Good afternoon, and welcome to Guardant Health's First Quarter 2019 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 March 31, 2019. 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 the 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 appears in the section entitled Forward Looking Statements and 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, May 9, 2019. With that, I'd like to turn the call over to Helmy El Chugighe, Gardens, Co Founder and Chief Executive Officer.
Tony?
Thanks, Carrie, and thank you everyone for joining us this afternoon. I am pleased to welcome you to GuardantHealth's Q1 2019 earnings call. Joining me today is AmirAli Telesaz, our President and Co Founder and Derek Bertocci, our Chief Financial Officer. At Guardant, we are fueled by our commitment to the patients we serve. So I would like to begin today's call by highlighting one patient's treatment journey.
The 51 year old female who had never smoked presented with shortness of breath and fluid in her right lung. A needle aspiration so she underwent another invasive tissue biopsy. This biopsy sample was PD L1 positive, but had only enough tissue to be tested for 1 of the 8 guideline recommended gene targets ALK, which was negative. She was prescribed pembrolizumab immunotherapy, but her cancer continued to progress. After a failed biopsy attempt, she was then transferred to an academic cancer center where she had her 4th tissue biopsy.
This center performed a series of individual tests for EGFR, ALK, ROS1, BRAF and RET, which were all negative. Her health severely declined, necessitating further hospitalization. At this time, 1 year after her initial diagnosis, her physician ordered a Guardant360 test. Just 6 days from receipt of her sample, Guardant360 identified a rash fusion that was missed by tissue testing. She was then enrolled into a clinical trial with a new targeted therapy for RET fusions to which she had a dramatic clinical response.
This patient had a likely avoidable 1 year delay for separate invasive procedures and multiple hospitalizations before discovering her RET fusion with Guardant360. This story demonstrates the challenges that tissue access poses to comprehensive genotyping and subsequent treatment. It also shows how quickly and non invasively Guardant360 can unlock this information and can positively impact outcomes for advanced stage cancer patients. It is our mission at Guardant to conquer cancer with data and we are developing products to address 3 broad population segments spanning the cancer care continuum. 1st, advanced stage patients second, early stage patients and cancer survivors and 3rd, asymptomatic individuals.
In the first segment, we have launched 2 products Guardant360 and GuardantOMNI for therapy selection in advanced stage cancer. Since its introduction in 2014, Guardant360 has been ordered more than 100,000 times by more than 6,000 oncologists for patients with advanced cancer to help select treatment. The best in class performance of the assay is supported by more than 100 peer reviewed publications, which address its analytical validity, clinical validity, clinical utility and multiple tumor types. We are similarly seeing exceptionally strong demand for GuardantOMNI from our biopharma customers, while it's helping them gain deeper insights into their clinical development programs. These commercial tests combined with their massive data streams are fueling the technology and infrastructure development of our LUNAR program, which aims to address the next two population segments with tests for managing early stage disease, surveillance for cancer survivors and screening for asymptomatic individuals.
These efforts have resulted in our 3rd commercial test, the LUNAR assay launched in late 2018 for research use only. Specifically, the LUNAR assay is being used for applications related to guiding neoadjuvant or adjuvant decision making and recurrence monitoring. In parallel, we have been actively exploring the performance of our LUNAR assay in initial studies related to screening and early detection in asymptomatic individuals. We are off to a great start in 2019 as we continue to make significant progress across our business. We finished the quarter with revenue of $36,700,000 up 120% over the Q1 of 2018.
Clinical volume grew 31% year over year in the Q1 to 9,521 clinical tests and pharmaceutical volumes grew 61% year over year to 3,762 tests. Now I will dive into some highlights from Q1. In advanced stage cancer, we continue to focus on shifting the market to a blood first paradigm for genotyping, which we believe will be key to further accelerating the adoption of liquid biopsies. At the end of the Q1, our NILE study readout was presented by the study's senior author, Doctor. Papa Dimitrakupolu at the AACR Annual Meeting.
