Q1 2020 Earnings Call

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Today's conference is being recorded if you require any further assistance. Please press star zero I would knowledge and the conference over to speaker today carry Mandeville Investor Relations. Please go ahead ma'am.

Thank you earlier today adaptive Biotechnologies released financial results for the first quarter ended March 31st 2020. If you have not received this news release or if you'd like to be added to the company's distribution list. Please send an email to investors at adaptive biotech dotcom.

Like most of you many of US are working from home. So please bear whether it could be encounter any unforeseen issues with today's call.

Before I begin I'd like to remind you that management will make statements. During this call that are forward looking statements in the meeting a federal securities laws. These statements involve material risks and uncertainties that could cause actual results or events to materially differ from does anticipated.

Additional information regarding these risks and uncertainties appears in the section titled forward looking statements in the press release adapted and she today for a more complete list and description. Please see the risk factor section of the company's annual report on form 10-K supplemented by the risks factors set forth in the company's 10-Q for the first quarter to be filed today.

Adaptive disclaims any intention or obligation to update or revise any financial projections or forward looking statements, whether because of new information future events or otherwise except as required by law. In addition, non-GAAP financial measures will be discussed during this call. Please visit the aforementioned press releases for a reconciliation to the most.

Likely comparable GAAP measure. This conference call contains time sensitive information and it's accurate only as of July broadcast May 12, 2020, but that I'd like to turn the call over to Chad Robbins Basket co founder and Chief Executive Officer Chad.

Thanks, Gary Good afternoon, and thank you all for joining us on our first quarter 2020 earnings call.

I hope that you and your loved ones are staying safe and healthy as we navigate through these challenging times.

Given our current environment I'll start off by reviewing our efforts and contributions towards a fight against covert 19.

Explain how these endeavors are enabled by our existing platform.

And review our long term vision for the company.

Next Judy will give an update across or commercial business and clinical development pipeline.

Which will include detail on the impact to covert 19 in the final weeks of Q1 and into April.

Finally, just see will provide a more detailed look at our financials and then we'll open up for questions.

I want to start off by saying I'm truly honored to be part of the adoptive team.

That adoptive we're focused on translating the genetic or the adaptive immune system into clinical products to detect and treat disease.

We are committed to leveraging our immune medicine platform in any way that we can to support the average to combat the Coburn 19 pandemic.

Lets her cobot Nike response committee or intercompany has shown unwavering dedication and flexibility over the past few months.

In early March we moved quickly to protect the health and safety of our employees enjoying the fight against over 19, all while ensuring that our labs remained open to service our patients and our partners.

In addition, I've never felt more privilege to be part of the broader health care community and the biotech industry.

It's been incredibly motivating to see so many entities and in some cases, our competitors proactively collaborating to solve this global pandemic.

It has always been our vision that adoptive that the immune response should be broadly incorporated into the diagnosis and treatment of disease.

The world is not watching this unfold and real time information about patients immune responses were Corona virus is published on the almost daily basis.

However, there are still many outstanding questions with respect to the immune response to the virus.

Why are some individuals virtually asymptomatic, while others have severe complications.

Beyond using age unknown risk factors can we determine ahead of time, who may have a more severe immune reaction or acquire hospitalization.

Versus being able to recover at home.

How can we identify with more certainty whether an individual has or has had the disease. Even if antibodies are not detectable.

And our certain strains of the virus more variant than others.

Our immune medicine platform was built intentionally to answer questions like these in response to many diseases, including infectious diseases.

No we are using our platform to help deliver diagnostic and therapeutic solution for people suffering from cobot 19.

Importantly, this is not a new effort for adaptive.

As infectious and debilitating is cobot 19 is to society.

The immune system seizes as it would any other disease and our platform works in exactly the same way.

Specifically, we are applying our platform to assist in two ways to help solve this crisis.

Other diagnostic side, we extended our partnership with Microsoft to decode the immune systems response to covert 19 virus to potentially develop a test that will measure the presence of virus specific T cells in the immune system.

Much like we are doing in line and other disease States. We're measuring the presence of T cells that identify disease early on and then clone themselves to combat infection.

