Summary of Adaptive Biotechnologies FY Conference Call Company Overview - **Company**: Adaptive Biotechnologies (NasdaqGS:ADPT) - **Founded**: 16 years ago at Fred Hutchinson Cancer Research Institute - **Employees**: Approximately 620 - **Revenue**: Over $275 million - **Cash Position**: Approximately $227 million [2][2] Core Business Segments Minimal Residual Disease (MRD) Business - **Market Size**: Global addressable market of approximately $5.5 billion, with a U.S. clinical testing market of roughly $1.8 billion [4][4] - **Growth Opportunity**: Potential to increase testing frequency from 2.5 to 3.5 tests per patient per year, expanding the U.S. market by approximately $700 million [4][4] - **Technology**: clonoSEQ test measures MRD with high sensitivity and specificity, detecting one cancer cell in every million healthy cells [6][6] - **Regulatory Approval**: clonoSEQ is the only FDA-cleared MRD assay in lymphoid malignancies [6][6] - **Financial Performance**: Achieved positive adjusted EBITDA in 2025, with revenue surpassing $200 million and a 34% cumulative average growth rate from 2021 to 2025 [8][9] Immune Medicine (IM) Business - **Focus**: Understanding T-cell receptor interactions with antigens to drive insights across various diseases [26][26] - **Data Generation**: Mapped over 5 million T-cell receptors to antigens, generating biological insights for autoimmune diseases [27][27] - **Partnerships**: Recent agreements with Pfizer for data licensing and target discovery in rheumatoid arthritis [28][28] Key Financial Metrics - **Revenue Growth**: Clinical revenue grew at a 53% CAGR, with gross margins improving significantly due to lab efficiencies [9][9] - **Testing Volume**: Clinical volumes grew at a 44% CAGR since 2021, with over 100,000 patients tested using clonoSEQ [10][10] - **Average Selling Price (ASP)**: Reached approximately $1,310 in 2025, with a target of $1,700-$1,800 by 2029 [19][20] Growth Drivers Clinical Testing - **Volume Growth Factors**: Blood-based testing, community presence, clinical guideline inclusion, ongoing data generation, and EMR integration [11][11] - **Community Testing**: Expected to grow from 30% to over 35% of clonoSEQ testing [12][12] - **Guideline Updates**: Significant updates in 2025, elevating MRD to a clinical decision-making tool [13][14] Biopharma Partnerships - **MRD Pharma Portfolio**: Anchored in multiple myeloma, with 70% of sequencing revenue from this indication [22][22] - **Diversification**: Tripled bookings in CLL in 2025, with ongoing pipeline development [22][22] Future Outlook - **2026 Expectations**: - Clinical testing volume expected to grow by more than 30% year-over-year [25][25] - ASP projected at approximately $1,400 [25][25] - Continued improvement in sequencing gross margins, targeting over 70% [25][25] - **Cash Burn**: Expected to decrease to between $15 million and $20 million while investing in data generation [30][30] Competitive Landscape - **Market Position**: Adaptive maintains a strong competitive moat in MRD testing, particularly in DLBCL, where it has seen significant growth [41][41][42] - **Emerging Competition**: Natera's acquisition of Foresight Diagnostics highlights the nascent market for NGS MRD testing, but Adaptive's established reimbursement and technology position it favorably [41][41] Conclusion - **Key Takeaways**: - Strengthening leadership in MRD testing for blood cancers - Advancing immune receptor data platform - Expectation of positive adjusted EBITDA and free cash flow for the entire company in 2026 [31][31]

Market Overview - The US equity market experienced a rally in the third quarter of 2025, with the S&P 500 Index increasing by 8.12% [1] - Bonds also performed well, with the Bloomberg U.S. Aggregate Bond Index rising by 2.03% during the same period [1] Performance Analysis - The composite return for the quarter was 7.22% gross of fees and 7.10% net of fees, which underperformed the S&P 500 Index's gain of 8.12% [1] - The underperformance of the strategy was attributed to security selection [1] Company Spotlight: Adaptive Biotechnologies Corporation - Adaptive Biotechnologies Corporation (NASDAQ:ADPT) is highlighted as a key stock, with a one-month return of -20.92% and a 52-week gain of 201.28% [2] - As of November 14, 2025, the stock closed at $14.10 per share, with a market capitalization of $2.159 billion [2] Performance Contribution - Adaptive Biotechnologies contributed positively to performance in the third quarter, driven by momentum in its minimal residual disease (MRD) testing business, particularly the clonoSEQ test [3] - The company reported better-than-expected earnings and raised its full-year guidance, with average selling price increases complementing accelerating volume growth [3] Hedge Fund Interest - Adaptive Biotechnologies was held by 26 hedge fund portfolios at the end of the second quarter, a slight decrease from 27 in the previous quarter [4] - While the company shows potential, there is a belief that certain AI stocks may offer greater upside potential with less downside risk [4]