And more recently, these results were published in Clinical Cancer Research. This landmark data demonstrated that Guardant360 detected targetable genomic biomarkers at a similar rate to tissue meeting the study's primary endpoints and supports the use of blood based biomarker testing ahead of tissue based testing for all newly diagnosed advanced non small cell lung cancer patients. Guardant360 demonstrated a quicker turnaround time with a median time to result of 9 days versus 15 days for tissue testing. Furthermore, when results for Guardant360 and tissue testing were both available for a given patient, they were concordant in more than 90% of cases. We believe this strongly demonstrates the benefits of a blood first paradigm as a greater number of patients are genotyped more quickly versus the current standard of care.
In fact, 87% of all NCCN recommended actionable biomarkers would have been identified on initial testing with a Guardant360 First paradigm versus only 67% of biomarkers with a tissue first approach. This growing body of clinical evidence has led to continued momentum in securing positive payer coverage decisions for Guardant360. At the beginning of April, Guardant360 was added as a covered benefit for the members of the health plans associated with eviCore. This test will be considered medically necessary to assist in selecting therapy for patients with advanced lung cancer. As a result, Guardant360 will have added coverage for over 38,000,000 lives, including those associated with Healthcare Service Corporation, Independence Blue Cross, Highmark Blue Cross Blue Shield, among many others.
This will increase total lung cancer coverage for Guardant360 to more than 150,000,000 Americans, up from 115 1,000,000 at the end of 2018. Not only are we seeing significant increases in Guardant360 coverage in advanced non small cell lung cancer, we are also making progress in expanding coverage to other tumor types. At the end of Q1, Palmetto GBA posted a draft local coverage determination or LCD, which will potentially expand Medicare coverage of the Guardant360 assay to over a dozen advanced solid tumor cancer types with guideline recommended genomic targets. These tumor types represent the vast majority of all solid tumors. The draft LCD will apply to advanced cancer patients who are covered by Medicare for next generation sequencing tumor tissue, but have insufficient or unavailable tissue samples.
This is an important step towards ensuring all Medicare beneficiaries with advanced cancer have timely access to guideline recommended treatment options. This draft LCD is an important development for us as it gives Guardant360 another pathway towards pan cancer reimbursement coverage. Such a policy could be finalized in the late Q3 to Q4 time period, moderately ahead of potential coverage under the NCD following FDA approval. Looking ahead in 2019, we are working hard to take advantage of these positive developments and potential upcoming catalysts. We have nearly completed the expansion of our commercial team to approximately 60 sales representatives and we are seeing early return on investments there in terms of pickup in our clinical volumes.
Our clinical volumes also continue to grow in international markets as we advance our global commercialization, an area of particular interest to our biopharma partners. Our biopharma business continues to make significant progress both in adding new partners and deepening our relationships with current ones. Finally, the rate of technical development in our pipeline relating to our LUNAR R and D programs continues to surpass our expectations. In sum, we are very encouraged by the strong growth across our business. As a result of this progress, we now expect revenue for 2019 to be in the range of $145,000,000 to $150,000,000 up from our previous forecast of $130,000,000 to $135,000,000 This updated guidance reflects growth of 60% to 65% year over year.
With that, I will now turn the call over to AmirAli for more details on our progress with our biopharma business and our LUNAR program. AmirAli?
Thanks, Elmi. In parallel with our efforts to accelerate clinical adoption, we are partnering with more than 50 biopharma companies who are using the Guardant assay to support their drug discovery and development programs. We are encouraged by the increasing demand for GuardantOMNI from our biopharma partners, especially those in immuno oncology. The large performance gap between our platform and other liquid biopsy approaches is even further magnified when applied to a large 500 gene panel. We believe this strong demand from a broad range of partners is driven by the highly differentiated analytical and clinical performance that GuardantOMNI offers, not only around genotyping, but also for IO specific markers such as tumor mutational burden or TMB.
