Guardant’s New Blood Test Can Detect Many Different Cancers. The Company Is Promising the Same for Other Diseases.

Guardant hopes AI will find early signals for hundreds of diseases in the brain, heart, lungs, liver, and other organs. (Courtesy Guardant)

Key Points

• Guardant Health will launch its Shield multi-cancer blood test next month, aiming to detect various cancers early using AI analysis.
• The company anticipates Shield’s market could expand to $300 billion by detecting early signals for hundreds of diseases beyond cancer.
• Guardant expects to achieve free-cash-flow positivity by 2028, with annual revenue growing 34% to reach $2.2 billion in that year.

Next month, Guardant Health will launch a blood test that detects many kinds of cancers—putting itself on the heels of diagnostics rival Exact Sciences in the multicancer blood-screen race started by Grail. If such tests find cancers while they’re still curable, some think annual sales could reach $50 billion.

Guardant announced its Shield multi-cancer screen Wednesday at an investor meeting in New York, during which the company explained how it is applying artificial intelligence to its database of more than a million cancer cases whose drug treatment it guided with the genomic analysis of its existing products.

That biobank of cases is helping researchers at drug companies and universities search for new treatments for cancer. But the Palo Alto firm hopes that AI analysis of its growing case files will expand Shield’s early detection beyond cancer.

Just as Guardant’s existing products find traces in the blood of the genomic on-switches for cancer—an analysis known as epigenomics—it hopes AI will find early signals for hundreds of diseases in the brain, heart, lungs, liver, and other organs. Success could expand the market for its Shield blood screen to $300 billion.

“Shield is a platform that can go well beyond cancer,” said co-CEO AmirAli Talasaz. “We have already accumulated a robust data set of epigenomic signatures in hundreds of diseases in asymptomatic individuals.”

A hurdle for cancer blood screens is that there’s almost no insurance coverage for them. Grail and Exact Sciences are selling multicancer tests for under $1,000.

Shield is already approved by the U.S. Food and Drug Administration for early detection of colorectal cancer, with reimbursement of $1,500 by Medicare and below $1,000 by private insurers. Starting in October, doctors and patients can choose to get findings on other cancers, along with their colorectal results. As pricing comes down, and Shield gets included in preventive health guidelines, Guardant thinks the product’s sales can surpass $500 million in 2028.

Guardant presented other financial updates at its investor meeting. It now expects to become free-cash-flow positive by 2028, with its annual revenue growing 34% to reach $2.2 billion that year.

The meeting lifted Guardant stock 5% on Thursday morning, to $60. At seven times Wall Street’s average estimate for next year’s sales, it’s not a dirt-cheap stock. But investors are encouraged by the prospects for cancer diagnostics, and they’ve bid up shares of rival Grail to an eight-times sales multiple.

“One thing has become clear to us in the current market,” wrote William Blair’s Andrew Brackmann, after the meeting. “Revenue growth acceleration and durability of underlying momentum can sustain multiples.”

He rates Guardant a Buy.

Corrections & Amplifications: Guardant Health is based in Palo Alto. A previous version of this article incorrectly said Redwood City.

Write to Bill Alpert at william.alpert@barrons.com