Adaptive Biotechnologies Corp Q1 FY2025 earnings call

Management Statement and Operational Highlights

• MRD Business: Strong clinical volume growth with 34% revenue increase. Received Medicare recurrence monitoring coverage in MCL. clonoSEQ clinical revenue grew 55% in Q1, tests delivered reached over 23,000 (36% increase year-over-year). Blood-based testing increased to 44% of US MRD tests. Number of ordering healthcare providers grew 31% to over 3,400. 27 live EMR integrations with plans to add at least 5 more accounts. ASP targeted at $1,300 per test for FY2025.
• Immune Medicine: Progress on preclinical antibody program in autoimmunity. Focus on developing a digital TCR-antigen prediction model for cancer cell therapy with Genentech and building a preclinical data package for autoimmunity T-cell depletion program. Targeting immune medicine cash burn between $25M and $30M.

Segment Performance

• MRD (Molecular Residual Disease): Revenue increased 34% year-over-year to $43.7 million, contributing 83% of total revenue. Clinical revenue grew 55% in Q1, with clonoSEQ test volume reaching over 23,000 (a 36% increase year-over-year). Blood-based testing contributed 44% of MRD tests in the US. ASP in the US was north of $1,220 per test, up 14% year-over-year. MRD Pharma revenue was $15.2 million, up 7% year-over-year, including $4.5 million in regulatory milestones.
• Immune Medicine: Revenue was $8.7 million, down 6% year-over-year. Sequencing gross margin was 62%, a 17 percentage point improvement year-over-year. Operating expenses decreased 9% overall, with Immune Medicine contributing 17% of total revenue.

Guidance

• MRD Revenue: Raised full-year guidance to $180M-$190M (previously $175M-$185M) due to stronger clinical volume and higher milestones.
• Operating Spend: Lowered full-year total company operating spend guidance to $335M-$345M (previously $340M-$350M).
• Cash Burn: Lowered full-year total company cash burn guidance to $50M-$60M (previously $60M-$70M) due to higher MRD revenue and reduced corporate costs.

Risks

• No specific detailed risks discussed, but general risks related to market conditions, tariffs, trading policies, and NIH funding pressures were mentioned as factors that could affect actual results.

Question and Answer

• Q: Any specific indications seeing growth in clonoSEQ volume? A: Susan Bobulsky mentioned strong growth in lymphoma indications like DLBCL and mantle cell lymphoma (MCL), with DLBCL seeing an enhanced assay launch and MCL benefiting from recent Medicare coverage.
• Q: Weather impact on Q1 clonoSEQ volumes? A: Susan Bobulsky stated no notable weather impact; growth driven by lymphoma indications, blood-based testing, and EMR integrations.
• Q: Milestone payments and funnel for MRD Pharma? A: Kyle Piskel mentioned more milestones becoming available, with Q1 having $4.5M, and potential for upside in 2025 outlook.
• Q: EMR integration cost savings and productivity gains? A: Susan Bobulsky noted operational efficiencies like 90% decrease in callbacks from a large account, with potential for more savings long-term.
• Q: DLBCL assay sensitivity and use cases? A: Susan Bobulsky explained the enhanced assay's importance in pharma settings for front-line therapy, where high sensitivity is needed for detecting disease not visible on imaging.
• Q: Leverage areas in MRD OpEx guide reduction? A: Chad Robins and Susan Bobulsky mentioned leverage from lab volume, asset consolidation, and revenue cycle management investments.
• Q: NeoGenomics partnership progress? **A: Susan Bobulsky detailed progress in selecting Phase 1 accounts, designing TRS, test requisition forms, and cross-functional team handoffs for a second half 2025 pilot launch.