Adaptive Biotechnologies Corporation

Good day, and thank you for standing by. Welcome to the Adaptive Biotechnologies Second Quarter 2025 Financial Results Conference Call. At this time, all participants are in a listen-only mode. After the speaker's presentation, there will be a question and answer session. To ask a question during the session, you will need to press star 1-1 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 Caldasia, Vice President, Investor Relations and FP&A. Please go ahead.

Thank you, Shannon, and good afternoon, everyone. I would like to welcome you to Adaptive Biotechnology's second quarter 2025 earnings conference call. Earlier today, we issued a press release reporting adaptive financial results for the second quarter of 25. 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 of our corporate website. During the call today, management will make projections and other forward-looking statements within the mini federal security laws regarding future events and the future financial performance of the company. These statements reflect management 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 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. Chad?

Thanks, Karina. Good afternoon, and thank you for joining us on our second quarter earnings call. Our second quarter results demonstrate strong execution without performance on both the top and bottom line. In addition to delivering ahead of expectations, we're also tracking ahead of schedule on key milestones for the year, as shown on slide three. Our MRD business achieved profitability this quarter, delivering approximately $2 million in positive adjusted EBITDA, which we anticipate to increase going forward. MRD revenue grew 42% year over year. driven by significant increases in clinical volume. We successfully integrated Clonoseq into Flatiron's OncoEMR, expanding access in the community. We've begun processing Clonoseq tests on the Novaseq X, a major step in scaling operations and improving margins. NCCN guidelines for multiple myeloma were updated to strengthen support for ID testing at diagnosis. reducing barriers to MRD testing, and helping drive volume. And we launched the first phase of our collaboration with Neogenomics. Total company sequencing gross margin improved by 14 percentage points year-over-year to 64%, and cash burned for the quarter was approximately $11 million, representing a 36% improvement over the same period last year. ending with a solid cash position of $222 million. Given these strong results, we are again raising our four-year guidance to reflect a higher MRD revenue range and a lower annual cash burn. Kyle will share more details on this shortly. Let's now dive into the MRD business on slide five. Clonacy revenue grew 57% year-over-year in the second quarter, driven by strong demand across all reimbursed indications. We delivered over 25,300 tests, up 37% versus prior year, and up 10% sequentially, an increase of about 2,200 tests versus Q1. Multiple myeloma remains the largest contributor, accounting for 41% of U.S. Clonacy volumes. followed by ALL at 33%, CLL at 10%, DLBCL at 8%, and MCL at 5%. We continue to see positive momentum across several key growth indicators. Blood-based testing represents 44% of MRD tests, up 40% from a year ago. In multiple myeloma, blood-based contribution rose to 23% compared to 21% last quarter. Community-based testing grew 16% quarter over quarter, reflecting our expanding footprint outside of academic centers. NHL volume rose to 14% of total, up from 11% last year, led by continued growth in DLBCL and MCL. Ordering healthcare providers grew 35% over 3,700, reflecting strong provider adoption. And over 18,000 unique patients were tested in Q2, up 40% year-over-year and 10% sequentially. On the reimbursement front, ASP for Clonacy continued its upward trend, reaching above $1,290 per test, a 17% increase year-over-year. Year-to-date, we've closed or renegotiated eight key agreements with major national and regional payers. with additional agreements anticipated to close in the back half of this year. We remain confident in achieving an average ASP of $1,300 per test for fiscal year 2025 with a solid growth trajectory well into the future. Now let's take a look at the progress of EMR integration, that's slide six. Integrating Clonacy into EMR systems across academic and community settings remains a key driver of volume growth. In the academic setting, we began Epic integration about 18 months ago and we're now live at 40 sites, including 13 added since our last call. Epic accounts that have been live for over a year are growing on average about two times faster than non-integrated accounts. Among our top 10 accounts, four are now Epic integrated and we're seeing acceleration in those accounts following integration. In the community setting, This quarter we achieved a major milestone with the integration of ClonoSeq into Flatiron across 113 community account groups, many of which include multiple practice locations. This marks a significant advancement in our strategy to scale in the community oncology space. It also provides OncoEMR