Adaptive Biotechnologies Corporation

With that, I'll turn the call to Chad Robbie. Chad?

Thanks, Karina. Good afternoon, everybody, and thank you for joining us on our second quarter 2022 earnings call. First, a big thank you to all our adaptive employees for their continuous dedication and hard work in delivering another strong quarter. We're halfway through the year. We're on track to achieve our 2022 goals in both our MRD and immune medicine businesses. As outlined on slide three, this quarter we executed towards important milestones and delivered key results. Revenue for the second quarter was $43.7 million, representing strong growth of 13% versus prior year. Our MRD business, comprised of Klonoseq Clinical Testing and our Pharma Partnerships, delivered strong performance. Clinical volumes grew 53% versus prior year. we secured a positive coverage decision for Medicare in diffuse large B-cell lymphoma, the most common type of non-Hodgkin's lymphoma. Clonoseq is the first and only test to receive Medicare coverage for MRD and DLBCL. And our MRD pharma partnerships continue to grow. This quarter, we entered into yet another PAN portfolio agreement with a major pharma company. Our immune medicine business, comprised of pharma services, drug discovery, and clinical testing opportunities, continues to grow as we diversify into multiple applications of our immune receptor data. We experience significant growth of 123% from pharma research partners. Our Genentech partnership is on track with both our shared and private cell therapy programs. We have made a business decision with respect to the commercialization of T-DETECT. Rather than launch diagnostic tests disease by disease, we are deferring commercialization until we have multiple signals with strong enough data to change physician behavior with a clear path to reimbursement. The science is working in multiple diseases, and we are confident in our long-term vision for T-DETECT as a single blood test for multiple indications. However, as we look ahead, we are now focused on pharma partnering and drug discovery while we generate strong clinical utility data around our T-DETECT multi-test panels. Related to our corporate activities, we continue to manage expenses prudently while exploring non-dilutive financing opportunities that could extend our cash runway. Moving on, to the MRD business on slide four. As shown in the graph, our Clonacy clinical testing growth is strong and accelerating quarter over quarter. This quarter, tests delivered grew 17% sequentially to nearly 9,000 tests with double-digit growth observed in all three marketed indications, ALL, multiple myeloma, and CLL. All metrics are pointing in the right direction. Ordering HCPs, or healthcare providers, and ordering accounts experienced significant growth of 53% and 44% versus prior year, respectively. Unique patients tested grew 56%. Slide 5 shows our strategies to solidify our leadership in MRD testing for patients with lymphoid malignancies. First, the team is focused on further penetrating existing institutional accounts and increasing the activation of new community accounts with our expanded field force, which is now fully trained and deployed. 72% of the volume growth this quarter came from established institutional accounts, underscoring the potential to expand usage within existing accounts. We also grew the number of newly activated community accounts by 20%, which is a positive indicator of our sales team expansion. Another key driver of growth is blood-based testing, which has the potential to both increase penetration of ClonoSeq among clinicians and increase the number of tests run per patient. About 30% of all ClonoSeq MRD tests are performed using blood, and importantly, multiple myeloma in blood increased 33% versus prior quarter. We plan to expand into DLBCL following our positive Medicare coverage decisions. The policy is effective immediately and extends to all DLBCL patients, 75% of which are Medicare-aged, regardless of line of therapy, treatment measurement, or testing time point. We continue to build our DLBCL evidence base to support guideline inclusion. Based on these efforts, we expect DLBCL to contribute to Clonacy growth in 2023 and beyond. Data continues to emerge Strengthening Clinical Utility and the Value of MRD Testing for Patients. Slide 6 highlights data presented at ASCO from the Phase 3 Determination Trial for Newly Diagnosed Multimyloma Patients. This study was designed to assess the benefit of adding transplant to frontline triple therapy followed by maintenance therapy until progression. An important result from the study showed that patients who achieved MRD negativity by Klonoseq prior to maintenance had similar outcomes independent of transplant. And the authors state that the elimination of MRD is of increasing importance in tailoring treatment, in informing clinical care, and as a treatment goal given its prognostic value for better outcomes. Let's shift to our MRD Pharma portfolio on slide seven. Our Clonacigase is being used in 168 active trials, representing about 21% penetration among active heme pharma trials. In multi-myeloma, we are the gold standard, almost 50% penetration. Our goal is to replicate our multi-myeloma success in NHL and CLL. This quarter, we signed a new pan-portfolio agreement with a major pharma partner. increasing our eligible milestones to over 355 million from ongoing and future studies. Now, turning to our immune medicine business on slide eight, we have proven our ability to map T-cell receptors to antigens at scale and can leverage this data for multiple diagnostic and therapeutic opportunities. To drive growth for our immune medicine business in the near to midterm, we will focus on pharma partnerships and drug discovery collaborations. Clinical testing with T-Detect is expected to be a meaningful contributor to revenue in the long term once we establish T-cell signatures in multiple indications that can be offered as a reimbursed, differentiated diagnostic panel to patients with shared symptomatology. On slide nine, we provide an overview of our growing immune medicine business opportunities in pharma and drug discovery. From a base level, T-cell and B-cell receptor sequencing to inform research and development continues to expand, and ImmunoSeq is the gold standard. Layering on our ability to map disease-specific TCRs to antigens unlocks a valuable product offering called TMAP, that is used to support our pharma partners in measuring the T cell response to various drugs, including vaccines. We are partnering on COVID and RSV vaccine programs and expect to drive additional revenue in infectious disease, autoimmunity, and oncology. Moving up the R&D value chain, immune response data can be also used as a regulated clinical endpoint with diagnostic applications. In drug discovery, We further characterized antigen-specific TCRs for target and or drug discovery. This is the basis of our partnership with Genentech. We are increasing our focus on additional high-value drug discovery opportunities. Turning to our T-DETECT clinical testing strategy on slide 10, we proved and validated our T-DETECT clinical testing capability in infectious diseases. Specifically, T-DETECT COVID achieved EUA and was key to educate the FDA about a new class of T-cell-based testing. We also made T-DETECT Lyme available in our CLIA lab, which enabled us to implement end-to-end and CLIA workflows and to continuously improve the algorithm. As mentioned previously, our experience showed us that the cost to commercialize and improve signals through self-pay customers disease by disease is high. Therefore, we have decided not to launch T-Detect tests before there is a clear path to reimbursement. We believe we can improve the signals to drive clinical evidence for coverage and commercial uptake by focusing on internal R&D and pharma partnering. This will allow us to drive near-term revenue and generate more signals that support the vision of T-Detect. We are confident that this disciplined approach will enable us to achieve commercial success with T-DETECT as a differentiated, high-value clinical test. We are excited about the multiple business opportunities that we discussed today and look forward to providing additional updates on our progress. I'll now pass it over to Tycho for a financial update.