We are developing a companion diagnostic version of GuardantOMNI to identify TMB high patients. This assay has received breakthrough device designation, which will enable an accelerated review process upon submission to the FDA. The commercial success of Guardant360 and GuardantOMNI with the generation of their massive data sets are helping us to develop deeper insights into the biology of cell free DNA. This data engine fuels the progress in our LUNAR program, which aims to expand precision oncology from advanced cancer treatment into early cancer management, surveillance of cancer survivors and screening of asymptomatic individuals. The LUNAR assay is able to simultaneously detect genomic alteration and epigenomic variations such as methylation changes and more recently, nucleosomal positioning and fragmentomics signatures.
Recently nucleosomal positioning and fragmentomics signatures. At this year's the AACR Annual Meeting, we presented exploratory data around the use of our LUNAR assay for detecting cancer in patients recently diagnosed with colorectal cancer. This data was quite encouraging as it demonstrated detection rates exceeding 80% sensitivity with specificity in the mid-90s for detection of colorectal cancer in early stages in a cohort of 225 patients. We believe this initial data represents some of the most compelling performance shared to date for a blood based approach for early colorectal cancer detection and shows the potential of using this test for screening average risk asymptomatic individual. We are encouraged by the progress we continue to make with our technology platform and seek to further accelerate our investments to pursue this exciting market opportunity.
To this end, we are planning to start a prospective colorectal screening study of over 10,000 patients in the second half of twenty nineteen. In April, we closed on the acquisition of Bellwether Bio, a privately held company focused on improving oncology patient care through their pioneering research into the epigenomic content of cell free DNA. We believe the addition of the Bellwether technology and team will further enhance our efforts as we continue to advance our LUNAR program. The team includes Doctor. Jay Shenduri, who will act as a scientific advisor to Guardant Health.
Finally, I would like to welcome Doctor. Bahija Jalal to our Board of Directors. Doctor. Jalal is a talented leader with deep scientific and operational experience in immuno oncology therapeutics. She currently serves as the Chief Executive Officer of ImmunoCore and previously held leadership roles at both AstraZeneca and MedImmune.
She has authored more than 70 peer reviewed publications and holds more than 15 patents. In addition to Guardant, Doctor. Jalal sits on the Board of Immunocor and Anthem. She is also a member of the Board of Trustees of John Hopkins University and UMB Health Science Research Park Corporation and past President of the Association For Women in Science. Her guidance, expertise and deep commitment to patient care will help strengthen Guardant as we advance our mission of conquering cancer with data.
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 Q1 of 2019 totaled 36,700,000 dollars up 120 percent from $16,700,000 in the same period of the prior year. This growth was driven by higher testing volume for both clinical and pharmaceutical customers and increased revenue per test. Precision oncology revenue from clinical tests in the Q1 totaled $17,200,000 up 136 percent from $7,300,000 for the prior year quarter due to the increased demand and higher overall ASP. 1st quarter clinical precision oncology volume totaled 9,521 tests, up 31% from 7,246 tests in the prior year quarter.
Average revenue recognized per clinical test in the Q1 was $1805 up 80% from $1,003 in the prior year quarter due to revenue earned from most tests of Medicare lung cancer patients starting in Q4 of 2018 and increases in commercial payer payments that were beneficially affected by the Protecting Access to Medicare Act of 2014. Precision oncology revenue from biopharmaceutical tests in the Q1 totaled $11,700,000 up 69% from $6,900,000 for the prior year quarter due to increased demand and higher overall ASP. 1st quarter biopharmaceutical precision oncology volume totaled 3,762 tests, up 61% from 2,300 and 34 tests in the prior year quarter due to the introduction of GuardantOMNI late in 2017 and an increase in customers using Guardant360 for retrospective and prospective testing. Average revenue recognized per biopharmaceutical test in the Q1 was $3,109 up 5% from $2,966 in the prior year quarter due to increased demand for the higher priced GuardantOMNI test. Development services revenue in the first quarter totaled $7,800,000 up 2 13 percent from the prior year quarter due to a ramp up of companion diagnostic development activities to support the CDx programs with AstraZeneca, which was announced in December 2018.