Well there have been great progress made in a short amount of time with PCR tests that look at the presence with the virus itself and Surajit tests that look at a patients antibody response.

Both have standardization and biological issues that make a challenging to understand how widespread the virus really is and who is truly developed immunity.

To generate immune response data to address these issues. We're proud to have recently announced the launch of our immune race study to enroll at least a thousand patients.

24 metropolitan areas across United States.

We're collecting de identified blood samples from individuals currently diagnosed with recovered from or exposed to covert 19.

Using a lab cord enabled mobile balmy service.

Immune cell receptor from these blood samples will be sequenced and then map to antigens that had been confirmed by our platform to be specific to Sars koby too.

Leveraging Microsoft's machine learning capabilities in the as your cloud platform.

The accuracy of the immune response signature will be continuously improved and updated online in real time as more trials are sequenced from this study.

The immune Ray study data will be combined with data from thousands of additional unique patient samples from many institutions around the world.

The list of participating institution is growing as we continue to work with other investigators in the US Europe, Australia Asia and Africa.

To collect in sequence valuable patient cohorts.

We expect to have preliminary data to share within a matter of weeks and we will making our findings publicly available to health officials academia and industry.

That way in addition to potentially advancing our own test we can obviously clip others with our data to include the immune response into their own efforts.

On the therapeutic side, we partnered with Amgen to use our immune medicine platform to identify and develop therapeutic antibodies from the blood of patients who are other actively fighting or recently recovered from Coburn 19.

Like others, we think that neutralizing antibodies may be efficacious since this virus seems to mutate more slowly than other R&D viruses and mutated stranger genetically similar.

There's been some early successes using convalescent plasma therapy to boost the ability of patients with severe cases of covered 19 to fight off the infection.

And this is great, but unfortunately this approach is hard to scale and standardize.

In collaboration with Amgen, we're using our high throughput method of screening immune mewn cells to find the best antibody or antibodies.

Ones, which neutralize the virus.

These could be used to treat patients fighting the disease and to potentially prevent disease and those with heightened exposure such as healthcare workers.

The key to neutralizing antibodies is our ability to fight effects infection alone or in small groups, meaning that they have to do the job of what normally takes hundreds of antibodies to do in a typical immune response.

But finding the most efficacious neutralizing antibodies is challenging because the vast majority is antibody don't neutralize virus.

We are approaching this search for neutralizing antibodies with Amgen in much the same way that we work with genentech to identify T cell receptor for use in cancer.

The key is our scale and speed to assess hundreds of thousands of possible antibodies against a wider range of targets to select those that neutralized Sars koby too.

Grown up in Chicago, and bringing infringing on the left dance Harlan I equate this defining the Michael Jordan of antibodies.

The search path to include the ability to Scott every single High school basketball basketball player in the entire country at the exact same time not just the players in one high school, one city or even one state.

Once we have narrowed down to a set of the most promising antibodies Amgen then leverage its world class antibody engineering and drug development capabilities to develop and manufacture antibodies to bind and neutralized Sars koby too.

While it is still early days, we are ready moving fast and see some insight exciting results and they're confident that we can deliver potent antibodies to amgen in the coming months.

We have always said that our platform presents an open ended opportunity across many disease states.

Our ability to move quickly on these solutions for Cobot 19 demonstrates the power and versatility of our immune medicine platform.

Turning to the first quarter.

We ended the quarter with just over $20.9 million in revenue up 65% over the first quarter of 2019.

While our business started off strong we did start to see an impact from the spread of cobot 19 over the last few weeks of March.

Julie will discuss this impact in greater detail during her review of the commercial business and Chad Cohen during his review of our financials.

Due to the evolving and significant uncertainties related to the impact of Coven 19 pandemic, we're withdrawing our full year 2020 guidance.

While our near term revenue may be impacted due to the macro challenges in our health and economic environments I'm more confident than ever in our vision for adaptive and the importance of broadly incorporating immune response into the diagnosis and treatment of disease.

We are well capitalized to continue to invest across our business to execute on our vision and move into this next phase of growth.

