Kyle Mixon

Kyle Mixon asked how the NHS-Galleri results impact GRAIL's international expansion strategy and next steps in the UK, and the rationale behind expanding the sales force despite missing the primary endpoint.

Answer

Bob Ragusa, CEO, and Harpal Kumar, Chief Scientific Officer and President of International, highlighted the strong reduction in stage four cancer and increased stage one/two detections as compelling for international discussions, with the UK NHS likely awaiting full ASCO results. Andy Partridge, Chief Commercial Officer, explained that market research and customer feedback indicate the stage four reduction and fourfold detection rate increase are compelling to U.S. clinicians, justifying the sales force expansion.

Kyle Mixon followed up on whether GRAIL could narrow its FDA label based on results, the impact on a potential advisory committee meeting, and the relevance of USPSTF inclusion versus FDA approval for coverage.

Answer

President Josh Ofman reiterated that FDA's focus on clinical performance and safety means the findings won't impact approvability, and labeling will be negotiated. CEO Bob Ragusa highlighted the strong safety profile. Sir Harpal Kumar noted Stage IV reduction was true for all cancers, not just the 12 specified. Josh Ofman stated FDA approval is the most critical milestone for patient and payer conviction, with USPSTF being supplemental to CMS's new statutory authority for coverage.

Kyle Mixon asked if the recent short-read divestment resulted in any further cost reductions from the P&L and if it provided a tailwind to gross margin. Mixon also inquired whether the cost of testing improves when transitioning from standard of care to long-read sequencing, referencing a slide in the earnings deck that highlighted better diagnostic yield and turnaround time.

Answer

Christian Henry, President and Chief Executive Officer, stated that the short-read divestment would not lead to substantial additional cost reductions, as many related costs were eliminated in 2025's workforce reductions. He noted that PacBio would continue supporting the Onso system through the year, with potential savings in 2027 as it reaches end-of-life. Henry confirmed a gross margin tailwind from the divestment, as the Onso platform had lower gross margins, but clarified that it wouldn't be an incremental year-over-year tailwind for 2025 due to minimal Onso sales. He emphasized that long-read sequencing, particularly HiFi, not only improves diagnostic yield and turnaround time but also lowers total testing costs by consolidating multiple assays into one comprehensive test, a message PacBio plans to amplify with the launch of SparkNex.

Kyle Mixon inquired about the cost implications of the recent short-read divestment, specifically if any costs were removed from the P&L and the expected tailwind to gross margin. He also asked if long-read sequencing improves costs when compared to the standard of care, referencing a slide on diagnostic yield and turnaround time.

Answer

Christian Henry, President and Chief Executive Officer, stated that substantially more costs would not be immediately removed from the P&L due to ongoing Onso system support, with savings likely in 2027. He confirmed a gross margin tailwind as the Onso platform had lower margins, but noted minimal impact in 2025 due to low sales. He emphasized that HiFi whole genome sequencing offers faster turnaround, better diagnostic yield, and lower overall costs by consolidating multiple tests into one.

Kyle Mixon asked which instrument franchise (Chromium or spatial) is expected to experience the largest impact from CapEx headwinds in 2026. He also asked for proof statements from 2025 that give confidence in biopharma revenue breaking through 30% in 2026 and potentially reaching half of revenue over time, given the new biopharma-focused commercial team.

Answer

CEO Serge Saxonov expressed excitement for translational research in both academia and biopharma, aiming for biopharma to eventually drive half of revenue, with steps in that direction in 2026. He cited publicly announced large-scale translational projects and the expansion opportunity beyond early discovery into biomarker programs. CFO Adam Taich noted broad CapEx constraints, with more pressure on higher-end CapEx. He mentioned Chromium instrument units grew year-over-year from 2024-2025 by working with customers on package deals, a strategy to continue in 2026.

Kyle Mixon questioned which instrument franchise would be most impacted by CapEx headwinds in 2026 and sought evidence from 2025 supporting biopharma's potential to reach 30% of revenue in 2026 and eventually 50%.

Answer

CEO Serge Saxonov expressed optimism for biopharma's long-term potential, aiming for 50% of revenue, with steps towards this in 2026, citing large-scale translational projects. CFO Adam Taich noted broad CapEx constraints, with higher-end CapEx facing more pressure, but highlighted Chromium unit growth in 2025 through customer partnerships and package deals.