A company making a blood test that can be used to detect mutations in cancer tumors shows promise.
This bloody company is already worth $3.3 billion.
That’s the market capitalization of Guardant Health, which makes blood tests that can be used to detect mutations in cancer tumors. Shares have doubled from the $19 price set in the company’s October 4 initial public offering, which raised $273 million. Sell-side analysts at Cowen, Leerink Partners, J.P. Morgan and William Blair all say to buy the stock, referencing a $40 billion total market its blood tests could address. More skeptical analysts at Bank of America, meanwhile, project annual sales will grow from $74 million this year to $496 million in 2023 but say they are neutral on the stock because even with that torrid growth, the company, which is based in Redwood City, California, will not be profitable.
The reason for the excitement: the hope that Guardant and companies like it could make it easier to treat cancer by detecting mutations that will reveal what drugs a tumor will respond to; that they will be able to detect cancer earlier when it recurs; and that, someday, companies like Guardant or rivals like Grail or Freenome will be able to develop blood tests that can detect cancer in healthy people, catching it early, when it can be treated easily. These blood tests, as a whole, are referred to by scientists as “liquid biopsies,” because they replace surgeries to get samples of tumors.
Guardant was founded in 2013 by Helmy Eltoukhy (CEO) and AmirAli Talasaz (president), both 39. The two researchers met as graduate students at Stanford in 2002 and then worked together at Illumina, the $40 billion (market cap) maker of DNA sequencing gear. Each owns shares in Guardant that are worth in excess of $200 million.
Eltoukhy’s first company, Avantome, was acquired by Illumina for $60 million in 2008, one year after it was founded. For four years, he worked as an executive in the company’s research labs.
“It was a great time, obviously, in their history,” says Eltoukhy. “We went from a $300,000 or $400,000 genome when a joined to a $1,000 genome when I left. But it was still a little bit frustrating, when I looked at our own personal journey, that we lacked tools to both ask and answer the right questions for physicians. [There was] a lot of great progress on the research side, but not a lot of it was moving the needle on the clinical side.”
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