Hi, everyone. So I'm Evie Koslowski, the Life Science Tools and Diagnostics Analyst here at Goldman Sachs. I'm joined here by Aaron Friedman, the CFO of Grill. Thank you so much for joining us.

Yeah, thanks for having us.

Maybe to kick us off, start by helping investors get oriented with this story, a quick overview of kind of how you're building out the multi-cancer early detection market and sort of what you're most focused on right now.

Yeah, definitely. So, you know, we're really excited about what we've built over the last 10 years. You know, multi-cancer early detection was just an idea, but now we've got a product on the market. We've got lots of interventional data. We've got RCT data that we released at ASCO, really showing that this technology works. You know, really the capability to pick up sulfur DNA circulating through the blood from tumors at a very, very high specificity, low false positive rate, and then tell people where the cancer is coming from. And so we've always been built for population scale. We've got a lab in RTP that can run over a million samples. the low false positive rate and so on. And we're now moving forward toward FDA approval and, you know, broad excess. So really, really big milestones coming up that we're excited to come to achieve.

And then last weekend at ASCO, you mentioned, but you had the full data readout from NHS Gallery. Maybe talk through at a high level sort of those results versus, you know, the original headline and how you think about that.

Yeah, definitely. So the full data readout is probably still coming. I mean, you've got to think about it. It's 140,000 people over three years in a randomized control trial. What we covered at ASCO were, you know, really the primary endpoints, some of the secondary endpoints, and, you know, what we press released earlier. So, you know, we're really excited that we showed a stage four reduction, essentially, between the control arm and the intervention arm. In the second year, it was more than 20%. The third year, it was more than 26%. That's a pretty massive, you know, decrease in stage four cancer, which is really, you know, metastatic cancer, cancer that you really don't treat with curative intent. It's more palliative care. So the oncology community was actually very excited and supportive of the data that we And, you know, clinical utility isn't just one thing, right? This isn't a stage three drug trial where, you know, it didn't actually have a clinical output outcome, and it hit some secondary endpoints that said the drug wasn't toxic. This is really the test of the implementation of an MSTED test in 140,000 people in NRCT. So beyond the stage shift, we found more stage one and two cancers than the control arm. And if you go a layer deeper, we actually found more stage one and two cancers in the screening arm, in the control arm, than total cancers found by screening in the control So, I mean, that's a pretty dramatic story to talking about what the current standard of care screening is, which, if you think about it, makes sense. I mean, standard of care in the U.S. only finds about 14% of cancers. In Pathfinder 2, you know, we've found four times, or was it three to six times more cancers, depending on how you compare it to USPSTF or just standard of care. So, other clinical utility endpoints, I mean, emergency room presentations, right? Big decrease there, more than 25%, and so on. So this clinical utility package, this clinical utility story was pretty impressive. And it'll support national coverage decisions. It'll support NHS decisions and so on going forward.

I think the other thing that was interesting that came out of the data was the stage 3 and 4 increased in the first year, but then the subsequent declines in years 2 and 3. So maybe talk through that. It kind of implies that with longer follow-up, you can potentially see that kind of decrease further over time. but maybe talk about sort of a potential extension of this data in another 12 months and any implications there from the cost standpoint.

Yeah, definitely. So we are extending the look-at period by 12 months. So there will be no more gallery tests, right? We're not going to be giving another test. But what we'll do is we'll allow the data to mature in the control arm, essentially, because what you're doing with a gallery test is you're finding cancer in people that you know don't have cancer. So they're getting a test. It's not showing up clinically. And in the original study analysis, we just cut that data off after 12 months. But there are people in the control arm who have cancer that isn't being found because it hasn't presented clinically. So after another 12 months go by, more of those cancers will show up. And we believe that there's, you know, that will happen because there's just far more cancers in the intervention arm than in the control arm. You'd expect those things to be balanced because it was an RCT where it was randomized and balanced between those two things. So we would expect that to happen over that period of time. And then also, you pointed out another really important part. That first year, you're essentially sweeping out all the cancer that's existing in the population, in the screening arm. So there's a bunch of people who didn't know they had cancer. There wasn't another clinical way to find it and so on. But when you look at the second and third year, those people have been swept out. And then that's where you see the reductions in stage four and also starting to see in stage three. And over more time, if we would have ran the study for another year, done another intervention, I think that type of data will be modeled and we'll be looking at it here eventually. But we're definitely going to be in probably the first part of next year we'll have the follow-up on the additional 12 months and we'll see what the numbers look like there.

