Good day, ladies and gentlemen. And welcome to the GRAIL First Quarter 2025 Earnings Call. At this time, all participants are in listen-only mode. After the speaker's presentation, there will be a question and answer session. Please be advised that this conference call is being recorded. GRAIL Investor Relations, please begin.

Thanks, operator. And thanks everyone for joining us today. On today's call are Bob Ragusa, GRAIL's Chief Executive Officer; Aaron Freidin, Chief Financial Officer; Dr. Joshua Ofman, President; Sir Harpal Kumar, President, International Business and BioPharma; and Andy Partridge, Chief Commercial Officer. We'll be making forward looking statements on this call based on current expectations. It's our intent that all statements other than statements of historical fact made during today's call, including statements regarding our anticipated financial results and commercial activity, will be covered by the Safe Harbor provisions for forward looking statements contained in Section 27A of the Securities Act of 1933 as amended and Section 21 of the Securities Exchange Act of 1934 as amended. Forward looking statements are subject to risks and uncertainties. Actual events or results may differ materially from those projected or discussed. All forward looking statements are based upon currently available information, and GRAIL assumes no obligation to update these statements. To better understand the risks and uncertainties that could cause actual results to differ, we refer you to the documents that GRAIL files with the SEC, including the Risk Factors section in GRAIL's most recent quarterly report on Form 10-Q. This call will also include a discussion of GAAP results and certain non-GAAP financial measures, including adjusted gross profit or loss, which are adjusted to exclude certain specified items. Our non-GAAP financial measures are intended to supplement your understanding of GRAIL's financials. Reconciliations of the non-GAAP measures to most directly comparable GAAP financial measures are available in the press release issued today, which is posted to our Web site. And with that, we turn to Bob.

Thank you. Good afternoon, everyone. And thank you for joining us to review first quarter results. We're making progress toward our vision of population scale, multi-cancer early detection and remain focused on developing the market. We plan to continue advancing Galleri through several key clinical and regulatory milestones that will help unlock broad access while maintaining our disciplined cost management. We are very pleased this afternoon to share positive top line results from the prevalent round of screening in the 140,000 participant NHS- Galleri trial. NHS- Galleri is one of our two registrational studies and as Harpal will describe shortly, these results continue to demonstrate strong Galleri performance in detecting multiple types of cancers with very low false positive rates. I'll take a moment to review key achievements in the first quarter before turning it over to Harpal. Then Josh will provide a medical and scientific update, and Aaron will cover the financials. We are building on our unique position as the first mover in the multi-cancer early detection field with the only commercially available clinically validated MCED test that has shown the ability to detect many types of cancer. GRAIL has sold more than 37,000 Galleri tests in the first quarter. And as of March 31st, more than 325,000 Galleri tests have been prescribed by more than 14,000 healthcare providers since we launched Galleri commercially in 2021. We continue to drive provider and patient awareness of the MCED opportunity and Galleri's ability to detect cancer early when it is more amenable to treatment. And importantly, we are generating real world evidence as our leading health systems and physician practices who have offered MCED as early Galleri adopters. We are proud of the demonstrated impact Galleri is having on patients' lives today, and I'm excited about our technology's potential to…

Thank you, Bob. I'm pleased to share high level Galleri test performance results from the intervention arm of the prevalent screening round of our 140,000 participant three year NHS Galleri registrational trial. The prevalent screening round was the first round of blood draws with one year of follow-up. We were pleased to see a substantially higher PPV than the 43% observed in the PATHFINDER study. We also saw specificity and cancer signal of origin or CSO consistent with PATHFINDER study, which was an interventional return of result study, evaluating the performance of Galleri. As a reminder, Galleri demonstrated specificity of 99.5% and a CSO accuracy of 88% in PATHFINDER. There were no serious safety concerns in the NHS Galleri prevalent screening round, also consistent with the PATHFINDER study. As Bob mentioned, the top line results from the prevalent screening round of the NHS Galleri trial are very encouraging. Results of all the three years of the trial are expected in mid 2026. These longitudinal results will be the first clinical utility results of their kind in the MCED field. The NHS Galleri trial was designed as three annual blood draws plus 12 months of follow-up in order to evaluate Galleri's ability to diagnose cancer at an earlier stage relative to standard of care. Cancer screening trials designed to show clinical utility are commonly conducted over three or more years using an annual screening interval. Because if screening is only conducted once, results can be influenced by the fact that the first screening round detects many prevalent late stage asymptomatic cancers that have not yet been diagnosed. This and other factors are likely to cause final results of the three year trial to defer from a review of the first round results. NHS Galleri is the largest and only randomized controlled trial of any MCED test, and the results thus far demonstrate strong Galleri performance. Together with England's NHS, we expect to publish detailed data from the ongoing NHS Galleri trial, including the primary endpoint of an absolute reduction in the number of stage three and four cancer diagnoses, as well as a number of test performance secondary endpoints, including episode sensitivity in mid 2026. And with that, I'll now hand over to Josh.

