Adaptive Biotechnologies Corporation

and thank you for standing by. Welcome to the Adaptive Biotechnologies second quarter 2024 earnings call. At this time, all participants are in listen-only mode. After the speaker's presentation, there will be a question and answer session. To ask a question during this session, you will need to press star 11 on your telephone. You will then hear an automated message advising your hand is raised. To withdraw your question, please press star 1-1 again. Please be advised that today's conference is being recorded. I would now like to hand the conference over to your first speaker today, Karina Calcidea, Head of Investor Relations. Please go ahead.

Thanks, Anton, and good afternoon, everyone. I would like to welcome you to Adaptive Biotechnologies' second quarter 2024 earnings conference call. Earlier today, we issued a press release reporting adaptive financial results for the second quarter of 24. The press release is available at www.adaptivebiotech.com. We are conducting a live webcast of this call and will be referencing to a slide presentation that has been posted to the investor section in our corporate website. During the call, Manitou will make projections and other forward-looking statements within the meetings of Federal Security Law 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 this presentation. 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 and co-founder, and Kyle Piskel, our Chief Financial Officer. Additional members for management will be available for Q&A. With that, I'll turn the call over to Chad Robbins. Chad?

Thanks, Karina. Good afternoon, everyone, and thank you for joining us on our second quarter earnings call. It is Seafair weekend here in Seattle, so if the Blue Angels are flying overhead, we are live, and I may pause for a couple seconds. Let's jump in. Our second quarter results are extremely encouraging. We are laser focused on fueling growth on the top line, reducing spend, and managing our capital. And this is exactly what we achieved this quarter, as you can see on slide three. MRD revenue grew 36% versus prior year, and 8% versus prior quarter, with growth coming from both clinical and pharma. Total operating spend, less one-time costs, had a significant decline of 15% versus prior year and 8% sequentially, with reductions observed across all segments. Sequencing gross margin increased 5 percentage points compared to last quarter. And cash ended at approximately $292 million. This reflects a cash burn reduction of 32% in the first half of this year versus a year ago. As a result of this strong performance, we are updating our full-year guidance. We are raising our MRD revenue range, decreasing our operating spend, and reducing our annual cash burn. Kyle will provide further details in his prepared remarks. Now, let's take a closer look at the MRD business on slide four. ClonoSeq clinical revenue grew 43% versus prior year, driven by both volume and ASP. Tests delivered had another record quarter growing 36% versus prior year and 9% versus prior quarter to over 18,500 tests. We observed double-digit growth sequentially in all marketed indications. Multiple myeloma continues to be the largest contributor, representing 42% of volume. Importantly, non-Hodgkin's lymphoma now contributes 11% of clonaseq tests, with DLBCL growing at 25% quarter over quarter. Blood-based testing continues to be a focal point of our strategy, currently representing 40% of tests, with multiple myeloma in blood at 21% versus 16% a year ago. We expect our planned launch in mantle cell lymphoma, coupled with continued promotion of expanding evidence for utility of blood in other disease states, to be key drivers of clonacy testing in blood during the second half. EMR integration remains an important area of investment for the MRD business, both as a future growth accelerant and as an additional competitive mode for our business. We are now live with six accounts in Epic and have 13 more in progress. we remain confident that we will have completed EPIC integrations with 20 or more accounts by year end. Notably, in the second half of this year, our integration activities will expand beyond EPIC, with a planned Q4 kickoff to our OncoEMR integration work with Flatiron Health. On the reimbursement front, we continue to reduce out-of-policy and non-contracted claims and optimize revenue cycle management to drive ASP growth, which increased 3% in Q2 versus Q1. Results through the first half of the year, coupled with a preliminary gap fill rate set by Medicare, further solidifies our confidence to grow ASP by $200 per test by the end of 2025. Looking at MRD Pharma on slide five, our pharma business had another strong quarter with revenue growth of 28% versus prior year, which included a $3 million milestone from a drug-approval multi-myeloma. This momentum comes on the heels of the ODAC announcement last quarter, which voted in favor of using MRD as a primary endpoint to support accelerated approval of new therapies in multiple myeloma. We are already seeing positive impact post this recommendation. In the past few months, we have booked two new studies and are in advanced discussions for another three new studies where the decision to use MRD as a primary endpoint was made based on the ODAC outcomes. Additionally, two existing studies have converted MRD from a secondary endpoint to a primary endpoint, and we are in talks with partners about another four studies already underway that may also upgrade. Importantly, we are also seeing a positive halo effect for the continued acceptance of MRD in other disease states, as our partners increasingly seek to incorporate MRD as a primary endpoint in CLL and DLBCL. As the only FDA-cleared MRD assay that can consistently deliver the sensitivity and standardization needed to meet the FDA's performance standards, we are confident that ClonoSeq will continue to be the test of choice, not only for multiple myeloma drug developers, but also in other lymphoid malignancies. Now, let's turn to immune medicine on slide six. We're making good progress in R&D toward the discovery and future development of differentiated immune-based therapeutics in cancer and autoimmunity. In oncology, we continue to work closely with Genentech and our cancer cell therapy programs. Both companies are excited and committed to deliver high-impact TCR-based cell therapy products to as many cancer patients as possible, and we will provide an update at the appropriate time. In autoimmunity, we've successfully identified a subset of autoreactive T subreceptors that are likely causing devastating diseases in patients with MS, T1D, and several others. This quarter, we started our target discovery efforts in T1D. As we did in multiple sclerosis, our goal is to identify the protein to which these autoreactive or problem TCRs bind. This helps de-risk our assumptions, and confirm that the disease biology makes sense. Also this quarter, we successfully completed our first antibody mouse immunization campaign, wave one, in our lead autoimmune indications, including multiple sclerosis and type 1 diabetes. By year end, we aim to identify and make a subset of antibodies to start functionally testing these candidates. Now, I'm going to pass it over to Kyle to walk through the financial results and guidance update.