With that I'll hand over to Julie will walk you through more detail across each of our product areas as well as provide more detail on the impact from covered 19 Julie.

Thanks, Chad and thanks to all for joining US today, I really hope you and your families are safe and healthy I want to Echo Chad. Thanks to our incredible employees, who have shown tremendous dedication and fortitude during its uncertain time.

Im going to start with an update on our Q commercial product corner peak and immuno seek followed by more operational details about our clinical diagnostic pipeline in units CTX and our drug discovery program.

Starting with clients seek.

In the first quarter Tech volumes grew 75% to 3518 tests compared to the first quarter of 2019.

The quarter started off strong and inline with our expectations throughout the quarter corner speak with ordered by over 500 HCP at 120 institutions for more than 2003 hundred unique patient.

We attribute this to the growing incorporation of corner seek MRT testing into clinical practice the important progress on both the reimbursement and regulatory front and the significant investments we have made in our salesforce.

However, beginning in early March volumes began to drop off as cases at close to 19 increase across the U.S. and patient visits to hospitals slowed dramatically to prevent exposure to the virus.

Coming out of March and through April we thought an approximate 30% lower clinical pack volumes than in the first eight weeks at the year. However, we are starting to see positive trends in our order volume in the first weeks of May which we are closely monitoring.

Order volumes are a strong indication of future clinical test volumes.

As you likely know cancer patients are among the highest risk group for corporate 19 and are facing numerous challenges.

The kids are limiting in person appointment important treatments are being the intensified or delayed to avoid immunosuppression and some procedures are being canceled or deferred.

These adjustments to patient management had need the bone marrow draws use to conduct MRT testing increasingly difficult to obtain yes, the need for MRT testing to inform patient management per se and in some cases, maybe even greater as providers try to understand the implications of unplanned changes to patient care protocol.

Clinical volumes ne continue to be impacted until oncology practices open up more consistently across the country. However, we have ramped up and instituted a number of efforts to continue engagement with physicians and patients. During these unusual time.

First and perhaps most importantly, our medical team has been communicating with the clinical community about blood based multi tasking via our client service.

While quantity is not an FDA cleared for blood based testing yet in AOL and multiple myeloma are clear service runs the exact same assay and is covered by Medicare and many private insurance payers.

We are pleased to announce an important partnership like labcorps to enable remote blood collection to make MRT testing more accessible.

Patients will soon be able to visit Labcorp patient service centers, nearly 2000 across the us to access corner seat. After he has been ordered by their clinician.

We are also negotiating agreements with some home with some home blood collection providers to further support patient access to quantity looking ahead, even after kobin restrictions get lifted we believe these solutions may continue to benefit patients by enabling a convenient and safe alternative to inpatient visit when possible.

In the field our team has done a remarkable job staying positive ensuring a best possible customer service and continuing to engage the clinical and patient communities via a regular cadence of virtual education.

Finally, our regulatory milestones for corn to seek remain on track we are preparing for the launch of corner seek for monitoring am R&D in CLL from blind following clearance from the FDA, which we anticipate midyear and in the second half of 2020, we are on track to file our second label expansion to the FDA for monitoring.

Ll from blood samples.

We made foundational investments throughout 2019 to ensure that has many patients if possible can benefit from quantity and as stated on the last call. We have seen increasing clinical acceptance of MRT testing.

While adoption of corner seek will be temporarily impacted as a result of the pandemic. We're confident that volumes will continue to grow as clinics reopened and new customer sites complete onboarding.

Moving onto immunity.

Research sequencing volume, which includes sequences reported from both our Biopharma and academic customers increased by 23% to 6030 sequences from 4891 sequences in the first quarter of 2019.

The quarter started off strong however, several pharmaceutical sample sets were slated to ship in Q1 that got pushed out to subsequent quarters due to slow clinical trial enrollment sample delays and impact of covert 19.

In Q2 to date, we've seen a 50% to 60% decline in samples arriving at our lab as more trials that halted and new study start delayed due to covert 19.

We anticipate sequencing revenue from pharmaceutical clinical trials will be significantly impacted until these gating factors are reimbursed.