Thanks, Harpal. And hello, everybody. At GRAIL, we have implemented one of the largest clinical evidence programs in the MCED space with more than 385,000 participants overall. More than 21,000 participants were included in the studies to support the development and launch of Galleri and over 170,000 individuals are included in our registrational studies, which support our PMA submission to the FDA. Now let's be clear. Galleri is working in the real world. We are detecting clinically meaningful cancers and early stage cancers in asymptomatic adults. Our signal detection rate in commercial use is very much in line with what we expected based on our prior clinical studies. The majority of the early stage cancers Galleri has found are in cancer types where a recommended screening test does not even exist, thereby allowing patients an opportunity to access more effective and even curative treatments. Now we've described over time the key performance metrics, features, and capabilities for multi-cancer early detection tests, which importantly, are quite different from those for single cancer screenings. Positive predictive value, or PPV, is a key metric which discerns among positive test results how many are true positives. Specificity, critically important, defines the false positive rate. A very low false positive rate helps reduce unnecessary workups and their associated costs and contributes to driving a high positive predictive value. Our demonstrated specificity at 99.5% equates to a false positive rate of 0.5%. So just to remind you, a 1% reduction in specificity to 98.5% would triple the false positive rate. That is a 0.5% false positive rate would then become a 1.5% false positive rate, 3 times higher. So applying this to a real world population of a million people tested, instead of there being only 5,000 false positives, there would now be 15,000. Such a…

Thanks, Josh. And good afternoon, everyone. I'm pleased to present our results for the first quarter. First quarter results were strong with revenue of $31.8 million, up $5.1 million or 19% as compared to the first quarter of 2024. Total revenue for the quarter is comprised of $29.1 million of screening revenue and $2.7 million of development service revenue. Development services revenue includes services we provide to biopharmaceutical and clinical customers, including support of clinical studies, pilot testing, research and therapy development. We see continued demand for our Galleri test and sold more than 37,000 tests in the first quarter, a period we have observed historically to be softer relative to the fourth quarter. Repeat test volumes have moved higher over time, including in early 2025. More than 20% of Galleri volume today is repeat testing. Screening revenue of $29.1 million in the first quarter was up 24% as compared with the first quarter of 2024. US Galleri revenue was $28.7 million, up 22% compared to the first quarter last year, and we are on track relative to full year guidance we shared in January of US Galleri revenue growth of 20% to 30%. We do not expect major impacts from tariffs on our current business as our laboratory is located in the US and a significant majority of our suppliers are located in and manufactured in US. Net loss for the quarter was $106.2 million, an improvement of 51% as compared to the first quarter of 2024 and included amortization of intangible assets of $34.6 million and stock based compensation of $16.2 million. Non-GAAP adjusted gross profit for the first quarter of 2025 was $14.3 million, an increase of $2.3 million or 19% as compared to the first quarter of 2024. We ended the quarter with a cash position of $677.9 million. In January, we guided that we expect cash burn for the full year 2025 to be no more than $320 million. This represents a decrease of more than 40% compared to 2024. Our cash runway extends into 2028, enabling us to achieve major planned clinical and regulatory milestones. I'll turn it back to Bob for concluding remarks.

Thank you, Aaron. To close, we remain encouraged by the demand we are seeing today while we advance towards major milestones, seeking FDA approval of Galleri and pursuing broad reimbursement. We are very pleased to have taken additional strides in early 2025, including executing on the transition to the enhanced, more scalable version of Galleri, achieving TRICARE coverage and enabling easier access to Galleri ordering through Quest Diagnostics and Athena Health. Looking ahead, we expect to share interim data from PATHFINDER 2 study in late 2025. That data set will include the first 25,000 of the 35,000 participants enrolled. In 2026, key milestones include the completion of our modular PMA submission to the FDA in the first half and final results from our 140,000 participant NHS Galleri study. With that, we'll turn the call over to Q&A. Operator, please go ahead.

[Operator Instructions] Our first question will come from Subbu Nabi with Guggenheim Partners.

My first question is, back in December, the new version of Galleri was starting to be offered with expected short term variable cost improvement. Can you quantify what those were in the quarter and what should we expect sequentially for the year?

Subbu, as you said, we did launch at the end of last year. This year, for the first quarter, we're on that new version and we'd expect to see margins continue to improve over the rest of the year as we increase scale and just work through the launch transition that we're that we're going through this quarter. As you said, you'll see those variable COGS improvements come over time as we move everything over to that the new version completely.

