GRAIL, Inc. (GRAL) May 12, 2026 Conference Transcript

Thanks, everyone, for joining us for our next session. My name is Mike Riskin. I'm on the Bank of America Life Science Tools and Diagnostics team. And we're excited to host Grail, joined by Aaron Freuden, CFO. Aaron, thanks so much for being here.

Yeah, thanks for having us.

Forum will be Fireside Chat. If you've got questions, feel free to throw up your hand, and we'll include you in. Aaron, maybe just to kick things off, you know, you recently reported first quarter results. Give us sort of a high-level overview, how it played out relative to the expectations and sort of where you see things going from here for the rest of the year.

Yeah, yeah, definitely. Yeah, thanks for having us. This is our first time here. I'm excited to be here. Reported earnings, 50% volume growth, $40 million in revenue, which is 37% growth year over year. Really excited with where we ended up. Continue to see strong growth and momentum in our provider channels, also in our digital health channels. It's been great to see their, you know, despite some of the NHS headlines, the growth, you know, persisted and so on. So really, really excited to be there. For the rest of the year, you know, we've announced we're going to implement Epic by the end of the year. We continue to see momentum from some of our other integrations, whether it's Quest or Athena Health. And, you know, the pull-through is there. So it's great to see.

Maybe let's – you mentioned NHS. Let's just dive right into that. That was sort of the big update that happened during the quarter.

A lot to parse apart there. you know has that impacted any of your customer or any of your conversations around the man because they had any impact on the business as you see it in terms of like volume yeah so I'd say that you know the the headline came out and you know physicians who are orders positions for prospective orders asked more questions it's it's was pretty pretty clear though that those who saw beyond the headline and saw some of the clinical utility measures such as you reduction increases stage one and two decrease emergency room presentations four times more cancers found in the standard of care like they got it you know that all being said everyone wants to see the data at ASCO you know it's one of those SEC disclosure type things where you've got a you've got data in house you've got to say something vague to not protect your I mean to not ruin your ASCO presentation so everybody wants to the ASCO data and that'll be coming out here at the end of the month okay any any way you can frame that I I know it's not ASCO yet, but we are getting the same questions.

Anyone can frame it like what the various scenarios are, what the various outcomes are, and sort of where it could go from there?

Yeah, I mean, I think what you'll see is all the underlying data beyond the headline, right, the qualitative headline. You know, the cancers by stage, how many were there were in each of the years, you know, where we really made, what all the details are behind those clinical utility metrics. and so you know our field team we've expanded that we've expanded our sales people who expanded our medical sales team they're all being hired and trained up so by the time ASCO hits they can hit the ground running with you know updated materials education for physicians and so on so you know we're excited to finally have the data out there because it really is you know the state has never been seen before you know it's a randomized controlled trial of 140,000 people three tests you know over the period of the three years three time points. You'll really see just how our test, how a multi-cancer test, can detect cancer very efficiently when it's sitting alongside standard of care. Standard of care only catches 14% of cancers. There's a whole lot that people aren't testing for.

What about going back to NHS? What are the next steps there? With the NHS?

We have an agreement with them as part of this whole trial thing. there was a series of clinical utility endpoints to look at and we've met some of those so we'll have a discussion but like anything with NHS or any other government agency that's always going to be balance of politics budget and then data so we'll have those discussions those discussions will happen you know probably over the next 12 months or so there's a lot going on with NHS right now I think they're consolidating the way that they run the NHS with the government so but what we are you know we do talk to them and of course we look forward to working with them on you know how and if this gets implemented in their population okay is there anything that will come out at ASCO that you think could impact those conversations or no I mean I think at this point I believe they they have the data they've they've the key people there have been read in as I said I think they've got a lot going on outside of our study okay Fair enough.

In terms of the NHS data and what you'll present at NASCO and how that impacts, you know, the FDA, that was a big debate point with sort of what would be considered and what would be considered. You know, what gives you confidence that that's not going to be interpreted as an incremental negative in terms of your data package?

