Adaptive Biotechnologies Corporation

Good day and thank you for standing by. Welcome to the Adaptive Biotechnologies Third Quarter Earnings Conference Call. At this time, all participants are in a listen-only mode. After the speaker presentation, there will be a question-and-answer session. To ask a question during the session, you will need to press star 1 on your telephone. If you require any further assistance, please press star 0. I would now like to hand the conference over to your speaker today, Karina Calcidelia, Thank you, please go ahead.

Thank you, Evangeline, and good afternoon, everyone. I would like to welcome you to Adaptive Biotechnologies' third quarter 2021 earnings conference call. Earlier today, we issued a press release reporting adaptive financial results for the third quarter of 2021. The press release is available at www.adaptivebiotech.com. We are conducting a live webcast of this call and will be referencing a slide presentation that has been posted to the investor section on our corporate website. During the call, management will make projections and other forward-looking statements within the meaning of federal security laws regarding future events and the future financial performance of the company. These statements reflect management's current perspective of the business as of today. Actual results may differ materially from today's forward-looking statements depending on a number of factors which are set forth in our public filings with the SEC and listed in these presentations. In addition, non-GAAP financial measures will be discussed during the call, and a reconciliation from non-GAAP to GAAP metrics can be found in our earnings release. Joining the call today are Chad Robbins, our CEO at Compounder, and Chad Cohen, our Chief Financial Officer. In addition, Harlan Robbins, Adaptive Chief Scientific Officer at Compounder, and Nathan Soot, Chief Commercial Officer, will be available for Q&A. With that, I'll turn the call over to Chad Robbins. Chad?

