numbers because we while we have more samples in the clinical side, we still have full reimbursement there. And on the pharma side, we have omni. So I'd say that they're close to similar.
Great. Thank you very much.
Yes. That's in the precision oncology, of course. Development services is entirely different revenue stream.
Yes, of course. Yes.
Thank you. Our next question comes from Puneet Bouda from SVB Leerink. Your line is now open.
Yes. Hi. Congrats on the quarter. So maybe just the first question, I just want to clarify for the approval in NCD, OMNI and NCD OMNI and G360 are going to be filed together and should we expect both at the same time now with BTD also for Omni?
So the answer is no, Puneet. So the Guardant360 is the IVD program that we've been working on for a while. So and we disclosed the timeline for that PMA submission. GuardantOMNI is a new IVD development activity for us. So for sure, it's going to be at a later time.
Still, it's too early for us to project a PMA submission timeline for that program. But there is a lot of learning and experience and infrastructure, which is scalable here when we did the first IVD program that will look at gardens in order to go through the 2nd development project.
Okay. Got it. Maybe if I could touch on Nile data again, and I know it's been talked about, but if we saw the data, look, 17 samples had liquid, where liquid picked up versus the tissue ahead of the tissue, but there were 12 samples where there was tissue only detection. So I just wanted to get a sense of how do you sort of position the test after that data and how in terms of what data sets that you need beyond this in order to convince the oncologists longer term the liquid first paradigm is the way to go? Should we just expect that as when the final NILE data is completed for 300 plus patients?
Or should there be more and more studies that here sort of convince the oncologists longer term?
Let me start with that and I'll let others chime in. It's a good question in terms of let me unpack that in terms of kind of multiple aspects of that question. So the first is neither testing modality is perfect. Liquid misses some, tissue misses some as well. But what the NILE data shows is there's an ideal sequence to how you position these tests.
If we think about what we're trying to establish, it's a blood first paradigm, not a blood only paradigm. And so, what we find is because of the shorter turnaround time, the ease of use, and the completeness of our liquid solution, by sequencing liquid ahead of tissue and reflexing the negative tested patients to tissue, you actually get more complete biomarker testing faster in first line non small cell lung cancer. And so that's really the punch line of NILE. Secondly, NILE shouldn't be taken into a vacuum. It's one of it'll be over 100 publications we have around Guardant360 once the full publication comes out.
And so if you think about that, what has preceded NILE? Obviously studies from University of Pennsylvania that recently read out in JAMA Oncology, our complete study with concordance of over 7,000 lung cancer samples and many others looking at concordance, looking at outcomes. And no one data set can really move the needle, but NILE is not just one data set. It's the culmination of a steady stream of data supporting use of this type of testing in first line lung cancer. And so obviously it's something that we are in the process of and intending to repeat for other cancer types to transition this further.
And is this going to be enough to completely move the needle? I think that I think we feel very confident that this is going to go a long way. And that being basically committed to continued investment in showing where our tests can move the needle and how they can add value.
Okay, great. And then if I could just touch on the omni as a product, now it seems to be getting more traction in the market and among the biopharma and then you obviously have plans for FDA and NCD approval for the product. Given the features that you're getting out of it, could you, first of all, give a sense of overall what features are getting demanded? Obviously, this is a 500 gene panel via fusions, you have other product features there. What is what are you seeing customers asking for, especially biopharma customers?
And what's your view here longer term for product features like TMB, MSI and other things that you're getting out of the product?
Yes, sure. So definitely the excitements around GuardantOMNI has been amazing. And it unlike some opportunities for us, especially with biopharmaceutical companies with strong IO programs. But its impact is not limited to the IO programs. We are even seeing some uptake in the targeted therapy areas and some other kind of drug assets.
It's a comprehensive way of looking at all kind of biomarkers, which there are many pipeline activities around it. The interest has been ranging from translation on medicine sites, we kept some biomarker research and discovery all the way to the clinical development and companion diagnostic as shown by the partnership that we announced with AstraZeneca that CardantOMNI is going to be used as a blood based TMB color. There are some interest around TMB feature around Guardant Omni, which in order to accurately call TMB, you need to have large panels. And also the fact that the TMB calling that we are using GuardantOMNI is just it's not just a simple mutation counting. It's a proprietary way of calling TMB that we filter out biological noises, we filter out somatic germline variance and we discriminate against each other and also be correct for the level of the tumor shedding in circulation, which is critical in order to have an accurate way of TMB assessment using GuardantOMNI.
So there are for different kinds of reasons and different kind of unmet needs by our biopharma customers, we are seeing huge uptake for GuardantOMNI.
Thank you. Our next question comes from Brian Weinstein from William Blair. Your line is now open.
Hi, guys. Good afternoon. This is actually Andrew on for Brian.
Hi, Brian.
Maybe we could start and just sort of take a step back given this is your first call guiding to a full year. And maybe you guys could talk a little bit about the process that you guys went through in order to set your full year guidance.
So I mean our full year guidance is obviously based on our annual planning process, which is a comprehensive look at our customers and markets, we come up with our best understanding of what we think the potential is and then we put that together into a plan. And our goal in providing guidance is to provide what we believe to be a realistic assessment of our opportunities. As you can see, it's close to 50% increase. So it's still a very high bar that we're targeting to go after.
Great. Maybe just a little bit more specific on that on the clinical volume side, sort of what's implied in terms of new clinician adds versus sort of increasing utilization within that group?
So it's a good question. So if we think about the current adoption that we've seen before last couple of quarters we've had traditionally relatively undersized sales force at 20 to 30 sales reps. It takes about 60 reps to really get to a full coverage of the 10000 to 12000 oncologists in the United States. And that's obviously something we're making good progress in terms of ramping up towards. And so new addition adds is going to continue to be an important component in the volume growth given that it'll only be in the coming kind of quarters that we will have we're also seeing that
data is
very We're also seeing that data is very valuable in terms of deepening our penetration into more intermittent users of comprehensive testing. And so we see both factors actually contributing to upcoming growth in the quarters and years to come.
Great, thanks. And then maybe just the last one on guidance, maybe on the development services side, could you talk about what's sort of baked in there? Do you guys factor in any sort of new contract signed throughout the year? How do you think about that? Thank you.
So for development services, because they are large individual agreements, we do look at what we see as prospects. But given that we're still fairly new in this area and it takes a long time for pharmaceutical companies to get to the point of moving forward. We are cautious about our forecasting and provide apply a fairly rigorous discounting if you will in terms of probability. That being said, we obviously signed some very large agreements with AstraZeneca, which provides a very solid base. We are seeing very strong interest from pharmaceutical companies.
So we expect it to grow in the long run, but we're trying to be measured about how much we expect in the near term.
Great. Thanks.
Very good. Thank you.
Thank you. And I'm showing no further questions.