Maybe taking a step back from the primary endpoint, and you still saw a 20% reduction in stage four, I guess have you done any sort of analysis on how this could translate into cost savings for a single-payer system like NHS?

Yeah, so the NHS will be doing a cost analysis. It's sometime in 28 or 29 analysis and so on. So yes, we will be looking at the, you know, I think other single-payer systems will cede a lot of value in that. You know, CMS, you know, U.S. payers, we've got the REACH gallery study where we're doing something similar to the NHS where it's a three-time point, 50,000-person study in the Medicare population, they'll have data in the U.S. population when they do an NCD as well. So we think all that put together will give them a very robust data package to make an NCD.

Yeah. And then the go, no-go decision on gallery rollout in the U.K. was kind of contingent on these results. I guess any update on that and how you're thinking about driving scale there?

Yeah, so they've just got access to the data. They've seen it, and, you know, they're excited by it. So, you know, I think no government makes a decision very quickly. We've always expected that to happen over an extended period of time. And there were multiple endpoints that they wanted to look at. One was the primary endpoint, but there were also others. So, you know, we'll be working with them to see, you know, what the next steps are. And once we have an idea of what those are, we'll share that.

And then you also mentioned the 25% reduction in the emergency presentation. Maybe talk through how you think that will impact the decision from current physicians right now in their ordering practices and any sort of demand you would expect on the back of some of this data.

Yeah, I mean, one of the things that we heard loud and clear from ASCO and Physician Sense is they're looking for things to do to not treat people with palliative care and treat with curative intent. So a reduction in emergency room presentation is very exciting to them. and we'll see we're training our sales force now we've expanded our sales force they're all getting trained on the ASCO data currently and they'll go out and hit the streets Great, yeah and actually my next question was on the sales force when would you expect maybe to see an influx in volumes on the back of the and is that included in your current guide?

Yes, our 22 to 32% guide includes that Great, and then I guess going to the FDA status, you know, you completed the final module of the PMA in January, you have the breakthrough device designations, and I guess like, you know, timing should really be any day now. I guess, what are your conversations with the agency now, and sort of is still convenient at home?

Yeah, we've been working with the FDA for quite a while now as a breakthrough device. First IMSEAD test that they're looking at. So a lot of foundation building, a lot of understanding of the technology and so on. They've looked at all of our studies that we've done to date under an IDE, which means they looked at the study, they looked at the SAP, they looked at the results. So they're very familiar with our capabilities and the way we've built our studies. We've submitted our final module, the PMA, in January of 26, and we're in an iterative review process with them. They get lots of questions, we have lots of responses, and to date the clock hasn't stopped. So this is an iterative review process. What we're waiting for now is to really understand if they're going to have an adcom. We should find out here shortly. some of their normal timelines are starting to run out if they're not going to have an adcom but we're really excited and confident with our submission and if there's an adcom let's have one, if there's not let's move forward and on the adcom is there anything you think would be the sticking point for the panel or really the focus for them again without an MSED test being looked at before I'm not going to probably give you a satisfying answer. I'd say they did an IMSEAD advisory panel in 2023. It then was really about the space or the application of the technology, but it was not the types of questions you would expect on a specific data submission. So if they have an adcom, I'd expect the adcom to be focused on the data submission, the data we submitted. But I think it can be often challenging to keep ADCOM members focused on that. Because, you know, our package doesn't include the clinical utility data from NHS. It's just the first year of data. I'm sure people will want to talk about years two and three. So we'll see. But again, I think either way, you know, from their first advisory committee, we took all that feedback. We incorporated it in our PMA submission. we've incorporated the feedback from, you know, sorry, their feedback in everything we've done to date. So we feel good about where we're at.

Great. And then how do you think about the initial label? I mean, will it be broad and kind of, you know, asymptomatic adults, 50 plus, or maybe more specific to cancer types, or maybe even like a risk adjusted?