Please remember that development services revenue from biopharmaceutical customers is subject to quarter to quarter variability as drug discovery and development programs start and complete. Gross profit is total revenue less cost of precision oncology testing and cost of development services. Gross profit for the Q1 of 2019 was $23,100,000 compared to a gross profit of $7,400,000 in the same period of the prior year. The gross margin in the Q1 was 63.1% as compared to 44.6% during the Q1 of 2018. Gross margin improvement was primarily due to higher clinical ASP and growth in development services revenue.
As a reminder, effective January 1, 2019, we adopted the new revenue accounting standard, ASC 606, which primarily impacted the company's recognition of precision oncology testing revenue related to claims paid by 3rd party commercial and governmental payers for testing samples from clinical patients. We adopted ASC 606 using the modified retrospective method, which means that revenue reported for 2018 is not restated in our 2019 financial statements. Instead, the accumulated difference resulting from applying the new standard the new revenue standard to all contracts that were not completed as of adoption was recorded to opening retained earnings as of January 1, 2019. The effect of the change was to decrease precision oncology testing revenue by $994,000 in Q1 compared to the revenue that would have been reported without adoption of ASC 606. The effect of this change is disclosed in our Form 10 Q and in our Q1 results press release.
Total operating expenses for the Q1 of 2019 were $46,800,000 a 79% increase from $26,100,000 in the Q1 of 2018. R and D expenses for the Q1 of 2019 were $16,300,000 compared to $8,300,000 in the Q1 of 2018. The increase was primarily attributable to work required to support our submissions to the FDA for PMA or premarket approval for Guardant360 and development and testing of assays under our LUNAR program. Sales and marketing expenses for the Q1 of 2019 were $17,800,000 compared to $11,300,000 in the Q1 of 2018. The increase was due to expansion of our clinical U.
S. Sales force and increased clinical U. S. Promotional activities, additions to our biopharmaceutical commercial teams to support growth in customers and programs and expansion of teams focused on markets outside the U. S.
General and administrative expenses for the Q1 were $12,700,000 compared to $6,500,000 in the Q1 of 2018. This increase was primarily due to incremental costs related to being a public company as well as litigation expenses. Net loss was $21,400,000 compared to a net loss of $13,800,000 in the Q1 of 2018. A charge of 4 point $7,000,000 was incurred in the Q1 of 2019 due to an increase in the fair value of the redeemable non controlling interest in our joint venture with SoftBank, bringing the net loss attributable to Guardant Health common stockholders to 26,100,000 dollars Net loss per share attributable to Guardant Health common stockholders was $0.30 in the Q1 of 2019 as compared to $1.16 in the corresponding period of the prior year. We ended the Q1 of 2019 with $492,800,000 in cash, cash equivalents and marketable securities compared to $496,500,000 at the end of the prior quarter.
As Helmy mentioned, we are updating our revenue guidance for the full year 2019 to the range of $145,000,000 to $150,000,000 representing growth of 60% to 65% over 2018. This compares to our previous revenue expectations of $130,000,000 to 135,000,000 We also expect clinical sample volume for 2019 to be in the range of 39,000 to 41,000 tests compared to our previous expectations of 35000 to 37000. We continue to expect revenue from biopharmaceutical customers to be particularly strong in the first half of twenty nineteen based on program timetables, while clinical testing should grow more steadily across the year. Excluding the impact of investment in the planned large prospective clinical trial for our LUNAR program, we continue to expect net loss in the range of $126,000,000 to 100 and $29,000,000 We are in the planning phase for the large prospective clinical trial and we'll be able to update our net loss guidance for the impact of this trial on our Q2 earnings call. At this point, I'd like to turn the call back to Helmy.
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 important headway on our goals and look forward to seeing some of you next week at the Bank of America Health Care Conference in Las Vegas. With that, we will now open it up to questions. Operator?
Thank And our first question comes from Tycho Peterson of JPMorgan. Your line is now open.
Hey, thanks. On the CRC screening study, I'm just wondering if you can talk a little bit about what the goalpost for success might be for the assay?
Yes. Hi, Tycho. So as we mentioned during our earning call, we are in the planning phase of that study. And as you know, non invasive liquid biopsy assay in CRC screening market for average risk patient population that's really the low compliance rate is a big issue, we believe can potentially play a very big role. We are in the planning phase of that prospective study.
