Grail, Inc.(US:GRAL)2025-05-14 20:11Part I - Financial Information Item 1. Financial Statements This section presents the unaudited condensed consolidated financial statements for the quarter ended March 31, 2025, including detailed notes Condensed Consolidated Balance Sheets The balance sheet as of March 31, 2025, shows total assets of $2.85 billion, a decrease from $2.98 billion at December 31, 2024, primarily due to reduced cash and cash equivalents Condensed Consolidated Balance Sheet Highlights (in thousands) | Account | March 31, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Assets | | | | Cash and cash equivalents | $133,895 | $214,234 | | Short-term marketable securities | $540,688 | $549,236 | | Total current assets | $727,655 | $819,861 | | Intangible assets, net | $1,982,306 | $2,016,890 | | Total assets | $2,847,605 | $2,983,307 | | Liabilities & Equity | | | | Total current liabilities | $74,977 | $76,925 | | Total liabilities | $433,937 | $479,902 | | Total stockholders' equity | $2,413,668 | $2,503,405 | Condensed Consolidated Statements of Operations Total revenue increased to $31.8 million in Q1 2025, while net loss significantly narrowed to $106.2 million due to reduced operating expenses Condensed Consolidated Statements of Operations (in thousands, except per share data) | Metric | Q1 2025 | Q1 2024 | | :--- | :--- | :--- | | Total revenue | $31,837 | $26,721 | | Total costs and operating expenses | $185,444 | $254,143 | | Loss from operations | $(153,607) | $(227,422) | | Net loss | $(106,213) | $(218,914) | | Net loss per share — Basic and Diluted | $(3.10) | $(7.05) | Condensed Consolidated Statements of Cash Flows Net cash used in operating activities significantly improved to $95.0 million in Q1 2025, with $14.6 million provided by investing activities Condensed Consolidated Statements of Cash Flow Highlights (in thousands) | Cash Flow Activity | Q1 2025 | Q1 2024 | | :--- | :--- | :--- | | Net cash used in operating activities | $(95,012) | $(207,286) | | Net cash provided by (used in) investing activities | $14,611 | $(2,548) | | Net cash provided by financing activities | $— | $312,000 | | Net (decrease) increase in cash | $(80,339) | $102,129 | Notes to Condensed Consolidated Financial Statements This section details the company's spin-off from Illumina, accounting policies, legal proceedings, and the impact of the 2024 restructuring plan - GRAIL separated from Illumina on June 24, 2024, becoming an independent public entity. Illumina retained a 14.5% ownership stake post-spin-off, which has since reduced to 12.8% as of March 31, 20253386 - The company believes its existing cash, cash equivalents, and short-term marketable securities are sufficient to meet its needs for at least the next 12 months38 - An SEC inquiry related to Illumina's acquisition of GRAIL was closed on May 9, 202563 - The 2024 Restructuring Plan, designed to focus on the core MCED business, was substantially completed in Q4 2024, with total charges of $18.3 million. As of March 31, 2025, there was no remaining restructuring liability72 Management's Discussion and Analysis of Financial Condition and Results of Operations Management discusses Q1 2025 financial performance, highlighting increased Galleri test volume, reduced operating expenses from restructuring, and liquidity - The company sold over 37,000 Galleri tests in Q1 2025, contributing to a total of over 325,000 commercial tests sold to date9596 - A restructuring plan approved in August 2024 to focus on the core MCED business involved a headcount reduction of approximately 30% and was substantially completed in Q4 2024101104105 Q1 2025 vs Q1 2024 Operating Expense Changes (in thousands) | Expense Category | Q1 2025 | Q1 2024 | Change ($) | Change (%) | | :--- | :--- | :--- | :--- | :--- | | Research and development | $53,625 | $101,625 | $(48,000) | (47%) | | Sales and marketing | $34,979 | $46,819 | $(11,840) | (25%) | | General and administrative | $45,074 | $57,069 | $(11,995) | (21%) | Reconciliation of Net Loss to Adjusted EBITDA (in thousands) | Line Item | Q1 2025 | Q1 2024 | | :--- | :--- | :--- | | Net loss | $(106,213) | $(218,914) | | Adjustments | $6,478 | $66,945 | | Adjusted EBITDA | $(98,735) | $(151,969) | - As of March 31, 2025, the company had $137.2 million in cash, cash equivalents, and restricted cash, and $540.7 million in short-term marketable securities. Management believes this is sufficient to fund operations for at least the next 12 months but anticipates needing to raise additional financing in the future158159 Quantitative and Qualitative Disclosures About Market Risk The company's market risk exposure is primarily from interest rate changes and foreign currency fluctuations, with no material impact expected - The company is exposed to interest rate risk on its cash, cash equivalents, and restricted cash of $137.2 million and short-term marketable securities of $540.7 million as of March 31, 2025173 - Foreign currency risk is present due to transactions denominated in currencies other than the U.S. dollar, primarily the British pound175 - A hypothetical 10% relative change in interest rates or foreign exchange rates would not have had a material impact on the company's financial statements174175 Controls and Procedures Management concluded disclosure controls and procedures were effective, with no material changes to internal control over financial reporting - Based on an evaluation as of the end of the reporting period, the principal executive officer and principal financial officer concluded that disclosure controls and procedures were effective177 - There were no changes in internal control over financial reporting during the quarter that have materially affected, or are reasonably likely to materially affect, internal controls178 Part II - Other Information Legal Proceedings This section details legal matters, including the closure of an SEC inquiry and ongoing securities class action lawsuits - For details on legal proceedings, the report refers to Note 7 of the condensed consolidated financial statements179 Item 1A. Risk Factors Key risks include product performance, clinical trial outcomes, regulatory uncertainty for LDTs, and international operational challenges - A primary risk is that products may not perform as expected, and clinical study results may not support commercial use, regulatory approval, or reimbursement182 - A U.S. District Court vacated the FDA's LDT Final Rule on March 31, 2025, creating significant uncertainty around the future regulation of LDTs like Galleri. If the rule is ultimately implemented, compliance would be costly and time-consuming184202 - Preliminary or interim data from clinical trials, such as the NHS-Galleri trial, are subject to change and may differ materially from final results, which could harm business prospects188190 - The company faces risks from international operations, including tariffs, trade restrictions, and varying political and regulatory environments, which could adversely impact results193195 Unregistered Sales of Equity Securities and Use of Proceeds No unregistered sales of equity securities or use of proceeds were reported during the quarter - None209 Defaults Upon Senior Securities No defaults upon senior securities were reported during the quarter - None210 Mine Safety Disclosures This item is not applicable to the company's operations - Not applicable211 Other Information Directors and officers adopted Rule 10b5-1 trading plans for future common stock sales during the quarter - On March 13, 2025, CFO Aaron Freidin, President Joshua Ofman, and Director Sarah Krevans each entered into a Rule 10b5-1 trading arrangement for the sale of common stock213214215 Exhibits This section lists exhibits filed, including key agreements and required certifications - A list of exhibits filed with the report is provided, including key agreements and required certifications218