Adaptive Biotechnologies Corporation

Good day and thank you for standing by. Welcome to the Adaptive Biotechnologies first quarter 2025 earnest conference call. At this time, our participants are in list only mode. After the speaker's presentation, there will be a question and answer session. To ask a question during this session, you need to press star one one on your telephone. You will then hear an automated message advising your hand is raised. To withdraw your question, please press star one one 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.

Thank you, Antoine, and good afternoon, everyone. I would like to welcome you to Adaptive Biotechnology 5 Earnings Conference Call. Earlier today, we issued a press release reporting adaptive financial results for the first quarter of 2025. 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 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 COO and co-founder, and Kyle Pisco, our Chief Financial Officer. Additional members from management will be available for Q&A. With that, I'll turn the call over to Chad.

Thanks, Karina. Good afternoon, and thank you for joining us on our first quarter earnings call. As highlighted on slide three, we are off to an excellent start this year, demonstrating strong execution across both top and bottom line results. In MRD, revenue increased 34% from a year ago. Significant growth was observed in clinical volumes, ASP, and pharma sequencing. This quarter, we also received our first Medicare recurrence monitoring coverage in MCL, a key part of our strategy to grow the lifetime value of each ClonoSeq Medicare patient. In immune medicine, we're making progress on our preclinical antibody program in autoimmunity. Dequence in gross margin improved by 17 percentage points year over year to 62%. At the same time, Operating expenses decreased by 9%, underscoring our disciplined cost management while driving strong, sustainable growth. As a result, cash burned for the quarter was $23 million, a 38% improvement compared to the same period last year. Given the strength of our performance and sustained momentum, we are raising our full-year guidance to reflect one, a higher MRD revenue range, two, lower operating expense range, and three, a lower annual cash burn. Kyle will provide more details during his remarks. Of note, our four-year outlook has minimal exposure to tariffs, trading policy updates, and NIH funding pressures. Importantly, I want to highlight our solid cash position of $233 million. We believe our cash on hand provides ample runway to achieve our strategic objectives without the need to raise additional capital in the current market environment. Let's now take a closer look at the MRD business on slide five. Clonacy clinical revenue in the first quarter grew 55% first prior year. Tests delivered reached a new record high of over 23,000 in the quarter, representing a 36% increase versus prior year and a 10% increase sequentially. Growth was once again observed in all reimbursed indications. Multiple myeloma continues to be the largest contributor of U.S. clonacy volume at 42%, followed by ALL at 33%, CLL at 10%, DLBCL at 7%, and MCL at 5%. Looking at other key growth metrics in the quarter, it's encouraging to see the positive trends that align with the successful execution of our strategy. Blood-based testing contributed 44% of MRD tests in the U.S. versus 39% a year ago. This increase was primarily driven by strong growth in DLBCL and MCL. Tests in the community grew 42% versus prior year and 14% sequentially. NHL contribution jumped to 12% from 10% a year ago, driven by continued ramp in MCL and the launch of our enhanced assay and DLBCL. The number of ordering healthcare providers grew 31% from the prior year and is now over 3,400. And our pace of EMR integrations is accelerating. We now have 27 live integrations, including five of our top 10 accounts. We expect to add at least five more accounts in the next month. We are seeing a notable lift in individual account growth rates post-integration, and growth in integrated accounts is outpacing growth in non-integrated accounts. In addition, we're making solid progress on our initiatives to increase Colonial Seek ASP. In Q1, ASP was north of 1220 per test, representing a 14% year-over-year increase. Importantly, we closed and or renegotiated six key agreements with major national payers, including Aetna, Humana, Anthem, Horizon, and two of the Blue Cross Blue Shield programs. Alongside these payer wins, we've expanded our reimbursement operations team and continue to optimize revenue cycle management. Given this progress, we are confident in achieving an average ASP of $1,300 per test for fiscal year 2025, setting us up for continued future ASP growth. Looking at MRD Pharma on slide six, our MRD Pharma business had a strong start to the year with sequencing revenue growth of 11% versus prior year. This quarter, we also recognized 4.5 million in regulatory milestones. We continue to see significant momentum following the ODAC recommendation in multiple myeloma last year. As you can see from the chart, over 60% of our portfolio today is in multiple myeloma. including 22 new studies which closed in the last 12 months. The majority of these studies are using MRD as a primary or secondary endpoint. They tend to be larger phase two and three studies, often with large milestones attached. We're also seeing a halo effect from this decision in other disease states like CLL, where treatment advances are necessitating more sensitive MRD assessment in clinical trials. Additionally, We see growth opportunities for the pharma business and DLBCL as multiple companies are preparing to advance MRD-directed therapy. To wrap up on MRD, we achieved strong results for the quarter in both our clinical and pharma businesses. As shown on slide seven, the stage is set to achieve our full year strategic goals. We are on track to end the year with over 45% of clonacy testing done in blood. We are on track with EMR integrations, including oncoEMR launch with Flatiron in the second half. We are on track to begin phase one testing with Neogenomics in an initial set of accounts in the second half of the year. We're on track to go live with NovaSeqX in the second half of this year. And we continue to have key data readouts spanning multiple indications. Importantly, we are on track to be adjusted EBITDA positive in the second half of this year. Now, let's turn to immune medicine on slide nine. Our immune medicine business focuses on two differentiated immune-based therapeutic strategies. One is in cancer with our partner Genentech. The second is in autoimmunity based on our highly targeted precision immunology approach. Our focus this year is on three main goals. First, it's to generate the size and quality of data to successfully develop a digital TCR antigen prediction model that supports our cancer cell therapy program with Genentech. As we successfully scale our data, we're also making good progress in training and improving the performance of our AI and ML models. We're aiming to replace our TCR discovery cellular assays with a digital model that can rapidly and accurately predict TCR antigen binding. This has the potential to meaningfully reduce both time and cost of selecting the best TCRs to include in a cancer cell therapy. among other future potential high-value therapeutic applications. Our second goal is to build a robust preclinical data package for our lead T-cell depletion program in autoimmunity. We're in the process of testing and characterizing a subset of promising antibody candidates in our lead indication. The third goal, as we execute on these two focused therapeutic strategies, We are managing to a target immune medicine cash burn between $25 and $30 million. We continue to strategically gate our IM R&D investments and grow our farmer business revenue to partially fund this spend. Now I'm going to pass it over to Kyle to walk through the financial results and our updated full year guidance. Kyle? Thanks, Chad.