Yeah, so we've been in breakthrough with them since 2018. We've designed, you know, our study package for them. We've submitted all that in January of this year. They've accepted the review package. and we're in an interview process with them now the part of the nhs gallery trial that was going to them was the first year data which was not the primary endpoint right it's the performance data which you know we've now repeated in multiple studies interventional studies case controlled studies really something that no one else in the space has done no one else has interventional data or prospective data so we're you know confident that you know the the package is the package that's that's what they're reviewing you know could there be an adcom could there be other people who want to talk about the clinical utility metrics I'm sure that'll that may happen you know we'll see how how that goes but the what the FDA said they're going to be looking at the benefits and harms of the test and the test performance I think the the NHS data the utility will be more impactful on like CMS or payers okay just on that we also have the reach study with cms and fda where the primary endpoint of that study is a stage four shift which is kind of what we've shown in the uh in the nhs data so we you know we we have a path there as well okay all right um maybe since you mentioned reach let's go to that can you give us an update on the timing for that um when we can expect the next update there yeah it's continually rolling uh It's going to be over three years, three blood draws for the population. I believe the final readout sometime in early 2031-ish, somewhere in there. But CMS, you know, the intention is to have interim data for them to look at in their population that will sit alongside the NHS data and real-world evidence that we've gathered. You know, we've done over half a million commercial tests at this point. and that'll give them a large package to review to make a decision on coverage of course CMS has never reviewed a multi-cancer early detection test before so they haven't stated publicly where the bars are at but I imagine kind of like with the FDA over seven years, eight years of working with them on a breakthrough they'll form an opinion the more we work together, the more that they understand how the test works and what the benefits are Okay.

In terms of that FDA review timelines, the ongoing conversations, is there a timeline you can share with us how that's going to play out?

Yeah, I mean, what the FDA says publicly is if there's no adcom, it's a 180-day review. If there is an adcom, it's 320 days. At this point, we don't know if there's going to be an adcom. We're preparing for one just so we're ready if it happens. But the package was submitted at the end of January. So you can all do the math from there if it fits in their stated timelines. But we're working with them iteratively right now. And, you know, when we have something to update, we will.

All right. And just to be clear, though, you know, there has been no change in conversation. There has been no change in tone since NHS came out. Maybe let's pivot to sort of like the commercial performance and what you're seeing in the market outside of NHS and the FDA process. You know, you talked about Epic.

You talked about Quest a little bit. can you expand a little bit more on sort of where you're seeing the benefits yeah so you know right now our channels it's really a self-pay test 70% of its self-pay really driven by you know brick and mortar physicians offices where we've seen an expansion of physicians order ordering the test and also existing order physicians order the test more you know things like those tools like Athena of Quest, Epic will really help there. You know, the digital health revolution, whatever you want to call it, it's happening where consumers are really driving their own health care through things like Function, Everly Well, Hems and Hers. That's a new opportunity, and it's been an opportunity that's shown to be fruitful. It's still early days for some of those partners. You know, we've been with Function for a while. We just launched with Hems and Hers. So we'll really see how that expands over time but if you think about it that's like a captive health seeker who's signed up to care about you know how they how they feel how they're living and so we know one of the harder parts of finding a patient is addressed these are people who want to know want to live longer want to know what their health is and generally they have you know they'll invest in that they'll spend their own money on it and so the more and more people in the US are combining these digital health platforms with standard care. There's something like just under 4 billion apps. Digital health apps have been downloaded in the last year. Of course, some of those are multiple apps for the same person. But it's a good opportunity and it's really just more proof that there's this large self-pay opportunity, large pre-reimbursement market as we work toward the broader access. Because GRAIL has been built for population health from day one, making sure that there's a low false positive rate, that it's easy for physicians to implement, and that it can be affordable. The whole plan is to get the price of the test down. The MSED legislation that was passed, that set reimbursement at just about $500, a little bit more than $500. And that's what our current version is built to be able to support margins in the 50% to 60% range at. So, you know, we think it's well-positioned, and the investment that we're making now and the traction we're seeing in this pre-rembursement space with these partners, with the physicians who are adopting, is very fruitful and will help on the broad access side.

You talked a lot about the digital health and some of the newer channels. What about, you know, more traditional channels like Quest or the traditional healthcare provider? Is that gaining traction in the market? How much of that is about educating the channel themselves, given sort of the new market opportunity here?