So I think if you look at what we've put together from a data package perspective, right, it's all asymptomatic people with no suspicion of cancer between the ages of 50 and 80. So having a label different than that would be hard to understand. I could see the label not including every cancer we find because if the FDA says, well, you only found two of this cancer and you found 20 of these, then we'll give you the 20 and not the two or however they end up doing that. But at the end of the day, we've been reassured that we'll be able to return all results. So whether it's in the label or whether it's on the second page, a physician, a clinician, a patient will be able to actually act on the report. And as far as, you know, where you could restrict would be by age. So maybe 50 to 80 is all of our data. Maybe somebody says, well, but 60 to 80, it's higher use or higher utilization. That's generally not an FDA call. That would be more of a payer call. But, you know, the thing that we're most assured by is that we'll be able to return all results. Because if we can do that, then, you know, I think it's an easy clinical commercial story.

Yeah, yeah, that was my next question was sort of, if it is a more restricted label, what are the economics? It seems like not much has changed or maybe, yeah.

Right. I mean, I think payers, once we get to those conversations, may have different views. um but you know at the end of the day if the test works at finding cancer that you have you know whether it's 47 cancers are in the label and 57 or we found over 150 different types of cancer at this point across our studies um you don't know what cancer the person has yeah and so what do you not not pay for or not treat one that's just rare yeah i mean i mean like something like anal cancer is very very rare uh you'd have to have a study of more than a million people to get like 20 cases you're never going to do that so um you know we'll we'll see how it ends up yeah and then if it was to be um screening a narrow population like high-risk individuals i guess how would you think about your ability to scale and kind of get the unit economics necessary if it's a narrower patient population uh i mean so i think i always have to remember at grail and dealing with this population it's 100 million people in the u.s um you know right now we did 56 000 tests last quarter so we're in a very low penetration into that population and that's even before you go globally so we've got a lab that can do more than a million tests you know you know we we're going to be able to get to our 50 to 60 percent margins um at lower asps closer to what what cms would reimburse the test for for the legislation um once we get to scale on the system we have yeah um and so i you know i i think we can get to the unit of economics without reimbursement. We get there faster with it. But given the international opportunity and this growing self-pay market, we'll see.

Yeah, that actually, I wanted to ask about that. So reimbursement, maybe walk us through some of the moving pieces there. How critical is it to the business model? And yeah, you kind of answered it, but is the self-pay market enough to kind of drive profitability with scale over time?

So I wouldn't go as far as I would start with, I don't think any screening company has really demonstrated profitability, sometimes even with broad reimbursement. But we do know that we're different than a lot of them. This is just a blood test that happens annually. So the cost of cell, we believe, is going to be more efficient and more effective than other screening tests that aren't blood-based or taken annually. But the other side of that equation is, you know, who does cholesterol testing? Well, is it going to be that, right? Is it just going to be an automatic every year because there's 70 million people that show up to get a physical every year? Is it just another checkbox? Maybe, eventually. But how that happens, what we have to invest in and building awareness to get to that level, those are the things that are stopping me from saying, we'll be profitable by blah, next date. But all I know is we've got over $800 million in the bank and we've got the capital to really invest in more faster if we're seeing an inflection, if we're seeing demand get out ahead of our capabilities. And that'd really be from a Salesforce perspective because we've got the lab.

Yeah. And then you mentioned your strategy outside the U.S. I guess any timelines you can provide on getting reimbursement there? I mean, we talked a little bit about the NHS, but you're also working with Samsung. So I guess how difficult is it to get coverage in other markets? And are there any major differences in how we should think about getting coverage internationally versus domestically?

So a lot of international markets will, one, look to FDA, right? You know, they don't just rubber stamp what the FDA does. But having FDA approval is a faster path, a smaller implementation study to do. And so we think once the FDA approval, that'll open up more of those markets. But then you would likely have to see some sort of, depending on the geography, a partnership, kind of like Samsung in Korea. If that goes well, it expands into Japan. And then some sort of, you know, geographic clinical study, small. We're not talking about anything near like what we did at the NHS or even with Pathfinder because those are really robust, strong data sets. So, you know, we do have several countries knocking on the door asking us to look at that type of an implementation. but it makes sense to tie it all around getting an FDA approval to speed up that process when it happens and then also the dissemination of the NHS data. So we'll really be growing more focused internationally once those things are broadly out.

