Adaptive Biotechnologies Corporation earnings

Management highlights

- MRD business has accelerating momentum: MRD revenue up 53% y-o-y, Clonacy clinical volumes up 41% y-o-y, blood-based testing and community volumes growing, pricing increasing. - Biopharma business: MRD pharma revenue up 53% y-o-y, new bookings strong, backlog ~$254 million, ~20 ongoing interventional studies using MRD. - Immune medicine programs: Scaling TCR antigen datasets, advancing AI ML modeling, partnering with Pfizer on RA target discovery.

Guidance

Raising full-year MRD revenue guidance to $260 to $270 million range. Reiterating full-year total operating expense guidance $350 to $360 million. Expecting positive adjusted EBITDA and positive free cash flow for full company by end of 2026.

Segment performance

MRD revenue grew 53% year over year. Clinical revenue up 54% y-o-y, Clonacy clinical volumes increased 41% y-o-y. Blood-based testing reached 49% of MRD volume, community volumes grew 67% y-o-y and represent 35% of total testing, US ASP growth 11% y-o-y to 1360 per test. Biopharma MRD revenue grew 53% y-o-y (33% excluding milestones), new bookings strong driving backlog to ~$254 million (24% y-o-y). Immune medicine revenue $3.8 million, down 26% y-o-y due to timing of sample receipts and processing. TCR antigen datasets over 6 million functional pairs, AI model outperformed public benchmarks in predicting TCR antigen binding, partnered with Pfizer on RA target discovery, IM cash burn expected $15 to $20 million in 2026.

Analyst Q&A

• Q: Andrew Brackman on community testing and reimbursement;

  A: Conversations shifted to practical implementation, ClonoSeq not subject to PAMA reporting requirements currently, in process of multi-pronged strategy for reimbursement.

• Q: David Westenberg on MRD as primary endpoint, pharma impact, and clinical trial monetization;

  A: Increasing use of MRD in pharma studies, potential for MRD as companion diagnostic, initial exploration on clinical trial matching.

• Q: Mark Mazzaro on pharma backlog and EHR integration;

  A: Backlog breakdown, primary endpoint milestones higher than secondary, early in EHR integration with strong playbook.

• Q: Sabu Namby on Medicare bundle and milestone payments;

  A: Strong relationship and productive discussions on Medicare bundle, renegotiations take time, sequencing margin expected to step up to ~75% gross margin.

• Q: Sebastian Sandler on pharma bookings and EBITDA;

  A: Prudent on bookings guide, EBITDA improvement in MRD business with continued growth trajectory.

• Q: Dan Brennan on volume guide and commercial organization;

  A: Confident in 35% volume growth with upside potential, commercial team with 65 sales reps, focusing on EMR integrations and data generation.

• Q: John Wilkin on sequencing business acceleration;

  A: Traction in pharma MRD space, growth potential with lumpy quarter to quarter nature