Thank you. Turning to our financial results, starting with revenue on slide 11. Total revenue in the second quarter was $43.7 million, representing a 13% increase from $38.5 million in the same period last year, with 51% from immune medicine and 49% from MRD. MRD revenue, which is comprised of clinical testing plus revenues from our MRD pharma and research partnerships, was $21.3 million, an increase of 38% from a year ago. Colonial Seq clinical testing and MRD partnerships drove approximately 65% and 35% of the growth, respectively. Within our MRD pharma business, we recognized a $1 million regulatory milestone. While we continue to see milestones from our MRD partnerships materializing and accelerating over time, these can vary quarter to quarter. Colonial Seq test volumes, which include tech transfer, increased by 53% to 8,998 tests delivered from 5,897 in the same period last year. We expect similar or higher volume growth trends to continue for the remainder of the year. Immune medicine revenue was $22.4 million, down 3% from a year ago. The change was driven by a $3.7 million increase from pharma and academic customers using ImmunoSeq and TMAP products, as well as a $1 million decrease in revenue from T-Detect COVID and a $3.4 million decrease from Genentech amortization, which, as we have noted in the past, varies from quarter to quarter. Shifting to our operating costs on slide 12. Total operating expenses were 96.2 million, or a 9% increase from 88.3 million last year, and a 6% decrease from 102 million last quarter. Cost of revenue was 13.2 million compared to 10.8 million last year, representing a 23% increase, driven mainly by a mix to higher cost assays. R&D expenses were 37 million, compared to 37.8 million a year ago, representing a 2% decrease which is partially attributable to reduced collaboration and medical advisory costs. Sales and marketing expenses were $24.3 million compared to $23.2 million a year ago, representing an increase of 5% due largely to higher T&E and increased personnel costs from the Salesforce expansion, partially offset by a decrease in marketing expenses. T&A expenses were $21.2 million compared to $16.1 million a year ago, representing an increase of 32%. This was primarily driven by the expansion of our facility footprint with the opening of our new headquarters in the back half of 2021, as well as higher depreciation expenses and increased personnel costs. Net loss for the second quarter of 2022 was $52.1 million compared to $49.3 million last year. Now, turning to full-year guidance, we are reiterating our full-year revenue range of $185 to $195 million. Both our MRD and immune medicine businesses have great momentum, and we expect them to still contribute to our full-year revenues, approximately 50-50 at the midpoint of the range. For operating expenses, we now expect our full-year target to be between $410 to $415 million, as compared to our previous expectation of $425 to $435 million. This reflects our continuous efforts in managing investments and improving operating efficiencies beyond the restructuring activities that we announced at the beginning of the year. Some of the operating efficiencies we are exploring include real estate consolidation, sequencing and workflow cost reductions, and software optimization. Importantly, we are being thoughtful about our cash, and we expect to deploy capital off our balance sheet to support operations, and we expect our quarterly burn rate to be approximately 55 million in the back half of the year. Our capital position is strong. We ended the quarter with about 450 million in cash and equivalents, which provides us around two years of runway. As Chad mentioned, given current market conditions, we are exploring non-dilutive financing alternatives to extend our cash runway while also working extensively on our long-range plan. And I look forward to providing you with further details on our path to profitability in the back half of the year. With that, I'll hand it back over to Chad.