Yeah, so, you know, as I said, the brick and mortar. So we started in concierge medicine back in 2021 when we launched, whatever it was. Now concierge is not a large part of the business. It's, you know, physician practices in areas where there's real champions who physicians really see the benefit of the test. you know at the end of the day one out of 100 people will have cancer the physicians who find a cancer we've found order the test a hell of a lot more than the ones who take a lot longer to find a cancer you know so commercially we try to connect these physicians so they can listen to each other and talk to each other oh yeah but your brick and mortar physicians offices continue to grow and expand i think we added 1300 physicians last quarter if i remember correctly and that's really driven by market awareness so any of the these things any of the medical education that we do any social social media advertising that we do and then these physician groups that we put together you know that's that's really how awareness is driven on the physician side patients you know can go to physicians as well and ask for it but we find is that the physician doesn't know about the test they're not likely to prescribe it so you know I think now There's other market players in there, like Xaxx out there now and so on. That's actually driving more awareness. They've got over 1,000 reps, I believe. We've got 150-ish. But what we've found is the more people out there, and we've been waiting for this, helping build the market, add credibility to it, educate people on what an MSET test is, the easier it's going to be. We're really confident with the position that we're in from a data perspective and our experience that this is helpful to us. They're bringing more players out there educating.

The physicians that you're adding, I mean, are you seeing any improvement in terms of attach rate, how much they're reordering? Is that sort of compounding over time?

Yeah, I mean, I think what we called our retest rate, so the people who've come back for another test after getting a first test is over 30% now, which we're really happy with, given that it's a self-pay test. It's not reimbursed. You know, I think for comparison, other screening tests, other stool-based screening tests have about a 30% retest rate after a decade of reimbursement. So, it just shows that this can be a really highly compliant, highly adhered to, you know, technology because it's blood-based. So, yeah, but we see that.

You mentioned on other players coming into the market and sort of the expanding MSN landscape.

And a lot of that is sort of bringing market awareness. um still very early obviously but are you seeing any any change in conversation in terms of competitive landscape or or what the alternative tests are no i mean as i said you know we've we're the only company that's got you know interventional data perspective data um not just case control data like we can actually tell you what how this test performs in a population of this room or or people who are actually asymptomatic for cancer um really no one else can do that we've also submitted our FDA approval and no one else has done that so you know they're building awareness to the space which is again helpful you know it's it's educating more doctors it's expanding the reach of of awareness to physicians so you know I think that landscape will evolve you know we'll see what if we have an FDA approval what that does to the landscape but you know we're we're excited about position we're in you know but you know that being said we're always you know looking at what we can do to improve the quality of the test to improve the delivery of the test and so on so you know we're not just resting on our laurels that we've got like the winning technology and we're done at this point so we'll continue to monitor pay attention but for now it's it's a bit of a tailwind I mean a lot of the debate we've heard is sort of having a one-off test versus a cancer care continuum right a lot of the other a of the other vendors and a lot of their players in advanced molecular diagnostics they'll have therapy selection they'll have mrd they'll have a recurrence pondering how do you feel that sets you up in the competitive landscape yeah in terms of conversations with with physicians with channel yeah so you know some of those are to pcps some of those are to oncologists right you know but at the end of the day you know back in 2024 we focused the company on msad when we did our restructuring but you know we have MRD capabilities we've got therapy selection capabilities we have recurrence capabilities those are all you know investments that we would need to make at the right time you know to move things forward to like clinical studies I've always I mean I'm the CFO here I'm not the scientist but you know I've always said that if you can find cancer and people who don't know they have cancer you don't know have cancer you can probably gonna be pretty good about finding it in people who you know have cancer and so if you can get the top of that funnel then you know the rest of that funnels can be easier to penetrate but right now you know winning in the MSED space creating the MSED space is where we're where we're investing I've also always said as a CFO that if we failed at MSED but one at MRD we'd be the most expensive MRD company ever funded there are probably much faster ways to do that than we would have but yeah that's you know given the position that we're in now, FDA approval and NHS data read out. We've financed ourselves last year. We've got about $830 million on the balance sheet. Now's the time that we can start thinking about what we do with those other product applications, if it's the right time to get back into them.

Okay. You touched on reimbursement a couple times, and obviously the cash pay nature of the business. How critical is that for you going forward? Or, you know, do you have various scenarios mapped out depending on how the reimbursement decisions go and where, you know, ASPs shake out over the next couple of years?

