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Canaccord Initiates Coverage of Guardant Health With Buy Rating

NEW YORK (GenomeWeb) – Investment bank Canaccord Genuity said today that it has initiated coverage of liquid biopsy firm Guardant Health with a Buy rating and a price target of $90.

In a note to investors, analyst Mark Massaro said that he views Guardant as the leader in liquid biopsy cancer testing, adding that that stock gains so far have been justified and predicted that its shares will rise further. He estimated that the Guardant360 test is less than 5 percent penetrated in a $6 billion market for liquid biopsy therapy selection in advanced cancer patients.  

Guardant reported in March that its fourth quarter revenues rose 64 percent year over year, driven by a 98 percent increase in revenues from its precision oncology business.

According to Massaro, the expected pan-cancer FDA approval of Guardant360 — the company plans to submit its test for breakthrough device approval by mid-2019 — will "reduce pushback from the remaining 40 percent of US-based oncologists who have not yet ordered" the test.

Massaro also said that greater utilization may be spurred on by the Medicare contractor Palmetto GBA's proposal in March to cover the test not just in lung cancer, but for any advanced solid tumors when tissue-based genomic analysis is deemed impossible.

Like other firms, Massaro heralded recent results from Guardant's NILE study — presented earlier this month at the American Association for Cancer Research meeting and now published in Clinical Cancer Research — as having potential to persuade clinicians to use Guardant360 in a new "blood first" paradigm, reversing the current tissue-centered standard of care.

However, clinical guidelines continue to advise that liquid biopsy should only be used for patients that can't safely or practically receive tissue testing.

Outside of therapy selection, Massaro also highlighted Guardant's efforts to prove clinical and economic utility of its tests outside of the current therapy selection indication — for recurrence monitoring in the approximately 15 million American cancer survivors, and later, in screening for cancer in the 35 million "higher-risk" Americans.

The company launched a research use only test, LUNAR-1, for recurrence monitoring and residual disease detection in pharmaceutical partners' clinical trials, with plans to offer the test clinically in the future.

An adaptation for screening in high-risk asymptomatic individuals is also in the works, and Massaro wrote that Guardant Health may even launch in this area before its rival Grail.

In afternoon trading on the Nasdaq, Guardant's shares were up almost 3 percent to $76.54.