And when we have more details about it, definitely we'll keep you guys posted. And hopefully in our next earnings call, we can provide more information about it.
Okay. And then on the draft LCD, just curious what fraction of Medicare volumes will get paid once this is finalized and how have you accounted for this in guidance?
So it's not in our current guidance in terms of what we've reported or what we've shared. In terms of how we think about the draft LCD, as you remember, our current LCD for lung cancer covers about 33% of our overall Medicare volume and about 75% of our lung Medicare volume. And that's because of the QNS or tissue inavailability requirement in terms of the coverage. This draft LCD expands that same kind of coverage, but to multiple cancer types. If you recall, the NCD would bump our Medicare coverage to about 85%.
And so we given that 75% number on lung cancer, we expect there'll be some percentage of samples that fairly significant percentage of samples that will have similar issues of tissue inavailability or tissue access. And so we hope that it's going to be a significant bump up in terms of the 33% of Medicare samples we're seeing, maybe not as much as 85%, but certainly somewhere in between and most likely above 50%.
Okay. And then just lastly on the regulatory front, the timeline for G360 and Omni, have the submission timelines changed at all? Can you maybe just talk about where you are in that process?
Yes, sure. In terms of our timeline, as we mentioned in our last call, we are working on multiple CDx project and especially like we decided as of late Q4 of 2018 to work on 2 IVD programs in parallel Guardant360 and GuardantOMNI. And as we mentioned before, we believe this should only impact our initial timelines minimally. As of now, still we expect to submit our FDA package for Guardant360 sometime in the summertime in the Q3 timeframe. For GuardantOMNI, still it's early days of the program and we haven't mentioned any specific timeline for GuardantOMNI, but we would keep you posted as we make progress in the GuardantOMNI program.
Okay. Thanks. Congrats on the quarter.
Okay. Thank you.
Thank you. And your next question comes from Derik De Bruin of Bank of America Merrill Lynch. Your line is now open.
Hi, this is Ivy Ma on for Derek today. Congrats on the quarter and thank you for taking my question. So first question, how should we think about the ASP trend given the expanded coverage? Can you just comment on that? Thank you.
So the ASP that we are showing here in this Q1 is driven significantly by the LCD that became effective in the fall for Medicare. We've also gotten some progress with private insurance payers as we mentioned. We would expect that if we're able to get a larger coverage from the proposed draft LCD that it could add significantly to our ASP, but we are not including that in our forecast at this time. We would expect modest continued improvement as we continue to make progress with commercial payers getting coverage decisions.
Thank you. That's very helpful. And then on the colorectal cancer study, so I know we are still thinking about the design for this. Just wanted to see when would the design be available? And how long should we think about how long it would take to recruit for 10,000 patients as previous trials, it would take to up to a year or year and a half to fully recruit those patients?
Yes. So as mentioned earlier, we are in the planning phase of that study. Actually, we believe we have a good idea of what study we have to do. It's going to be a prospective observational study that for patients who are going to go through the colonoscopy, we are going to get a liquid biopsy or blood draw from them and look at the performance of that blood draw. And when I referred, we are in the planning phase is exactly for your question about the timing.
So in terms of STI and the duration of this study, it's still early for us to comment. And hopefully, we would have more information for you in our next earnings call for Q2 earnings call.
All right. Looking forward to that. And finally, this the plan for the large prospective study is kind of earlier than we expected. Just wanted to get your thoughts on what's the plan to get considered in the USPS guidelines? Is the next circle something you would be targeting?
Thank you.
So, Stephen, I think earlier for us to comment about that, let us maybe go through this planning phase and maybe it's going to become more clear. Our focus would be to start this prospective study. And maybe I just make this statement that the reason we are starting this study much earlier than what we planned before is due to the progress that we made in our technology platform and some of the early data that we've seen, some data that we present in AACR and some additional data that we think it's the right time to start doing this investment and going after this prospective observation study.
Okay, great. Looking forward to seeing you guys at Vegas next week. Thank you.
Thank you.
Thank you. And our next question comes from Doug Schenkel from Cowen. Your line is now open.