And then when setting guidance, you said you considered Quest and said legislation and TRICARE approval. How have those played out to your expectations in 1Q and then is there any upside from here more than what you expected?

So early days on both Quest as well as TRICARE. So we are seeing improved ordering from Quest providers that are going through the Quest portal. So that's very encouraging. But again, early days on that. And on TRICARE, we're working through the contracting process. So we're in coverage with TRICARE but working through the coverage process with the various contractors there. So more to come on that later in the year.

Our next question will come from Tejas Savant with Morgan Stanley.

So maybe just one on the cash burn in the quarter. I guess, can you help us just think about the burn trajectory over the course of the next between now and year end, how you're tracking towards that sort $320 million or less in burn target that you guys had? And then second, on a related note, you've got a couple of other MCED launches coming up here, including one from an established brand in single cancer screening. So how are you thinking about your OpEx levels, which you've done a good job sort of controlling, so as to keep the burn down? Do you need to sort of think about reaccelerating it a little bit as some of those other offerings make it to market here?

Tejas, on the cash burn, so Q1, I think we burned just under $90 million. First quarter is the period that we pay out our annual bonus from the prior year, which is something, of course, it's not going to repeat in the future quarters. Then also as we talked about margins, just the last question, as we grow more and as margins improve, the cash burn will be in the $320 million range that we gave. And then on the OpEx and competitors, so it's good actually to see others investing in multi-cancer early detection as we've -- I think, we've noted on this call where we've been doing all the heavy lifting in terms of really educating the field, developing the market. We've made unprecedented investments though to set a very high bar for the field and demonstrate a really strong specifications based on that. And so we'll have to take a look and see from the announcements what actually transpires in terms of actual competitive approaches to see if that's going to have any OpEx impacts on us. So right now, I would say it's not clear that we have OpEx impacts from those launches but something we'll monitor over the next couple of quarters.

And then couple of quick cleanups on the data side guys. So the intervention arm from the NHS Galleri that data that you just shared. How should we be thinking about the read across from that your next year's final NHS Galleri readout like particularly in terms of that higher PPV you highlighted? And can you put a finer point on when in the second half of the year we can expect PATHFINDER 2 data?

So on the second question, we're looking to mid next year to have the readout on full three year study. We also have Harpal on the call today. So Harpal may be answering the first part of that question.

So look, it's important just to reiterate that the results we've shared today are from the first screening round only. And as we've tried to describe, it's really important that the first round of a screening program, what you typically see is that you are finding a lot of prevalent cancers in the population that have not yet been diagnosed. They are asymptomatic but they can often be very late stage. And so as we go through to the second and third rounds and those prevalent cancers in the population have already been diagnosed, we would expect to see some differences in the second and third round as indeed has other screening programs in the past. But we're not in a position today to be able to predict what those results will be, but we will have those results in mid '26.

Our next question will come from Doug Schenkel with Wolfe Research.

I want to talk about two things, the BMJ publication and then I want to talk about your cash management strategy, which is obviously top of mind for a lot of us. So starting on the BMJ publication, as you talked about in your prepared remarks, you demonstrated that annual MCED screening shows a higher projected impact on stage shift and mortality reduction relative to biannual testing. So keeping that in mind and then also the fact that you've indicated that based on draft MCED legislation that you would assume that ASPs would land in the 500 to 550 level. My questions are, do you believe that the ASP would be unaffected by testing interval? Meaning, if there's more frequent testing, does the ASP need to come down? And then the second part of the question is, when you think about the cost to the system, if there was broad adoption of Galleri at that pricing level, how -- and then you think about, by extension, how much it would cost to find a single cancer. If we think about the cost for cancer detected, including subsequent workups and even a small number of false positives. Would there be any concern in that scenario about the health economics, especially, again, for an annual test?

So I think, as you noted we have a lot of data now to suggest that based on cancer biology, Galleri should be administered on an annual basis, if we want to find early stage asymptomatic cancer based on the rates with which cancers are progressing given everything we know on the biology of circulating DNA now. So we think that's the right way to go. And all of our pricing strategies and everything we've projected about ASP are based on annual testing. So it's really too early to speculate on what would happen if we tested more frequently than that. From the health economic perspective, Doug, it's a great question. We know that with annual testing, even if population scale at the prices that are in the market today, let alone the lower ASPs that you're commenting on, this is a highly cost effective intervention. And compared to what we're spending today to diagnose a cancer, given everything that's going on with the false positive rates of current single cancer screening that the cost to diagnose a cancer with an MCED added to standard of care screening come down substantially. And the numbers needed to screen are much lower than what we've seen traditionally with some of the single cancer screening tests. So even today, the health economic data are very compelling from an efficiency and cost effectiveness perspective. There obviously is a budgetary impact to payers by screening the population for any disease, but it's high value investment.