Yeah, definitely. I mean, you know, from broad access, which is what we've been built for, we're talking about running millions of tests. Like our lab in RTP, just with the infrastructure that it has today, can already run over a million tests. And it can be expanded significantly from there in the same footprint of that building. So there's a couple different paths to reimbursement or broad access. There's global, right? There's international, and there's the U.S. Of course, we're working internationally with NHS. You know, we've worked with Samsung. So there's ways to get to broad access globally that are actually kind of independent from what's happening in the U.S. We've got the infrastructure to kind of service both. And domestically, for reimbursement, you know, we've talked about reach leading to a CMS. We've talked about the MSED legislation that passed, which would allow CMS to start covering the test in 2029 upon a positive national coverage decision. and then there's always you know new developments that are happening with legislation or on the hill so there's the there's a new push for the rapid legislation or rapid rules which would allow essentially fda to and cms to work faster together essentially to to drive reimbursement for fda you know breakthrough approved devices faster than the normal timelines um you know so there's all sorts of positive ways that you could get to reimbursement, reimbursement faster. You know, the offset of that is if reimbursement takes longer. Well, we're, like we've demonstrated, we're demonstrating a growing self-pay market, you know, a growing pre-reimbursement market in the U.S. Things like Samsung and some of the things that we're doing, we've got a distributor in Canada, we've got one in Israel, we'll see what that looks like. You know, but we're still talking a million, a couple million tests there, pre-reimbursement And for now, you don't get into, like, the 40 million test range with broad access, which is what we're built for. But we're definitely aware and conscious of running the business pre-reimbursement longer if we need to versus getting to broad access in the proposed timelines.

I mean, the other side of that coin is COGS and the cost structure, you know, making some progress there. Can you talk about roadmap there for the next couple of years and how that can help offset reimbursement if it doesn't play out as favorably? Yeah, definitely.

So, as I said, the version we have now is going to be capable of supporting a lower cost at scale, right? The lab infrastructure we have now can run more than a million tests. And so if you look at our last two or three quarters, you can see how many tests we've ran, and you can see us growing into that fixed cost leverage, and you see margin improvement. That'll just continue to happen. We're nowhere near running a million tests a year right now. And so we can definitely be bringing the price down. We've kind of built the model now and the business now to act like the MSED legislation rates of around 500 plus dollars a test to support a 50 to 60% margin, right? And that's what the version we have today. And we're always looking at things that we can do, have development efforts to bring the cost down further and or improve the performance of the test. So we're going to continue to drive this cost down because we think it should be accessible to everybody. We do appreciate it. It's going to be a large line item, a legit line item. It might be cost effective. Who knows? It might even be cost neutral someday. But it's going to be a large budget item. And so the more we can bring that down, the better, we think, for people and for systems who are going to want to adopt it. And is that operational efficiency?

Is that scale? Is that new platforms, new technologies?

Scale and probably some technology changes. In terms of sequencing workflow? I mean, test format, sequencing workflow, regions, and so on and so on.

Any questions from the audience? We'll keep going. You talked about cash balance and the raise and sort of being well-positioned there. What are your investment opportunities or investment priorities in 2026 and 2027? You did a little bit of a commercial expansion so far. Can you talk about the roadmap there and timing for contribution?

Yeah, so the goal is to have that specific expansion, those people up and running after ASCO, contributing to growth by the Q3, Q4. As far as other investment opportunities, the whole point of the raise was to give us the flexibility to intercept the demand that we believe will come from things like NHS data being out there and understood, the FDA approval, and so on. So we may make further investments into people. We've invested in Epic, right? There's other tools that we'll do to wrap around the ordering process, the reporting process, that should make things easier, as well, and is it alluding to investing in the next versions of the test, and so on. We may make some decisions to go into things outside of screening, but right now, we're still focused on MSED. I don't like doing early victory dances, and I think investing in things outside of that right now would be a little too early.

Is there an argument of, let's chat post ASCO, let's chat post FDA decision, maybe let's chat post CMS, and then that'll determine, are we going after, are we going right here?

Yeah, I mean, I think we'll learn a lot after ASCO. We'll learn a lot after FDA approval. And those two things are not very far away right now. I don't see myself waiting for CMS to make any of those decisions.

Okay. Maybe a couple of big picture ones. We've got about five minutes left. You know, you've been talking about population scale screening for a while. You touched on a couple of the barriers there. It's been a long road, certainly. What do you think has been the biggest factor holding you back and the biggest factor holding back broader adoption of population scale, I've said? Is it reimbursement? Is it awareness? Is it test accuracy and sensitivity? It's been a long road, if you go back to Grail's founding in 2016.