Our partners have been transparent in giving up their best estimate for sample shipments and our laboratory is fully functional and ready to run these samples as they arise.

While we have limited visibility into the timing for receiving samples due to covert 19, we are still actively signing on new pharma partners and encouraged by the growing interest in incorporating immuno sequencing into clinical trials.

We are seeing similar challenges in the academic research setting where 75% of labs are close and the remaining labs are operating at reduced capacity.

As a result, we slowed our investment in our UL kit launch activities, including marketing and training until we have more clarity about the return to work.

We are bullish in the medium to longer term because our team is busy ramping up adoption in advance of the reopening of the lab.

In fact, we aren't drawing between 80 to 100 participants at each of our immunity virtual webinars at least every two weeks.

We also continue to progress on key partnerships with CRM tools to enable immuno sequencing and other qualified lab.

Finally in addition to our two proactive cobot initiatives. We are also receiving many inbound requests for immunity to be used in other researchers coated work such as vaccine development and identification of Biomarkers of immune response to the virus.

Moving onto our clinical pipeline for immuno CTX and drug discovery.

With regards to immunoassay deck. The work, we're doing uncoated 19, and Lyme disease has solidified our initial commercial focus for immuno CTX in infectious diseases.

We are using mobile phlebotomy to collect samples for our clinical validation is in both covert 19 at line disease to work around the difficulty of running clinical trials that traditionally require in person visits.

We are confident that we will be able to develop and commercialize diagnostics based on TCR signatures for infectious diseases that can address the needs for more accurate testing for patients at multiple time points.

For the Koby 19 program. The team is currently focused on recruiting patients to the immune rate study.

Defining our product specifications and planning for product development activities.

To date, we already have over 300 people consented to participate in.

In particular, we're studying three possibly use cases for the product.

One.

Diagnosed infection from the virus early on potentially even in asymptomatic patients.

To identify immunity to determine who has either recovered from or been exposed to the virus and three.

Treat patients into risk categories based on their immune response, something that we believe no. Other test is capable of doing today.

We're also beginning to plan for market development and commercialization efforts, assuming the data is strong which we expect to confirm in the next few weeks.

In Q1, we made several investments to advance immuno CTX.

We hired and Onboarded, our commercial SVP, a new head of research for the antigen map and a new Chief Technology Officer, all of whom have already contributed enormously to our ability to execute on our vision for this product.

We also completed important market research in Q1, which confirmed the commercial viability of an improved diagnostic for Lyme disease.

Of the 3.4 million U.S. patients, who get tested for line. Each year. We are focusing initially on over 1 million of those who are either newly diagnosed or concern or who continue to have recurring symptoms even after traditional antibiotic treatments.

We are launching our clinical validation study with Q via one of the largest clinical research and information companies in the coming weeks.

Overtime, our clinical development plan will extend into the remainder of the 2 million patients with nondescript symptoms, who get tested for line every year in the U.S. alone.

Early pricing research indicates a range that confirms a healthy margin profile supporting our decision to move forward with commercialization of aligned diagnostic.

We are on track with our plan to submit aligned diagnostic application for immuno CTX two the FDA by the end of this year.

Although we had suggested that line would be our first submission. There is a chance that we may submit a coated 19 diagnostic prior to that.

In line with our immunity Dx product strategy, both indications cobot 19 and line will support the development of a single test that is capable of delivering multiple results within and across the disease areas.

This is just the starting point as we layer on more diagnostic results to the same test leading to a truly outsized margin profile in the future.

Moving onto drug discovery, we continue to leverage our immune medicine platform to enable the discovery and development of novel Therapeutics now, including both TCR discovery for cellular therapies in oncology with Genentech and antibody discovery for neutralizing antibodies against Sars cope too with Amgen.

Both of these drug discovery programs leverage the unique capabilities of our platform to accurately screen immune receptor and further characterize and prioritize them for therapeutic Keith.

We remain on track for our work with Genentech, we have delivered to Genentech and I, Andy enabling GLP compliant data package for our lead TCR candidate against the selected shared antigens and they are progressing on the engineering and development of our first shared product for R&D submission.

