Adaptive Biotechnologies(ADPT) - 2022 Q1 - Earnings Call Transcript

Financial Data and Key Metrics Changes - Total revenue for Q1 2022 was $38.6 million, a slight increase from $38.4 million in the same period last year [23][24] - Immune medicine revenue was $20.8 million, a 4% increase from the same period in 2021, while MRD revenue was $17.8 million, down 3% from the same period last year [24][25] - Net loss for Q1 2022 was $62.8 million, compared to a net loss of $40.6 million in Q1 2021 [27] Business Line Data and Key Metrics Changes - In the MRD business, clonoSEQ test volume grew by 45% year-over-year, with test deliveries increasing by 12% to 7,698 tests [9][11] - The immune medicine business generated approximately $21 million this quarter, with revenue from pharma partners using immunoSEQ and data from the TCR antigen map growing by 100% year-over-year [10][24] - The MRD business saw significant growth in ordering healthcare providers (53%) and unique patients tested (59%) compared to the prior year [11] Market Data and Key Metrics Changes - The community setting for MRD testing experienced growth of over 60% during the quarter [12] - The immune medicine business is expected to expand into multiple therapeutic areas beyond COVID, with new collaborations such as mapping T-cell responses to RSV for Johnson & Johnson's vaccine program [10][18] Company Strategy and Development Direction - The company has restructured its business to focus on two main areas: MRD and immune medicine, aiming for a more streamlined organization to fuel growth [7][8] - The strategy includes expanding into non-Hodgkin's lymphoma using ctDNA and enhancing customer experience through integration of clonoSEQ into ordering systems [12][19] - The company aims to launch at least one autoimmune indication by the end of 2023, focusing on high unmet needs in diseases like MS and Crohn's [22] Management's Comments on Operating Environment and Future Outlook - Management acknowledged the importance of achieving cash flow neutrality and is taking proactive steps to manage expenses while exploring non-dilutive cash flow opportunities [38][39] - The company is confident in achieving its full-year revenue guidance of $185 million to $195 million, with both MRD and immune medicine businesses contributing approximately equally [27][29] Other Important Information - Total operating expenses for Q1 2022 were $101.7 million, a 28% increase from the same quarter last year, driven by higher personnel costs and restructuring activities [25][26] - The company is on track to manage operating expenses to grow at lower rates than revenue due to restructuring efforts [28] Q&A Session Summary Question: Growth rate and factors affecting it - Management explained that the flat growth was impacted by lower MRD milestones and changes in Genentech amortization, which compressed growth figures [33] Question: Path to profitability - Management emphasized the importance of cash flow neutrality and proactive steps taken to manage expenses, with a clearer long-term plan expected later in the year [38] Question: Genentech private product specifications - Management detailed ongoing work to define specifications through successful proof-of-concept screens and additional patient studies [41] Question: Visibility in the field and access for sales reps - Management noted that in-person meetings are improving, with a current trend of 60% virtual visits [45] Question: Prioritization of autoimmune disease portfolio - Management clarified that MS and Crohn's are prioritized due to advanced signals and high unmet needs, while RA is further behind in sample collection [47] Question: ASP for clonoSEQ - Management indicated steady ASP growth for clonoSEQ, expecting it to reach $1,200 to $1,300 in the next two to three years [55] Question: Cash burn and future expectations - Management acknowledged higher cash burn in Q1 due to restructuring timing and seasonal factors, with expectations of reduced cash burn in the following quarters [57] Question: NHL assay commercialization timeline - Management confirmed plans to launch the NHL assay later this year, with ongoing validation and a clinical experience program already underway [59][60]