Hey, good afternoon guys and thank you for taking my questions. Starting on guidance, Derek, can you bridge I think it's a $15,000,000 increase in full year revenue guidance. How much of this is clinical testing versus biopharma testing versus development services?
So the $15,000,000 is correct and we indicated that we're looking at an increase of 4,000 samples on the clinical side and our average ASP on that is 1805, so that's 7,200,000 dollars of the 15. And we continue to see that clinical and pharma sample volume, we expect them to move both equally up roughly and approximately. So there would be a modest increase left over for the development services revenue.
Okay. And is there any based on what you're seeing year to date, is there any change in the mix of Omni that you're expecting within biopharma testing that's impacting the guidance change?
Omni has it continues to be a strong product. We saw good volume from Omni and G360 this quarter. There will be some variability quarter to quarter, but we see them both being continued to be strong from biopharma.
Yes. I think the guidance is pretty equal around clinical and pharma.
Okay. Super helpful. And then on I guess just kind of recent developments. Over the past I guess it's month and a half or so, as you noted in your prepared remarks, there was the NILE data presentation and you got the eviCore positive reimbursement decision. Is it too early to say that you're seeing an impact on business, meaning in the Q2?
And is that part of what's driving on top of a strong Q1, the bump up in expectations for clinical volume this year?
So I think it's
a little bit early to comment on uptake as catalyzed by Niall. But that being said, we are seeing, I think anecdotal evidence from our sales force and from our medical affairs team that NILE is certainly resonating with physicians out there. And so we do it was something that we've pre messaged as an important catalyst in 2019. And there's really nothing we have seen that changes our view that it is going to be important to continued uptake and continued clinical adoption of 360 throughout the year and into 2020.
Okay. And I want to take one more shot at the colorectal cancer questions. I hear you in the sense that you are just in the planning stages, but you also to be fair made it a point of emphasis on this call. So I want to go back there. I mean if we use Exact Sciences as an example and really as a baseline for what's required in the development of a colorectal cancer screening tool, it seems that to advance a successful product to market, you're going to need FDA approval, going to need to get into guidelines and you're going to need to garner favorable USPSTF recommendations.
So with all that out there, I guess the first question would be, do you agree to are you budgeting more than $50,000,000 for the study because that's about what exact spent on deep sea fully loaded and it could be more than that in today's dollars? And then 3rd, would you plan on doing a second prospective study because Exact really needed that Alaska Native study in combination with Deepsea to successfully get to the finish line?
Yes. I appreciate the question, Doug. So as mentioned earlier, we are in the planning phase and we would keep you guys posted about the progress that we are going to make about the exact and some of the details of what we are going to do in this study. Regarding the budget requirement for this study, I think it's too early for us to give a concrete answer, but we are hoping that we can share more detailed information in our next earnings call as we go through this process. Now remembering your question, yes, in terms of what is required to have a commercially successful test, which is going to get paid, we agree with you that FDA approval is most probably required for such kind of test.
And as you can imagine with the kind of study plan that we outlaid in terms of the scope of study, we have that in our consideration. In terms of reimbursement, I think it's still too early for us to comment about the reimbursement strategy for Plunar.
Okay. Thank you.
Thank you. And our next question comes from Puneet Souda from Leerink. Your line is now open.
Yes. Hi, Amit. Congrats on the quarter. Just first question maybe around recurrence monitoring. That's an important market.
Just give us a sense of initial conversations that you've had with the product and with the biopharma companies and in terms of sort of how much are you modeling here for the year and then just give us your sense of how that product or how early conversations are going versus the initial ones that you've had with the G360 as an omni products?
Yes, very good question. I think we're very encouraged by conversations we're having with pharma companies today. Many of them are thinking about how they can move their pipelines and existing drugs into the adjuvant setting. And so we're involved in many of those conversations, also involved in terms of testing some of their samples as well. And those are going well.
I would say it's going very similarly or perhaps even better than the early phases of Guardant360 when we first started. I think one of the differentiating factors of the assay is the epigenomics component that's there. And there really is a new, I would say, innovation for the field. And so it's certainly something that pharma companies kind of want to kick the tires on. But we're very encouraged by the progress we've seen.