In parallel we've expanded our lease in south San Francisco to build a prototype lab for the personalized cellular therapy product and anticipate opening the lab in Q1 of 21.

The work, we're doing with Amgen follows a similar discovery funnel, where we identify naturally occurring therapeutic candidates from human blood and advanced them through our proprietary screening and characterization process.

We are confident in our ability to deliver on both of our drug discovery commitment to date, we have started to screen for Sars Coke to neutralizing antibodies from the blood of more than 45 Cobot 19 patients at the rate. We are moving we anticipate completing sample collection from donors by the end of Q2.

We will confirmed a subset of antibodies that are specific for the virus and then screen for those that are neutralizing to various strains of the virus.

We are working closely and collaboratively with the Amgen team and feel confident that we will have antibody candidates to advance into early development and testing by Amgen in a few months.

I'll now pass it over to chassis, who will provide you with the financial update.

Thanks Randy.

I hope, you're all staying safe and healthy similar to prior earnings calls I'll run through our financials and compare results for the same period in the prior year.

For this call I will also provide some additional details in order to better characterize our financial results against the backdrop of the coded crisis.

Turning to our results total revenue in the first quarter was $20.9 million, representing an increase of 65% from 12.7 million in the same period last year.

Our revenue mix for the first quarter consisted of 45% of our revenues coming from our sequencing category and 55% coming from our development category.

Sequencing revenue in the first quarter was 9.5 million and grew 56% from the same period in 2019.

This increase was primarily driven by growth in revenue generated from our clinical customers as well as growth in revenue generated from our biopharma and academic customers and their related sequencing volume.

Closely clinical testing volume increased 75% in the first quarter 2020 to 3518 clinical tests from 2011 clinical tests in this first quarter of 2019.

As Julie mentioned volumes were impacted by the spread of coded 19, starting in March and testing volume slowed over the last two weeks of the month.

Research sequencing volume, which includes sequences reported to both our biopharma and academic customers increased by 23% to 6030 sequences from 4891 sequences in the first quarter of 29 team.

Development revenue grew to 11.4 million in the first quarter, which is up 74% from the same period last year.

The increase was primarily due to revenue generated from our Genentech partnership.

And this was largely in line with our own internal expectations.

Shifting now from a revenue to our operating costs total operating expenses for the first quarter of 2020 were $55.5 million, representing a 70% increase from 32.7 million in the same quarter last year.

Working down our operating expenses cost of revenue was $5.3 million during the first quarter 2020, compared to 5 million for the first quarter last year, representing an approximate 7% increase.

Increases in clinical and research volume offset by cost per unit reductions help manage down the overall increase in our cost from prior year.

Research and development expenses for the first quarter 2020 were $23.9 million compared to 12.5 million and the first quarter 2019, representing an increase of 92%.

The increase was primarily attributable to growth in people and lab costs to support overall platform development efforts, I mean, a CTX and TCR antigen map development and our drug discovery efforts.

Sales and marketing expenses for the first quarter 2020 were $14 million compared to $7.8 million in the first quarter 2019, representing an increase of 79%.

The increase was primarily due to additional personnel costs and external sales and marketing expenses to support mark market adoption of quota seek and to a lesser extent increases in costs to support our broader corporate marketing initiatives.

General and administrative expenses for the first quarter 2020 were 11.8 million as compared to 7 million in the first quarter of 2019, representing an increase of 69%.

This increase was driven primarily by increased head count and costs associated with being a public company.

Net loss for the first quarter 2020 was 31.4 million compared the first quarter 2019, net loss of 18.4 million.

Net loss attributable to common shareholders for the period was also 31.4 million or 25 cents per basic and diluted share compared to $18.6 million net loss or $1.45 cents per basic and diluted share in the first quarter of 2019.

Our earnings per share are based on approximately 126.1 million and 12.9 million weighted average shares outstanding for the first quarter of 2020 and 2019, respectively.

Adjusted EBITDA for the first quarter of 2020 was a loss of 28 million compared to a loss of 15.2 million in the same period for the prior year.

We ended the first quarter of 2020 with approximately $656 million in cash cash equivalents and marketable securities and we had no debt.