Okay, okay. And when we think about CMS coverage, kind of what aspects of the NHS gallery test or trial do you think best convey the clinical utility?

So the stage reduction, you know, stage four reduction for sure. The three and four starts to reduce after the second and third year. The significant increase in stage one and two cancers found, stage one and two cancers are, you know, you treat those. They're generally treated with, you know, surgery, radiation, and so on. The decrease in the emergency room presentation, you know, and so on. So, you know, those are the things that are really going to drive CMS that they're going to look at as saying when they make their coverage decision.

Yeah. And then I guess, you know, we've seen some early adopters in the private space for the gallery test in terms of payers. After the ASCO data, you know, does that change in the conversations with some of those private players, either small ones or even larger ones, as we kind of wait for FDA or CMS? Or is the NHS data just enough to start like private pilot programs there?

So the commercial payers in the U.S. have been pretty clear that you've got to have an FDA approval. With FDA and approval, and then with the ASCO data, then, you know, those conversations will start to happen. You know, and at the same time, Medicare will be moving along. We know payers like to also follow Medicare. We'll also be leading into the USPSTF path. And then who knows, you know, where this possible rapid, you know, development goes.

And you mentioned the MSED Act. I guess, you know, there's a lot of legislative considerations, also the rapid pathway, which you mentioned. Maybe talk about the puts and takes of these and how we should think about them and what we're thinking about the timing of coverage.

So coverage is generally a long process, as we all know. But I think there's an overwhelming sense, especially after ASCO and now that we're on this FDA path, that it's a when, not if now for an MSED. like they will be covered eventually and how we get there I think there's multiple paths and there's probably multiple timelines something like rapid happens getting to reimbursement will be faster than if you have to get to USPSTF you know I don't no one's really even sure what USPSTF is going to look like in a year or two or now so I think it's important though for the business given that we've built this large self-pay market we lean into that and then these international opportunities are kind of disconnected other than from the FDA approval standpoint to further ramp into a more profitable company.

Yeah, yeah. So FDA approval takes longer than what you expect. I guess, could you move into some of these international markets without that, or would you really need to see the FDA approval first?

So we've got, we're in international markets now, you know, through distributor models, which are kind of like building, you know in canada and israel um some other other countries kind of like the way we started in the u.s where they've got you know their concierge or their medical tourism they've got wealthy individuals who can pay for the test so we're you know we're leaning into that we're taking you know advantage of that where these distributors have sold these tests before they and we can really do it in a capital efficient way where we basically are just running the test and they're managing everything else so we can we'll continue to do those um but when you step back and you're going into like are you in millions of people doing that And, you know, probably by the time we will have FDA approval before we're getting to the millions of people through that type of test deployment.

Yeah, yeah. Touching on some of the self-pay, I mean, it's obviously the majority of your tests right now. Maybe walk through the various channels and where you're finding particular success there.

So, you know, offices, not just concierge doctors, but just drive there, continued growth there. That's really where our sales reps are focused. And it's not a strategy of blanketing the whole U.S. with reps. We're really focused in metropolitan areas or where we're finding success. There's a lot of white space out there because we were the only people educating and building awareness up until a couple quarters ago, and it's an expensive proposition. But now there's more awareness being built, and we've just expanded our sales force by about 30 territories, and we'll continue to grow there, really driven by PCPs. The other trend in healthcare is the consumerization of healthcare and some of these digital health platforms. So Function Health has been a partner for a couple of years now, and they're a great partner. They continue to drive growth. We've recently announced with Hims and Herbs, Whoop, and others. We'll see how that translates. It's a new thing for us. Those launches are built into our guide, as it is. But each of them kind of have a captive audience of potentially millions of people who are health seekers. One of the biggest, hardest cells is finding patients who want that. So we'll see how that goes. But I think the digital health channel is potentially a large opportunity to expand the self-pay market.

Yeah, yeah. And maybe talk about some of these direct-to-consumer marketing plans. How much do you expect to, or how are you balancing this spend in your P&L planning?

