Adaptive Biotechnologies(ADPT) - 2024 Q4 - Earnings Call Transcript

Financial Data and Key Metrics Changes - In Q4 2024, total revenue was $47.5 million, with MRD contributing 85% and immune medicine 15%, representing a 4% growth year-over-year [31] - MRD revenue reached$ 40.1 million, up 31% from the previous year, while immune medicine revenue was $7.3 million, down 51% [32] - Full year 2024 revenue was$ 179 million, a 5% increase year-over-year, with MRD revenue at $145.5 million, up 42% [33] - Adjusted EBITDA loss for Q4 was$ 16.4 million, an improvement from $24.7 million in Q4 2023, and for the full year, the loss was$ 80.4 million compared to $116.4 million in 2023 [36] Business Line Data and Key Metrics Changes - In MRD, clinical testing revenue grew 40% year-over-year, with clonoSEQ test volume increasing 34% to 20,945 tests delivered in Q4 [11][12] - The average selling price (ASP) for clonoSEQ tests was$ 1,117, a 7% increase from fiscal year 2023 [15] - The MRD Pharma business saw a revenue growth of 44% versus 2023, including $12.5 million in regulatory milestone revenue [18] Market Data and Key Metrics Changes - Blood-based MRD testing grew 55%, contributing 41% of MRD tests in the U.S. [13] - The number of ordering healthcare providers increased by 30%, exceeding 3,000 [14] - The company completed integrations with 19 accounts, representing about 20% of ordering volume in 2024 [14] Company Strategy and Development Direction - The company aims to drive top-line growth in 2025 by expanding blood-based testing to contribute over 45% of total MRD volume and increasing ASP to an average of$ 1,300 per test [22] - Strategic priorities include integrating additional EPIC accounts and launching OncoEMR integration with Flatiron [22] - The immune medicine business focuses on developing TCR-based cell therapies and antibody therapeutic candidates for autoimmune diseases [24][28] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in achieving adjusted EBITDA positivity in the second half of 2025, driven by improved revenue and operating efficiencies [45] - The company highlighted a strong cash position of $256 million, enabling continued growth and execution of strategic goals [38][44] - Management noted the importance of the NeoGenomics partnership for future growth, although material contributions are not expected until 2026 and 2027 [64] Other Important Information - The company completed restructuring initiatives, resulting in a 40% reduction in cash burn from 2023 [11] - The company anticipates full-year operating expenses to be between$ 340 million and $350 million, reflecting similar levels as in 2024 [41] Q&A Session Summary Question: What are the underlying assumptions for the MRD business guidance? - Management discussed the impact of the new gap fill rate for Medicare and the importance of recontracting with payers to drive ASP [50][52] Question: Can you elaborate on the NeoGenomics partnership and its expected contributions? - Management indicated that the partnership would take about four months to implement, with material volume contributions expected in 2026 and 2027 [62][64] Question: What is the expected volume growth progression throughout the year? - Management suggested a linear progression in volume growth, with potential upside from EPIC and Flatiron integrations [68] Question: How is the company addressing the ASP for 2025? - Management outlined several drivers for ASP, including the full-year impact of the gap fill rate and improved revenue cycle management [50][52] Question: What is the status of the MRD pipeline and upcoming indications? - Management confirmed that mantle cell lymphoma is the most recent Medicare-covered indication, with plans to seek coverage for T-cell ALL and advanced stages of cutaneous T-cell lymphoma [78][79]