users with a more streamlined customer experience, enabling simplified ID MRD ordering and the option for serial testing directly through the EMR. Looking ahead, we plan to continue expanding EMR integrations over the coming years, further sheltering adoption, simplifying workflows, reducing order discrepancy, and strengthening our competitive modes. Looking at MRD Pharma on slide seven, our MRD Pharma business had another strong quarter. with revenue up 20% year over year, with steady growth in sequencing revenue and $5.5 million in milestones. We ended the quarter with approximately 175 active global clinical trials and a $218 million backlog, up 21% from the prior year. This backlog is a strong leading indicator of future revenue. Clonoseq is being used as a primary or secondary endpoint in 90 of these studies, many of which may trigger milestone payments upon regulatory approval. On the regulatory front, momentum continues. Recently, the European Medicines Agency, CHMP, issued a positive opinion supporting the use of MRD testing as an early endpoint for conditional approval in multiple myeloma. This decision aligns with the ODAP recommendation and further cements the already strong case for pharma companies to make MRD a central element of their myeloma drug development strategy. As we continue to monitor developments at the FDA, we're optimistic about the growing global support for MRD to accelerate new treatments, not just in multiple myeloma, but across all lymphoid malignancies. Turning to slide eight, I'd like to take a moment to highlight some Clonaseq MRD data presented this quarter at various conferences, starting with the MITUS study in multiple myeloma. This 791-patient study is the first prospective randomized MRD-directed phase three trial to assess the ability of Clonaseq to guide myeloma transplant decisions. The study evaluated the use of consolidation therapy with versus without transplant in patients who achieved MRD negativity by Clonaseq at the end of induction. Data shows that patients achieved similar MRD outcomes regardless of whether they received a transplant, supporting the idea that transplant may not be needed for MRD negative patients. In CLL, Promising interim data from Venetastop, an ongoing phase two study, demonstrated the potential to reduce duration of venetoclast-based therapy in patients who achieve an MRD-negative response. And in DLBCO, several studies presented at the ICML conference in Lugano showed how clonoseq and ctDNA can effectively assess response and complement imaging across different lines and classes of therapies. Q2 also marked an important milestone for the enhanced version of our ClonoSeq CT DNA assay and DLBCL, as the FDA granted two investigational device exemptions for use in investigator-sponsored trials to assess escalation of therapy for patients who remain MRD-positive at the end of frontline treatment. It's exciting to see the expansion of data and studies supporting the interventional use of ClonoSeq, MRD, and lymphoid malignancies to inform clinical decision-making, and we look forward to more key data readouts at the ASH conference later this year. In summary, our MRD business is firing on all cylinders. As shown on slide nine, we're only halfway through the year, and most of our key full-year strategic goals have been achieved, including reaching MRD profitability this quarter ahead of our second half target. Now, let's turn to immune medicine on slide 11. Our immune medicine business is on track to meet three main goals. The first goal is to develop a digital TCR antigen prediction model. As we scale the size and quality of our data generation, we aim to replace our validated TCR discovery cellular assays with this digital TCR antigen prediction model, which will significantly reduce both cost and time. We're starting to digitally model the ability to accurately select the best TCRs in our cell therapy application with Genentech. We're also making good progress in applying our large training data sets. This includes improving the accuracy of our TCR antigen binding predictions and deploying our AI machine learning models to enable additional partnering opportunities with attractive future monetization potential. The second goal is to build a robust preclinical data package for our lead T cell depletion program in autoimmunity. We are conducting functional and biophysical characterization of our top antibody candidates in our lead clinical indication. We also solidified our patient selection strategy in this indication. This will allow us to select only those patients who we confirm have the specific disease-causing autoreactive T cell receptors and who are at a higher likelihood to respond to our T cell depletion therapy. As we continue to execute on these two focused therapeutic strategies, Our third goal is to achieve our 2025 cash burn target of $25 to $30 million by scaling revenue generation from farmer partnering and continuing to thoughtfully gate R&D investments through year end. Now, I'm going to pass it over to Kyle to walk through our financial results and our updated full-year guidance. Kyle? Thanks, Chad.