So these digital health partners are a very efficient way for us to sell and grow, right? because it's their marketing dollars. Again, we're running the test. They've got the captive patient and so on. So it's definitely an area that we would continue to lean into given how capital efficient it is. And then on the other spectrum, you can have self-insured employers that can be a little bit more costly to sell tests into because they've got benefits managers you've got to manage. They've got to get the test out to their people. You usually have to do blood draw events to get a bolus of people because, I mean, people are at work. They don't want to go to a doctor's office, so you just bring the phobotomy to them. And then you've got PCPs who are somewhere in between. You've got those that are, you know, like Eric Su or Dr. Friedman who were on our panel, advisory panel. They were on the, Dr. Su was on the ASCO Investor Day where they're prescribing the test to just about everybody in their office. That's an easier one. Then there's, you know, others that are more dabblers where you've got to talk to them more often.

Yeah, that is something I wanted to touch on, like kind of your, how do you think about same store sales within some of the brick and mortar physicians driving that? I guess, what would it take to get a doctor to order this test more often?

I mean, I think like any other adoption curve, like there's going to be those true believers, right, who are going to be early, early adopters. And then the more milestones we achieve to, like, de-risk, I think the decision of a physician to prescribe the test, more we'll adopt. So, you know, FDA approval. That'll likely open up a whole other group of physicians. You know, it's interesting because, you know, one out of 100 people they're going to find a cancer in. So that's just the incidence of cancer. We do know that when they find a cancer and they find a cancer early, they become believers and they prescribe more. But if it takes you 100 to find a cancer, there's a lot of time in there to actually not think this works. So we've got a lot of programs around putting physicians together to talk to each other who find cancers and what do they do with it and so on. And I think you're also seeing through, like, Farber and, you know, Mayo, some of these other well-respected oncology centers, they're creating their own MSED clinics where, you know, they're publishing on their own data. You know, they've got PPPs of, like, 70%, 80% because they're looking for the cancer, like, until they find it. You know, it's just we find tests of cancer molecularly, and imaging isn't perfect. Is there really a false positive, or is it just a later positive?

Yeah. Yeah. Kind of the same question for patients, you know, at $900 a test, you know, do you see patients coming back for repeat testing or is it typically like a one-time thing for them?

No, I mean, we've, this last quarter, I think more than 30% of the tests have been repeat tests in the last 18 months. So you would take the test annually, but I mean, I never take my physical exactly 12 months after. So we use 18 months. And then just for, you know, So comparatively, like Cologuard, I think their retest rate is just around 30% for a fully reimbursed FDA-approved test after 10 years. So I think it really speaks. I mean, Cologuard's a great test. It speaks more toward the form factor of a blood-based test and the ability to pick up cancers, not a cancer.

Yeah, definitely. You also have the EPIC integration. Maybe, you know, if we look at kind of past integrations like Quest and Athena, how much volume uplift did you get from these within ordering physicians? And did we expect a similar uplift in Epic?

So we're excited about Epic. We're in the middle of that implementation process. I'd expect that to go live by the end of the quarter, I mean, by the end of the year. So I wouldn't expect that to be a significant impact this year. But I think as you're talking about early adopters and how do we expand X, so this makes the physicians who are bought in very easy to order. I don't think we're at a point, because it's not an FDA-approved test that is fully reimbursed, that just having Epic is going to make a physician go from, I'm not going to order this, to order it. I think physicians are a little more thoughtful than just having an easy button. But I think once we have crossed that threshold of FDA approval and so on, then it just becomes much easier to order. We've seen definitely good uptake from Quest and Athena. Epic's a completely bigger and different beast. And so we're excited to see where that goes.

And then maybe turning to competition, you know, the MSED market is obviously has a really large patient population. But how do you think about increasing competition in the MSED space with more launches and then also maybe single cancer screening and just talk through kind of what you're seeing there?

Yeah. I mean, we've been the only people in the space for a while. And we welcome others into it. There's over 100 million people. This doesn't need to be a winner-take-all market. We're very proud of where we're at, though, in that position, being the market leader. We're also the only company that has interventional data, clinical data. We're the only company that has data in the intended use population, which is asymptomatic people. We're the only company that has randomized controlled data. We're the only company that showed a stage four shift. So our data package is just so much higher quality and built in the intended use population versus case-controlled study that we think were pretty differentiated there. But people building awareness, people educating on MSED, we more than welcome that. We're really comfortable with where we're at, and we're continually looking at what is new, what could we do differently, how are we going to improve the test? We've already done it once. We reduced our costs pretty significantly with the same performance. So we've shown that we can take the data in our system, our commercial data, and make the test better. We're going to continue to do that. I think we've ran close to a million total samples now between clinical and commercial studies. So, you know, we like where we're at.