But that being said, we do not think it will be a significant contributor in 2019.
Okay. And just given your comments around and the prior average risk screening indication. Wanted to really understand in terms of your preparedness going into the study. If you could give us a sense of, I know you have and I completely appreciate you are in the planning phases, but just give us a sense of if have you reached a point where you have an assay lock here or have you reached a point where are there some immediate studies that you need to conduct before you get into the second half before starting this trial? Just give us a sense of sort of the preparedness that you have at this point in time.
Yes. So maybe I'll say a few words and then I'll let AmirAli chime in. I think we've gotten to the point in terms of the technical development of the assay where we feel it's confident and we are justified both from data that we've presented, but as well as internal data that we have that we believe the technology has an ability to provide a compelling alternative to existing screening tests for that market. We wouldn't be pulling the trigger on this study and doing the extensive planning that we are doing now if that wasn't the case.
Some aspects of it really time would tell. We have to do this study and see at the end of the study when we get a readout what's going to happen. But one thing that always we had at Guardant as our philosophy is we are committed to develop technologies that would make a difference and we are committed to only launching products that would add value to patient care. And we believe due to the compliance issues in CRC field as you know in terms of screening A simple blood test can add a significant role. But let us hopefully start this study and we see what would be the outcome of this study.
And then the study would tell us, do we have an asset that works or no.
Okay. That's helpful. Okay. That's great. And if I could squeeze the last one.
Around Bellwether Bio, what's the what's your near term sort of expectations from that technology? And what could that technology do for you, both in recurrence monitoring market and sort of asymptomatic screening longer term? How do you see this getting employed? Thank you.
So we closed the basically acquisition. We've gone through the integration process. And Bellwether team and technologies that they have, have some kind of interesting value add on looking at the epigenomics of cell free DNA in oncology space. That was a team that look at those kind of biomarkers and that kind of information circling tumor DNA for years and that was an asset. In the data that we showed in AACR, as we mentioned earlier, we looked at somatic genomic alteration in parallel to epigenomic, which included fragmented mix.
So we had some kind of early evidence about the potential that fragmented mix and technology could have, especially with the fact that we saw that there are synergistic relationship between fragmentomics and methylation signal, which was interesting to see and it helps us to increase the signal to noise ratio when we are talking about detecting very tiny amounts of tumor shed material into the circulation. That's why I can't say about Bellwether technology and where we are with that.
Great. Thank you.
Thank you.
And our next question comes from Brian Weinstein from William Blair. Your line is now open.
Hi, guys. Good afternoon.
This is actually Andrew Brackmann on for Brian. I'll add some questions on the CRC trial as well. Could you maybe be a little bit more specific on the data that you have internally that gives you confidence here? When will we see that? And then I guess more broadly speaking, can you remind us at what level of sensitivity and specificity you think you need in order to be commercially competitive here?
Thanks. So what the data you guys know about the public data that we showed in AACR. You could imagine that we have continued those kind of efforts and we have generated additional data in those lines looking at the signatures of tumor shed material in patients who've been recently diagnosed with colorectal cancer and more control patient population and some of the patient population that we want to generate some data to increase some of our confidence level about some of the materials that we thought potentially could interfere with the assay. And as we mentioned in our prepared remarks, the data that we showed in AACR was sensitivity of more than 80% in detecting Stage onetwo with specificity of mid-90s. That's what we showed in AACR.
Now in terms of the primary endpoint for our prospective study, hopefully, we would have more data for you guys on the field in our next earning call when the protocol is completely frozen and we can talk about the primary endpoint of that study.
Got it. Thanks. And then
I guess as it relates
to that AACR data that you read out, we've gotten a lot of questions on the sort of difference between the data and the abstract and what you guys formally presented. Can you just help us better understand what led to those differences? Thanks.
Yes. The abstract that got published before the presentation. So the abstract data, that's my best memory, actually was very small end size and number of patient size and we continue to increase the number of patient. We showed an air cut of that data with higher number of patient samples in the oral presentation. Specifically, we increased the number of healthy individuals.