As chart as chat our mentioned given the uncertainty that cobot 19 has put on our ability to confidently forecast our financial indicators, we are formally withdrawing all guidance, including our revenue and close to seek testing volume outlook.

While our near term revenue as I'm certain due to the macro challenges in our health and economic environments, our long term goals and vision for adaptive are both squarely intact.

We believe that long term, we have a number of economic advantages in our business model that we can make modest investments to develop applications on top of our platform, which opened up huge opportunities for us to capture significant market share and large addressable markets.

During these times, we understand the need to be strong stewards of our capital. We are using this moment to balance our short term investments, which would have normally driven near term revenues against driving investment into long term platform extensions and improvements.

This rate reprioritization, coupled with the strength of our balance sheet lead us to be incredibly bullish on the long term opportunities that stem from our platform.

With that I'd like to turn the call back the operator and open it up for questions.

Thank you as a reminder, asking question you'll need to press star one on the telephone to withdraw your question press the pound Keith Please stand by we compile the June a roster.

Our first question comes from Brian Weinstein with William Blair. You May proceed with your question.

Hey, guys. Thanks for taking the questions.

I guess just to start with them I think you covered it fairly well in the prepared remarks, but a couple of questions on uncovered 19 in general so just to be clear about.

How youre diagnostic test is differentiated versus other things that are there in the market and then also.

It really does seem like you fits in pretty well with with the platform that you guys have in your capabilities here, but maybe.

Maybe just want to expand on on.

On that a little bit and talk about.

What about your platform capabilities gives you the April the opportunity to quickly pivot into something like cobot, 19, and just sort of highlight that a little bit.

Oh hurling I'm going to have you cover what kind of differentiates with tests and then I'll I'll talk about how it fits in with the platform and long term strategy sure. Thanks, Brian.

So currently there's two types of tests for covered 19, Theres a PCR test that we you know as the nasal club and then there is the surajit tests, which indicates exposure to the and potential immunity against the virus by measuring the presence of antibodies in a blip.

So, but there are gaps in both of these these tests the PCR test lack sensitivity. It early time points. This a lower respiratory virus. So sometimes it doesn't get the upper respiratory very quickly and is prone to operator error, because you have to stick the nasal slumps really far up.

Leading to.

False negatives Soroti test run the risk of cross reacting to other Corona viruses, which caused the common cold leading to false positives is particularly dangerous for determining a path to reopen society.

Neither test is able to provide information to predict the severity disease, which would be very very helpful to determine treatment alternatives for new patients. So adaptive and Microsoft believe a third type of tests can potentially address the gaps in the current testing paradigm, our testing strategy, let's see adaptive immune system directly.

Tell us what is seeing the T cell response comes up fast it's specific to the virus and persist as immunological memory importantly, all evidence, which suggests that the robustness of the T cell response determines the severity of disease, which may help with triaging patients.

We believe our diagnostic which we call music Dx, which directly reads. The T cell response has the potential to fill many of these GAAP so that I just talked about.

And what gives us confidence in the T cell receptor signature. We are developing is twofold first is that we get to compare to a set of controls from our massive database.

We've already sequenced prior to.

Prior to October 19 in other words, we've we've already applied our vectoring technology to to patients before this this virus even existed so we know they're truly true negative. So that is the first case and then separately from that.

We've also done this before with line, which is what we're separately commercializing we have a signal that thats significantly better than standard of care, So which is a surajit test in line.

So once we confirm a TCR signature. We're also very interested to see if we can identify immunity and people who have been asymptomatic or mildly some dramatic but may have may may have already been infected. This is the true value that that's required that we're hoping for in the immune scan that we're doing.

As Chad and Julie discussed we're collecting samples from over 4000 patients 1000 of which are being a prospectively collected from the immune Ray study and we are leveraging this together with tens of thousands a negative controls already in our database.

As we said prior to cover 19th.

And I'll check can you answer the yeah, So I mean it Brian.

Thank you a question I mean in terms of how this fits into the platform our long term strategy.

