Adaptive Biotechnologies Corporation

Good day and welcome to Adaptive Biotechnology's third quarter financial results. At this time, all participants are in a listen-only mode. After the speaker's presentation, there will be a question and answer session. Instructions will be given at that time. As a reminder, this call may be recorded. I would now like to turn the call over to Karina Casadilla, Head of Investor Relations. Please go ahead.

Thank you, Michelle. Good afternoon, everyone. I would like to welcome you to Adaptive Biotechnology's third quarter 2024 earnings conference call. Earlier today, we issued a press release reporting adaptive financial results for the third 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, 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 this presentation. In addition, non-GAAP financial measures will be discussed during this 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 Piskill, our chief financial officer. Additional members from management will be available for Q&A. With that, I'll turn the call over to Chad. Chad?

Thanks, Karina. Good afternoon, and thank you for joining us on our third quarter earnings call. As shown on slide three, Results for the quarter are a clear testament of our continued strong execution on the top and bottom line. MRD revenue increased 52% year over year, driven by both clinical and pharma. This quarter, we reached two catalysts that will drive MRD revenue growth. One, Medicare set a new gap bill rate of $2,007 for our ClonoC test. which is a 17% increase from our previous rate under the episode structure. And two, we secured Medicare coverage for mantle cell lymphoma. Operating spend had another significant decline of 11% versus prior year and 5% sequentially, excluding one-time costs. Sequencing gross margin further increased six percentage points compared to last quarter as we successfully executed efficiencies in workflow, leading to lower per sample cost. And cash ended at approximately $267 million, which represents a burn reduction of 38% in the first nine months this year, compared to the same period a year ago. Due to our strong year-to-date performance, we are raising the lower end of our previous MRD revenue guidance. We are reducing our full-year operating expenses and lowering our annual cash burn target. Kyle will share more in his detailed remarks. Now let's take a closer look at the MRD business on slide four. Clonacy clinical revenue grew 39% versus prior year. Tests delivered reached a new record representing 30% growth year over year and 6% sequentially, with growth observed across all marketed indications. Multimyloma continues to be the largest contributor at 41% of volume, followed by ALL at 34%, CLL at 10%, and DLBCL at 6%. Other Clonacy key indicators continue to trend positively. Blood-based testing represented 41% of tests, and we expect it to continue to increase as we generate additional data in blood and launch new blood-based indications such as MCL. tests in the community grew 11% sequentially, with overall steady contribution at about 25% of tests delivered. And ordering HCPs and ordering accounts grew 39% and 16% versus prior year, respectively. As mentioned, we achieved important catalysts for the business this quarter. First, new pricing for Klonosy. Recently, CMS published its updated gap bill determination for Clonaseq of $2,007 per test. Accordingly, we're pleased to see that Moldex has updated the episode rate to $8,029 for our Medicare covered indications. Based on the updated gap bill rate, we have executed new agreements with non-contracted commercial payers at this new price per test or higher, and we are seeing positive momentum with several other key non-contracted payers. Additionally, we are working with our contracted payers to accelerate negotiations to increase rates based on this information. As a result, coupled with our ongoing efforts to optimize revenue cycle management and reduce out of policy and non-contracted claims, we anticipate ASP will reach approximately $1,300 per test on average for fiscal year 2025. This represents an increase of $250 per test from fiscal year 2023. Second, the launch of Clonaseq and mantle cell lymphoma, or MCL. This morning, we announced that Moldex has expanded coverage of Clonaseq for Medicare patients with MCL. MCL is an aggressive form of non-Hodgkin's lymphoma, accounting for about 6% of NHLs, with most patients experiencing repeated relapses. We're pleased with Moldex's decision, as it reaffirms Clonacy's role as a valuable tool for disease monitoring in another lymphoid malignancy. With this coverage now in place, we have initiated promotional activities in MCL. Of note, coverage follows the current episode structure and reflects the updated gap fill rate. Lastly, EMR integration continues to be a key focus to enhance customer experience and drive growth. This quarter, we successfully completed Epic integrations for six accounts, including our largest customer, MD Anderson. We are now live with a total of 11 accounts and have nine more integrations scheduled to be completed by year end, representing about 20% of our projected volume in 2024. Beyond Epic, we have initiated our on-call EMR integration with Flatiron Health and have several other active EMR integration projects with large community practice networks with target launch dates throughout 2025. Now, looking at MRD Pharma on slide five, our pharma business had another strong quarter with revenue growth of 73% versus prior year, which included $5 million in regulatory milestone revenue. We continue to experience significant momentum following the April ODAC recommendation in three main areas. First, new studies. We have seen increased investments from biopharma and have closed 16 new myeloma studies year to date. These new bookings will support future revenue growth. Second, regulatory endpoint. As expected, MRD is increasingly being used as a primary endpoint. We now have 10 multi-myeloma studies utilizing ClonoSeq as a primary endpoint, including two recently signed studies and three that were upgraded from secondary to primary. Some of these studies will yield high single-digit million-dollar milestone payments upon successful regulatory approval. And third, clinical impact. As mentioned, the pharma and clinical businesses are synergistic. Pharma companies are starting to highlight the clinical utility of MRD testing, educating both physicians and patients about its significance as a key measure of treatment response. New MRD-directed treatment regimens, if FDA approved, will further enhance adoption in the clinic. In summary, MRD is thriving on multiple fronts. The successes we have achieved throughout the year bolster our confidence in a long-term outlook for the business. Now, let's turn to immune medicine on slide six. We are advancing R&D efforts to develop differentiated immune-based therapeutics in cancer and autoimmunity. In oncology, we continue working with Genentech to deliver high-impact TCR-based cell therapy to as many patients with solid tumors as possible. Our focus is to improve turnaround time and reduce cost, which will enhance the profile of our fully personalized cell therapy product. we will provide an update on our progress with Genentech at the appropriate time. In autoimmunity, we successfully identified a subset of autoreactive T cell receptors that are likely causing disease in patients with multiple sclerosis, type 1 diabetes, and several other devastating autoimmune indications with high unmet medical need. As mentioned last quarter, we successfully completed several antibody mouse immunization campaigns. This quarter, we started making and functionally testing a subset of these antibodies that we selected because of their attractive properties. Our goal is to nominate elite autoimmune indications by year end and focus our antibody development efforts to build a robust preclinical data package in this first autoimmune program. Now, I'm going to pass it over to Kyle to walk through the financial results and guidance updates. Kyle?