Thanks, Karina. Good afternoon, everybody. Thank you for joining us on our third quarter 2021 earnings call. We had another quarter of strong performance with key progress across our business areas, paving the way for our immune medicine platform to transform disease diagnosis and drug discovery. Thank you to all of our employees for their dedication and commitment to our company and the patients we serve. This quarter, we had the pleasure of opening our new corporate headquarters and laboratory facility in Seattle. This building represents a new chapter for Adaptive to scale our business as we continue to grow. From sample processing to data analysis, this is truly an end-to-end facility designed to be a place that inspires our workforce to deliver innovative solutions for our patients and our community. Moving to the slides. Starting on slide three. Our third quarter results demonstrate continued progress. Revenue in the quarter was $39.5 million, representing significant growth of 50% versus prior year. Increasing the overall value of our ClonoSeq brand through both clinical adoption and pharma-MRD collaborations remains a key focus. We recently launched an enhanced version of the ClonoSeq assay for CLL patients, which gives patients IGHB mutation status in the same test where we measure the trackable MRD sequence. This is an important step if Clonoseq will become an even more valuable diagnostic for hematologists to use at the start of patient workouts. In addition, our pharma partners continue to benefit from using our MRD assay as an endpoint in clinical trials, and this quarter recognized another regulatory milestone. our COVID efforts continue to gain traction on multiple fronts. We are delighted to report that we received a positive assessment from Moldex recommending coverage for T-DETECT COVID for immunocompromised patients. This is a further validation that T-cell testing fills an important gap in understanding the immune response to the virus and is a key reimbursement milestone for the T-DETECT franchise. Of note, a large subset of the immunocompromised population is the same blood cancer patients we target with our Clonacy Commercial T. In addition, there is an increasing number of research collaborators and vaccine manufacturers interested in using Immunocytemap COVID to assess whether T cells may provide a correlate of protection. These data would answer key questions in understanding immunity to the virus. Beyond COVID, our T-DETECT franchise continues to progress. We completed our ImmuneSense line study, which showed our T-cell-based diagnostic to be nearly two times more sensitive than standard two-tier testing in identifying individuals with early disease. This is the second technical proof of concept that our T-cell-based testing has advantages over serology in this diagnosis of infectious diseases. We continue to advance T-DETECT and autoimmune indications. For IBD, we already have a signal in ileochrones and have approximately 5,000 IBD samples in-house, of which over 80% have been sequenced, and the remainder are in process. We expect to have the totality of the data completed by year-end, and we'll share steps of development at that time. We have also identified a signal in multiple sclerosis and have additional samples in-house, which are currently under analysis. Autoimmune disease diagnosis is a key focus area for Adaptive. We are prioritizing our development efforts around our business units. In our drug discovery efforts, our Genentech collaboration is progressing well. On the shared product, we are assessing efficacy and safety data with Genentech to enable a decision by year end to move our lead product into early development. For the private product, we are on track to complete our proof of concept in 60 cancer patients by the end of this year. In addition, it was great to see VaccinBody announce the initiation of a Phase 1-2 study for the two SARS-CoV-2 vaccine candidates under development, one of which includes T-cell-based components identified by our immune medicine platform. This is the first time that our platform is being used to inform the construct of a novel vaccine, and we're encouraged by this important advancement. In summary, we're executing towards our 2021 goals and continue to generate data to enable multiple opportunities stemming from our platform. I'll now provide more detail on some of these highlights and then I'll pass it over to Chad Cohn who will review the financials. Starting with Clonaseq on slide four, on the left side, Clonacy clinical volumes of 5,928 tests in the quarter grew 47% versus prior year and 8% versus the prior quarter. During the quarter, orders were placed by over 1,000 unique healthcare providers spanning 260 accounts for approximately 3,800 patients tested, and Clonacy has now been used to test more than 20,000 unique patients. Tests delivered grew quarter over quarter in each indication. we increased the number of ordering physicians and the number of accounts, including within the community setting. So far into the fourth quarter, we have seen our daily order volumes increase and expect to achieve sequential growth. The recent launch of IDHV was an important milestone for ClonoSeq, which we expect to influence utilization for CLL patients. IDHV testing is recommended in clinical practice guidelines because it is shown to be prognostic in CLL. We do believe this added feature will help boost CLL orders and have already observed a 20% increase in CLL orders in the four weeks since launch. Although off a small base, we believe this is a great indicator at this very early point in the launch. We continue to drive expansion of payer coverage policies reaching over 240 million covered lives in ALL and multi-myeloma and over 150 million in CLL. Of note, CLL covered lives increased 15% this quarter, and we had an important payer addition with Centene, who now considers Clonaseq as medically necessary for their patients with ALL, multiple myeloma, and CLL. On the right side of the slide, you can see our MRD-Pharma partnerships continue to drive the value for the Clonaseq brand. In addition to sequencing revenues, we have over $330 million in future regulatory milestones. This portfolio This portfolio of eligible milestones continues to grow and materialize over time. In this quarter, we recognize an additional $1.5 million, which brings the total to $10 million year-to-date. Turning to T-Detect on slide five. The interest in T-Detect COVID orders despite vaccine rollout continued over the quarter, mostly related to concerns with the Delta variant. Importantly, given the lack of effective tests to assess the immune response to COVID-19 infection in certain groups of individuals, including immunocompromised patients, Moldex has allowed for reimbursement of T-Detect COVID at $770 per test. There are approximately 1 million oncology-related immune-compromised patients in the United States. Notably, we are planning to leverage our Clonacy sales channel and increase our promotional efforts to this population. This is an exciting advancement for T-DETECT, as this is the first reimbursement that potentially paves the way to accelerate market access for future indications. For T-DETECT LIME, our Munisense LIME study was completed and data was presented at the ID Week in October. The study validated that T-detect Lyme in patients tested within 30 days of symptom onset is nearly twice as sensitive versus standard two-tiered serology testing in detecting Lyme disease. Given the focus of these data in the acute setting, we've decided to make T-detect Lyme available closer to the start of the Lyme season while focusing our near-term efforts on operationalizing the T-detect COVID reimbursement launch. I also want to emphasize the key interplay between our clinical diagnostic and pharma research business. Just as the overall value of our Clonacy brand is driven by a combination of clinical test volumes and the strength of our MRD pharma portfolio, the same applies with T-Detect. The right side of the slide shows a variety of ways in which our pharma and research partners are using T-MAP COVID to assess T-cell response to vaccines and potential correlates of protection. We believe that the role of T-cells will continue to gain traction as COVID becomes endemic and questions about immunity remain unanswered. We intend to be the go-to platform for the acute and accurate quantification of T-cell response for our pharma partners and other research collaborators. Lastly, on slide six, our drug discovery efforts continue to advance. We are on track with our Genentech cell therapy collaboration to advance both the shared and the private products. Both programs are making good progress as expected, and our joint Genentech adaptive teams are working closely together to assess efficacy and safety data of our lead PCR for our shared product to enable a decision by year end to move into early development. teams also continue to establish private product specifications. Last quarter, we disclosed the extension of our drug discovery capabilities to inform the design and development of vaccines with VaxxerBody. VaxxerBody designed its next-generation T-cell-based COVID-19 vaccine candidate by encoding multiple spike and non-spike-specific T-cell epitopes validated by Adaptive. This T-cell-based vaccine is intended to address SARS-CoV-2 variants of concern and to be used as a potential universal booster to available vaccines. This morning, Vax-a-Body announced the start of its two-arm Phase 1-2 trial to evaluate the safety, reactogenicity, and immunogenicity of its two vaccine candidates, an RBD-only vaccine and our T-cell-based vaccine. Both vaccine candidates will be tested in already vaccinated individuals. Look forward to seeing progress on this new and important program that aims to address variants of concern and will continue to work with the VaccineBody team to share any additional information at the appropriate time. Our VaccineBody collaboration is yet another validation of our platform in drug discovery. We're excited to pursue additional opportunities to inform the design and development of next-generation T-cell-based vaccines and other diseases. I'll now pass it over to Chad Cohn for our third quarter financial update.