Our strategy to incorporate immune response into detection and treatment of any disease is awful as covert 19 is to the world. It's just another disease that the immune system season, the same way that sees any other disease.

So therefore.

Our Workover 90 directly extends our product pipeline, while allowing.

Commercial teams to continue to focus.

On the commercial products of immuno seeking courtesy.

If we can break this down on the diagnostic side, it's a new indication for Mueller CTX.

And we're leveraging the platform and infrastructure that we've already built with Microsoft.

And just pointing it towards this new disease. They are really three things that allowed us to move extremely quickly with Covance you. A first is the chemistry, which we built to connect receptors to antigens. The second is what hardwood just mentioned as we got the largest set of controls in the world in our database and then.

Third with Microsoft we've already built a lot of the machine learning algorithms that are able to really really quickly find the disease specific immune response signatures. So it's come from a business model standpoint, it's always been to do this for disease after disease after disease and once once we can match.

Multiple diseases. It's the same tessa can be run on a person's blood and then deliver kind of multiple touch results for anything thats been map.

And and then Correspondently, if we look other therapeutic side view our work with Amgen is actually is a platform extension is something we always said that we do when the time was right.

We we built the platform to harness from you interceptors as targeting molecules to kill disease.

Well, we've already developed this expertise and screening and characterize in T cell receptors for cell therapy in cancer with Genentech. We're now starting to apply this kind of methodology and screening technology to the characterization of antibodies with Amgen for therapeutic use in infectious disease and show them.

It's actually does.

A lot a new core competency of future.

Your opportunity for us in antibody discoveries and Joe.

I guess looking at has it really doesn't change our long term strategy as a matter of fact, it's it's just a great proof of concept for our strategy for both immunologic Dx ends and a new era of drug discovery. So it another positive size really helps solidify our focus on infectious diseases Bermuda CTX.

And again I think it represents a platform extension for drug discovery, sorry that might have been a longer longer answer then you're looking for but I think it's really important to understand how does fit into the platform.

No that was great and I think it's very clear.

And then a junior one for you talked about the blood based MRT via the Korea service can you talk a little bit more about what that entails and when you're running something on blood versus.

The other marrow can you just confirm and just reviewed the performance of the assay in the two different sample types, if theres any difference at all thanks.

Sure. So we've always offered Kona seek via our client service as I think you know.

But our reps are our market only the Ll multiple myeloma indications our FDA cleared.

And so really the CLIA services used for all different indications that we generally see a pretty similar.

To tivity of the test in in blood as we've discussed in the past unpaid the only disease state where the sensitivity in applied maybe a little bit lowering in multiple myeloma, but it's still higher than it is slow.

And so we're we're just making sure that people know that disease in an option that's available to them and as I mentioned, we are also our partnering with Labcorp and essentially looking for other partners to just make make it more accessible to patients during during cold the times and beyond the most likely.

Perhaps medicine may change a little bit all around.

Great. Thank you guys.

Thanks, Ron Thanks, Brian.

Thanks Brent.

Thank you. Thank your next question comes from Doug Schenkel. The talent you May proceed with your question.

Hey, good afternoon everybody.

So obviously a lot of focus in your prepared remarks on your efforts with Amgen and Labcorps Covance to advance cobot 19 testing and diagnostic initiatives.

And clearly these partnerships and the fact that you're moving so quickly are nice affirmations of your platform and how nimble you can based.

That said, there's a lot of announcements about cobot out there and I think when it comes to you guys. Some wonder if I guess theres really two things people wonder about the first is.

Keep in mind, there are already I think 210 treatments under consideration for co benign team and secondly, the practical need for rapid tests that are ideally Don near patients. If those the combination of those things really render these initiatives as not being really a good fit with what the new.

Needs are practically speaking of the market.

I think that could be further by the point that one you are just starting your your your therapeutic initiatives and Theres no approval yet. So this is a it's it's an exciting but still a new area for you guys and secondly, your diagnostic infrastructure really an optimized to really go after a rapid test.

Centralized market and.

Hopefully by the time, you get to the market. The hope would be theres already therapies more diagnostics or maybe a vaccine on the market. So so how do you respond to that specifically.

