GH FDA emergency use auth for COVID test

Investment Analysis Clubs Saul’s Investing Discussions
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Guardant Health just announced they received emergency use authorization from the FDA for a COVID test

On the recent earnings call, they mentioned that they had developed a saliva test that was only being used for employees, but they mentioned that they were willing to roll it out more to help others test for COVID. They said on the call they weren’t looking to profit off of it, but would only hope to not lose money on it.

The details in the PR seem to refer more to “nasal” test which sounds more like the common tests we’ve seen during the pandemic, rather than using saliva, but maybe it’s the same thing.

At least one school, Delaware State University, is using the Guardant COVID test for students returning to campus.

The one potential business positive on this, and I am just wagering a guess here, is even if they don’t plan to profit off the COVID test, if they previously recognized a lot of costs related to development of the test without anticipating related revenue, and rolling it out beyond just the employee base brings in enough future revenue just to break even (not to lose money), they may ultimately recoup a lot of previously recognized costs and essentially show net profit on this test going forward, resulting in a breakeven since inception situation. So even without an ultimate profit relating to COVID tests, it’s not outside of the realm of possibility that there could be a minor windfall/profit for them in the second half of 2020. We’ll see

https://investors.guardanthealth.com/news-releases/news-rele…

REDWOOD CITY, Calif., Aug. 24, 2020 (GLOBE NEWSWIRE) – Guardant Health, Inc. (Nasdaq: GH) announces that the U.S. Food and Drug Administration (FDA) has granted the Guardant-19 test emergency use authorization (EUA) for use in the detection of the novel coronavirus, SARS-CoV-2. The test is being offered to Guardant Health employees and select partner organizations through the company’s CLIA-certified clinical laboratory.

The Guardant-19 test is a reverse transcriptase polymerase chain reaction next generation sequencing (rt-PCR-seq) test that detects coronavirus SARS-CoV-2 nucleic acid from upper respiratory nasal specimens including nasopharyngeal swabs, oropharyngeal swabs, nasal swabs, interior nasal swabs, mid-turbinate nasal swabs, nasopharyngeal wash/aspirates, nasal aspirates, and nasal washes. The test has a validated limit of detection (LoD) of 125 copies per mL and results are typically returned the next day. The heavily multiplexed testing workflow used has the ability to scale to over 10,000 tests per day.

“While serving cancer patients remains our top priority, we are proud to be able to leverage our expertise in liquid biopsy testing to contribute to battling the COVID-19 pandemic by offering a highly accurate test that is truly additive to the testing options available today,”

-mekong

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The one potential business positive on this, and I am just wagering a guess here, is even if they don’t plan to profit off the COVID test, if they previously recognized a lot of costs related to development of the test without anticipating related revenue, and rolling it out beyond just the employee base brings in enough future revenue just to break even (not to lose money), they may ultimately recoup a lot of previously recognized costs and essentially show net profit on this test going forward, resulting in a breakeven since inception situation.

I do not know how the test is performed. If GH has access to the data though, that would be a huge coup.

330 million people worth of saliva data multiple time? Massive!

Cheers
Qazulight

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One of the things that seems likely about COVID-19 tests, treatments, and vaccines is that we are going to get a lot of them. In time, there is likely to be some weeding based on cost, efficacy, ease of use, availability, and the like, but that could take a while. Which said, I am skeptical of investing in individual companies for return in this area, at least until we can see some sorting beginning to happen because there is just too much that is unknown.

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One of the things that seems likely about COVID-19 tests, treatments, and vaccines is that we are going to get a lot of them. In time, there is likely to be some weeding based on cost, efficacy, ease of use, availability, and the like, but that could take a while. Which said, I am skeptical of investing in individual companies for return in this area, at least until we can see some sorting beginning to happen because there is just too much that is unknown.

These tests should, if worked properly, create a lot of extra metadata. The
data mining should be enormous. Considering that healthcare is one of the largest, if not the largest industry in the USA, the mining of the
data is where the money is.

AYX?
DDOG?

I know AYX got hit hard. The data mining narrative
is past. Still, these are new huge and valuable piles of data.

Cheers
Qazulight

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One of the things that seems likely about COVID-19 tests, treatments, and vaccines is that we are going to get a lot of them. In time, there is likely to be some weeding based on cost, efficacy, ease of use, availability, and the like, but that could take a while. Which said, I am skeptical of investing in individual companies for return in this area, at least until we can see some sorting beginning to happen because there is just too much that is unknown.

yes, I agree that if someone wasn’t investing in GH for their cancer screening liquid biopsy potential, this COVID test doesn’t swing the business case for them significantly.

What it might suggest tho, after two recent FDA approvals this summer, is to confirm that the company has the knowhow and capability to successfully navigate the FDA approval process, both with one approval for Guardant360 that, despite not being related at all to the current pandemic, still managed to get the attention from the authorities to move forward in the midst of the pandemic, and then to quickly do what was needed to get an emergency use authorization for a COVID test that, as far as I can tell, is very much outside the company’s core area of competence.

This gives me more confidence that, if the LUNAR programs (where the big money and profits potentially exist for GH in future years) go according to plan, they won’t encounter any new obstacles navigating the FDA when that time comes. It also shows that they can be agile and quickly successfully develop new solutions/products as the needs arise.

-mekong

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Mekong you hit on something important, and I had actually thought about commenting on this a while back in a different thread. I work in the pharmaceutical industry, and have been (somewhat) involved with the FDA approval process with two different companies. The general public definitely does not comprehend how much goes into submissions and the approval process. It is definitely true to a certain extent that once you’ve gotten approval the first time, future applications should be easier due to the experience gained. I have the exact same thoughts about approval for Guardant360 providing more confidence about LUNAR in the future. I hadn’t been invested in GH in the past when it was first brought to the board but I did decide to start a small position after the Guardant360 approval announcement.

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