We increased number of cohorts from different sites. We got access to early stage colorectal. We wanted to make sure that if there are any site to site variation, those variations would also be considered in our data. Still, the data that we showed in AACR were early pilot data, as we repeatedly mentioned, since even before those days and after those days. And we have to continue generating data for much larger cohorts and some additional cohorts of some other patient types that could introduce some non specificity in the assay.
So hopefully, in next cancer conferences when we showed data about LUNAR-two in the early cancer screening for early cancer screening application, we can share more data and talk about the performance.
And then I'll just add one more line. I think we were very encouraged by the expanded cohort we saw in the presentation itself. It was within the confidence intervals of the abstract or at least in line, but a large part of it has to do with the fact that small n wide confidence intervals in the abstract versus larger in the presentation itself.
Got it. Thank you. Yes.
Thank you. And our next question comes from Mark Massaro from Canaccord Genuity. Your line is now open.
Hey, guys. Thanks for the questions and congrats on the quarter. What you have planned this year? And then kind of related to that, you've got the companion deals with AstraZeneca. Can you give us a sense on how active you are to advance additional companion diagnostic assays with the pharma partners?
Yes. So in terms of ASCO, I think we have a number of abstracts that will be presented there. Most of them will be around Guardant360, GuardantOMNI. I believe one will be around the residual disease detection in the adjuvant setting. And I don't believe we have any data on screening or early detection in terms of the LUNAR-two application at ASCO this year.
In terms of our companion diagnostic work, it's something that I think we're very encouraged by obviously the partnership we have with AstraZeneca around Guardant360, GuardantOMNI. Those are both products that we believe can be really workhorses in terms of finding patients very broadly and universally, both in the clinical development setting, clinical trial setting as well as in the commercial setting once those drugs are approved. And so we are having, I would say, very many conversations. Our pipeline looks excellent in terms of continuing to add other companion diagnostic markers onto those assays. But so we do think that we'll be a continuing, I think, driving force in terms of the both of those assets.
Great. I also wanted to ask a question on the colon cancer opportunity. There have been a lot of questions on this call about Exact Sciences. They've done a great job. I think you know that.
Their compliance rate is close to 70% and they think they could do better. So can you maybe just frame why you're starting with colon? Is it because the data internally is superior in colon than the other assays? Or is it more because of the regulatory framework is sort of laid out and you kind of know based on a predecessor company exactly how to get to the market?
I think there are multiple aspects to how we think about rolling out different tests and where we decide to invest. As you remember under our LUNAR program, we're focusing on 4 cancer types initially lung, colorectal, breast and ovarian cancers. Lung and colorectal have been our lead programs. And I think when we see and we chose some of those cancer types, not just out of the blue, but we took, I would say, several considerations into account, not just the technology aspect, but market aspects, reimbursement, the cost of the test, some of the dynamics in terms of the commercial scale up and so on. And so all those factors play a role and have gone into the calculus of us choosing to pull the trigger on this investment in this space and with this large prospective trial in colorectal screening.
Great. And as a quick follow-up to the colon question, Exact has seen success in part because of the call center and their compliance engine. Is this something that you think that you need to replicate or do you think that there's a way to drive strong compliance because of the ease of use of liquid?
We think that's one of the major advantages of a blood based test is really the ease of use. If you think about it, the control and the relationship can be in the doctor's office in terms of that compliance piece. And there's no gap, there's no delay in time in terms of when a consent is given and when a test is actually administered. And there's a large drop off there in terms of compliance as you well know and why those call centers are needed and typically a lot of follow-up is needed to ensure that compliance is high. As we've seen with frankly even with other tests and we've seen in the market with blood based tests, we think that is a clear differentiator as a compliance because if no one takes the test, then it doesn't serve much purpose despite regardless of its sensitivity and specificity.
Great. Thanks, guys.
Thank you. And that concludes our question and answer session. Ladies and gentlemen, thank you for participating in today's conference. This does conclude the program and you may all disconnect. Everyone have a great day.