Dive Brief:
- The Food and Drug Administration has approved Guardant Health’s new blood-based genomic test, the company said Wednesday.
- Guardant designed the liquid biopsy panel to profile more than 740 genes, compared with the 74 covered by its existing product.
- Wall Street analysts, who noted the approval arrived earlier than anticipated, expect Guardant to leverage the benefits of the new test to secure a higher price next year.
Dive Insight:
The FDA approved Guardant’s previous tumor mutation profiling test, Guardant360 CDx, in 2020. Initially sold as a laboratory-developed test, the new product, Guardant360 Liquid CDx, has 100-fold wider coverage than its predecessor to enable physicians to identify more mutations that may inform cancer treatment. The FDA transferred the legacy test’s seven companion diagnostic approvals to the new assay.
Half of the estimated 200,000 Guardant360 tests sold are LDTs, Leerink Partners analysts said in a note to investors. The analysts expect LDT users to “shift wholesale to this new assay.” Moving customers to the new assay could increase Guardant’s average selling price for the Guardant360 business.
The Guardant360 CDx price under the Centers for Medicare and Medicaid Services’ advanced diagnostic laboratory test program is $5,000, the analysts said. The LDT version of the new test also commands a $5,000 price, TD Cowen analysts said in a note to investors.
Based on talks with Guardant, TD Cowen analysts estimate the FDA-approved version of the new test could achieve an ADLT price of $6,000 to $9,000. The analysts’ base case is $7,500, while their peers at Leerink said a $9,700 list price is possible.
TD Cowen and William Blair analysts forecast Guardant could secure a new price early next year. Leerink analysts said ADLT pricing could arrive slightly earlier than the previously suggested timeline of 2027. The expectation that Guardant will benefit from higher pricing for most of next year is informing forecasts, with TD Cowen analysts seeing a 9% upside to the company’s revenues in 2027.
The approval could increase volumes of the test, which will face fewer restrictions on its use than the LDT version, William Blair analysts said. Leerink analysts estimate Guardant has maintained a more than 50% share of the market despite “multiple competitive entrants.”
Companies including Roche’s Foundation Medicine compete with Guardant.
Guardant’s stock price increased by just over 17% Wednesday to close at $114.97. The stock edged higher when trading began on Thursday.