Yeah, yeah. Do you think that that data differentiation is something that a lot of the self-pay kind of consumers will understand as they look to, you know, who their provider is going to be?

So that's a great question. I think the more awareness we build and the more we are successful in showing physicians and explaining the difference, I think that kind of gets you there. We'll see how many tests somebody like a digital health partner offers. Are they going to offer five MSED tests? Are they going to offer one? So we'll see how that all rolls out. But as you guys all know, you're investors in this space and you're an analyst in this space. People like to compare all sorts of data that probably isn't comparable, and it can cause confusion. But at the end of the day, we've got RCT data that shows clinical utility. It's kind of everything, but it kind of understands that.

Yeah, yeah. Maybe touching on the financials a bit and on profitability, I guess, how do you think about the OPEX line items moving forward? You know, you recently hired more reps, but then you completed the NHS study, so kind of maybe the moving piece is there.

Yeah, so I think we'll burn about $300 million this year, no more than that, and we see cash into 2030. So the growth, the increase in margins, growth in revenue, will start to contribute to the bottom line. Sales and marketing will be the area that we do invest in. R&D are now, I mean, primarily the majority of the costs from prior years, the testing, right, that's the most expensive part of it. This is just pretty affordable follow-up type stuff. And, you know, our innovation and R&D programs we continue to invest in, but they're not, you know, 70,000-person clinical trials.

Yeah, yeah, absolutely. You mentioned the cash runway into 2030. I guess maybe talk us through the bridge to EBITDA break-even eventually. Like, what revenue scale would be required to kind of get you there?

So we haven't gotten that specific yet. We've got a lab that's capable of doing more than a million tests. and, you know, all those variables we talked about earlier is about how efficient that can be, how efficiently you can sell will drive whether you get there or not. I also think that, you know, what happens internationally because, right, selling in the U.S. is a lot more expensive than selling internationally. If something were to happen with the NHS or any other single-payer system, that's not a sales force. You know, they send out text messages and people show up to the doctor. and so our gross margins will be less because the test price will be less but the cost of sale is close to zero and so our operating margins will be pretty healthy so I hate to not answer your question directly but I just know it all ended up being wrong there's a lot of variables and I guess thinking about your revenue guide for the year, the 22 to 32% for gallery you grew 37% in 1Q how should we think about the cadence throughout the year and why the implied step down? Yeah. So, you know, we will be looking at guidance again. You know, we'll see how this quarter goes. You know, we had ASCO data going out, you know, Salesforce expansion and so on. We'll see how those things, this transition period works. We were excited by the growth in Q1. You know, Q2 volumes were already higher than Q1s from last year. So, like, the growth is going to be a little bit different. But we still believe we're in the 22% to 32% range. But we, of course, will look at our guidances as we go through the quarter.

Okay, great. And the upside-downside levers there, Salesforce sounds like on the upside, the downside?

I mean, like any upside, if it all goes well, there's downside if it doesn't, because there's disruption from your existing territories and so on and so on. Is that transitory? Is it permanent? Those are the types of things that you figure out.

Yeah, yeah. And I guess we just have a couple minutes left. So what do you feel is the most underappreciated part of the girl story? What are you most looking forward to in the few years ahead?

Yeah, I mean, I think we spent a lot of time talking about NHS Gallery, right, and clinical utility. Some of the big criticisms we get are it's not ready for prime time. And I go, I don't know, we just kind of showed a pretty substantial stage four shift in a two-year period in an RCT. I mean, I think these other people have said, you know, you could add up, like, the last 15 years of therapeutic innovation, and it's nowhere near that. This is ready now, and it's saving lives now. And we're, you know, very proud of the data we have. We've been very transparent with it. And we're excited to see where it goes. I think the biggest takeaway I have is this test is saving lives today and saving thousands of lives.

Great. All right, we'll leave it at that. Thank you so much.