So the second topic is on cash management, and just keeping in mind your stock, at least last I checked, is up about 140% year-to-date. There are obviously questions about your ability to fund operations through the period where you would plausibly get FDA approval and CMS reimbursement. And again, acknowledging you guys are doing a good job moving towards trying to extend the runway as long as possible. There are still concerns you can get there, especially given where we are with the MCED bill and the path to FDA reimbursement and the path -- or approval and CMS reimbursement. So in a best case, recognizing those developments are several years away and also recognizing the NHS Galleri readout, which is pretty critical, it doesn't read out until next year. And at that point, your cash position is going to be below half of what it is today, things start to get a little bit tight. So what was the calculus given all of these facts at the board level behind not raising money to derisk the outlook? It seems like that would have been a very prudent move to allow you to maybe play offense a little more aggressively and to make the NHS readout next year less binary. So simply put, what's the thinking here? What's the rationale to not take some steps, what are we missing?

Doug, it's a good question, something we've obviously thought about. As we've said in previous discussions, we think that getting through some of these milestones derisks the business and creates value for us. And so in the calculus, we were looking at getting through some of these major milestones and knowing that we have the cash runway to get through those was kind of the deciding factor towards waiting until things to play out a little bit. Obviously, the stock, as you mentioned, stock's up a bit. That obviously pushes more in the favor of being able to do something. But we still feel we have substantial cash runway and we have relatively near term milestones that will be value creating. Aaron, anything on that?

I mean, I would just add. I mean, we're less than a year out from our spin as well. We've got just about $700 million on our balance sheet. So Doug, I think it's something that we're going to continue to look at and work about work on and think about with our board. So it's on our minds but we're in a good position now in our view.

Our final question will come from Kyle Mikson with Canaccord.

Just on NHS first, just given the data here and the partnership in the study keep progressing. How are the recent conversations with NHS going? And do you -- what do you expect they're going to do, I guess, with Galleri commercialization in the country of following the full readout in 2026? And then secondly, for maybe Harpal, did you work on the PPV for the subset here that you provided? Is that a modeled number or is that a concrete metric? I just want to kind of understand if it's -- like how the number should be used and if it's -- I'm sure like how much earlier hire it is compared to PATHFINDER, for example?

So let me quickly take the second question first. So when we say the PPV was substantially higher in the first round, that's a concrete number. We're not sharing what that number is but we can say it's substantially higher than the 43% that we saw in PATHFINDER. So it's not a models number. With respect to the conversations with the NHS, I mean, just to say that we're in constant dialog with the NHS and with the national screening committee in the UK and with the government in the UK, they are clear that they want to wait to see final results from all three rounds of the study before they will make a decision as to if and when to roll out a screening program in the UK or in England particularly. So I can't give you anything more concrete than that at this point other than to say we're in constant dialog.

Harpal, maybe go through a little bit of the why not reveal the numbers right now.

So I mean, it's important to sort of reiterate that that the NHS Galleri trial was designed as a three year screening study. In other words, we do three rounds of screening. And that's very common in screening trials and in studies of screening because for the reasons that I stated earlier on the call, if you only look at one round of screening then what you'll typically find in that first round is a lot of prevalent asymptomatic cancers in the population, which can often be late stage but haven't yet been diagnosed. By going to a second and third round, you start to see what the impact of a, if you like, a more established or steady state screening program might be. And so it's really important that we safeguard those upcoming readouts and the integrity of the trial as a whole. It's also really important that we safeguard the interest of the participants taking part in the trial. And so for all of those reasons, we're not sharing more detailed information at this stage but we are now getting closer to having the final results middle of next year and we look forward to sharing all of those both with all of you but also with the NHS at that time.

And on the topic of repeat testing, it sounds like that metric remained stable, I think I heard 20% continues. So when you think about repeat testing, what's an acceptable number at this point, do you like 20%? How do you improve the stickiness and that recurring kind of revenue stream? And then how does movement in that number affect your modeling of ASP and customer acquisition cost over the medium term?

So first of all, we're very pleased with above 20%. Given that we're generally not a reimbursed test, we think it compares very favorably to reimburse tests in the market. So the 20% mark, we expect to continue to be able to grow that but we need a little more time when there are belts to figure out exactly where that's going to go. From a -- clearly from a customer acquisition cost that certainly helps the model being able to have that repeat base at that significant level. So that is something we're factoring in into our modeling.

Thank you. There are no further questions at this time. I will now turn the call back to GRAIL for closing remarks.

So thank you, everyone, for joining today's call.

Ladies and gentlemen, this concludes the call. You may now disconnect.