I wouldn't put performance as a barrier. it's just an understanding of a new technology like the FDA as I said we've been working with them for eight years the FDA didn't have a plan on how to approve MSET tests CMS doesn't have a plan on how to approve MSET tests there's just physicians the first thing most people think about is a single cancer test well this is not a single cancer test most folks don't realize that when you do your standard of care screening as I said that detects about 14% of cancers in the population. That probably surprises most people when you talk to them. So it's just so new and paradigm-changing that you've got to do a lot of education, show a lot of data, show that consistently, right? Be transparent about it, and do a lot of work to show that this can work, and it works consistently. And so, you know, the barriers haven't really been performance. I mean, as we've demonstrated, I mean, with a false positive rate of less than a half a percent, if you can find four times more cancers than the standard of care that's a pretty powerful tool you just have to believe in the tool you have to believe that that's accurate and so you know asco data hopefully shows that fd approval shows that um and then we then we move into the economic discussions with cms and and and other large payers on on affordability and on the economics of reimbursement i mean to that point in terms of how paradigm shifting it is you know that kind of speaks to some of the other um some of the other players in the space are starting with a you know a single test um and sort of using that to piggyback into more of an m set approach um

there's a lot of debate on like the pros and cons of those two methods i mean does that kind of speak to maybe uh maybe this is not the way to go after maybe maybe the you know the paradigm shift that FDA and CMS is too much of a hurdle?

I don't believe that. You know, the world has single cancer tests. Developers develop single cancer tests where there's already reimbursement. So you have another colorectal cancer test, you know, another, you know, breast cancer test. That's why companies choose those things. You know, when we were founded, we did a bake-off of, you know, multiple technologies, methylation, mutations, fragment, you know, so on and so on, to find multiple cancers. And so we picked that to find MSED. We didn't take a technology that we already had and then shoehorn it into something else. But it's simple. Companies go after single cancer screening tests because they're already reimbursed. I don't think that's paradigm changing at all. That drives more people into compliance of things like colonoscopy. We're trying to find, as I said, the 86% of cancers that people aren't looking for. And that's where you find a paradigm shift. Okay.

Unless there's any... Oh, we've got a question now.

Yeah, you talked about preparing a sales force for the upcoming... Can you talk about what you're doing with oncologists to kind of prepare?

I'll just repeat the question for the webcast. The question was preparing the sales force. What can you do to prepare oncologists?

Yeah, so right now, the primary orders of this are PCPs. Um, oncologists, you know, as you guys know, work with somebody once they already have We, we do engage oncologists because they are KOLs and they're thought leaders. Um, oncologists, you know, that we've engaged are, you know, they're excited about the, the data at ASCO. Um, actually, I've, I've actually never heard more oncologists say positive things about GRAIL than after the ASCO release went out. Um, because, you know, an oncologist knows that, you know, a reduction in stage four cancers of that amount is a very important thing. Physicians don't, and oncologists specifically, would rather treat people with stage 1, 2, or 3 cancer than stage 4 cancer. There's a large mortality cliff between stage 3 and stage 4 right now for many cancers due to the advances in cancer therapies. But we have forums, symposiums. We show up at ASCO, AACR, NSMO, and so on. We have a lot of publications out there. The oncology community is an important community, but they're not. the orders of the test right now so we're trying to tackle the 500 000 person pcp sale you know you know physicians that are out there um and educate the oncologists as well which is again back to the competition we were doing this by ourselves for multiple years which is very expensive now there's other people out there helping do it which is which is nice i hope that answers your question we've got about a minute left so maybe just we'll end with our usual closing question of you know what do you think is most under appreciated or miss most misunderstood about grail a lot to choose from I'm sure yeah I mean I just again the opportunity in front of us to find more than 14% of cancers by adding one test with a very low false positive rate right right so you're gonna make the whole cancer detection system extremely more efficient than it is today the cost of finding a cancer goes way down and it's probably the best shot we have finding at bending the cancer mortality curve adding single cancer tests you know you already have about a 40% false positive rate as a as a person getting four annual screens that's just not not sustainable um and you multiply that by all the cancers that are out there you're going to have to start testing an individual for cancers not an individual for all for a single cancer so what cancer does that individual have versus looking for prostate cancer or looking for colon cancer and our technology does that it just all it cares about is finding cancer it then tells you where it's at okay well on that note um we're going to wrap it there thanks everyone for joining Aaron, thanks for being here.

Yeah, thanks for having me, Mike. Looking forward to ASCO.

Sounds like a must attend. Yeah, it's gonna be a good time.

Thanks, everyone.