One what are realistic timelines to how do you get a diagnostic to the market that's rapid and quick enough for the needs of the market in a decentralized away and third what would be the plausible pricing for both given many therapeutic player players have already indicated they're going to supply cost and not make any money on these.

And given that diagnostic reimbursement per test out there seems to be up most around $100 from CMS.

Yes, so Doug.

I'll start and then.

How are we can chime in.

I think we need to break it down.

You're talking about diagnostics and therapeutics, and we need to cover them kind of one by one so lets first let's first.

Take the diagnostic and some of it really depends on.

What the data says and how good it is so what the product market fit is so there's there's a couple of different use cases.

That said, our test lends itself to and which potentially only our touch can do the first is in terms of hospitalizations.

Triaging patients to whether they can stay home or whether they need to go to the hospital on this is a test that you can have you potentially a.

A longer turnaround time that is sequencing based.

The second one of the large markets as employers and kind of returning to work and so I think I think there's many many different urology to US again, none of them are standardized and I think there's a lot to open questions with whether they've got a truly provide it kind of a immune scan to allow employers to two other there.

Employees to come back to work so that some of it depends on that.

Secondly in terms of I think you bring up a good point with respect to sequencing I do want to say, we're we've already begun begun evaluating the ability to turn because sequencing into your faster deliverable tests with other technologies kind of recognizing.

Recognizing kind of the turnaround and kind of sample requirements for for sequencing.

So those are those are kind of two to two considerations that I think are really important to think about third in terms of kind of pricing as you mentioned kind of pricing has gone from $50 to kind of $100 for I'm kind of high volume.

You're testing and this rally as you touching on getting 200 $100 that being said.

Again, depending on the utility of the data and again.

What is being where specifically being used for I do believe that the the payer community both public and private.

Would support a higher price point test.

Then as we go move to therapeutics. There are we believe that it's going to be potentially it and I do agree with you on it might be a long time before we get about machine. There are other companies that are going to beat us to market with antibody strategies. However.

You view.

If you look at kind of what third the for the first the first set of therapies in terms of repurposing existing existing drugs.

Look at the Ram disappear right you are what it is working on severe patients reducing hospital stays right essentially and then you have done you're going to have kind of some neutralizing antibodies, which will be potentially beat the market, but they may not work on all population. So the call again, it's going to be the quality of how how good the new.

Neutralizing antibodies are and I think theres going to be potentially room for kind of multiple strategies to effectively neutralize virus.

Okay and the timeline question.

For for the died suffered for the diagnostic we knew we were kind of actively working on commercialization in parallel to accumulating the data. We again as we said we think we'll have a signal within the next few weeks and then kind of move move quickly on kind of product market fit and move.

Very quickly.

To the you pathways are you a pathway with the FDA and hopefully hopefully have jumping in.

In the coming months on the diagnostic front.

In the near term in terms of therapeutic all were commenting right now is.

The next actually I'll turn it over Harlan who is closer to the therapeutic efforts in terms of our time.

Yes.

These are great questions and I think on on the therapeutic side you to the drugs that are that are front and center right now and that are getting a lot of the play time, our drugs that are been kind of re purpose that didnt work in other cases or do something completely unrelated and hope you know people are hoping we'll have effort.

Cassie and sure that.

We've seen cases, where where there's been sort of mild efficacy the might allow certain K certain cases to be to provide clinical value, but but the vast majority are either not providing any value or very very limited value to the this is not going away. This is going to lie.

Likely be endemic in our population so having a set of having a really good therapy, even if it takes a little bit longer is going to be.

Vital and for many many years to common and so we've we together with Amgen have really set set apart and said, okay, let's take a little bit longer we're not going to be necessarily first but but we'd like to be the of the product that actually works effectively and so thats really the strategy there.

Okay, Alright, all Super helpful. Thanks for all those details just one more for me.

And this may be a Julie question are there any signs that CMS might accelerate timelines to reimburse blood based Colin.

Close to seek for AOL and multiple myeloma face some challenges with patients actually getting into doctors' offices for.

Bone marrow draws.

Check.

Yes.

Yeah go ahead, but no you take that that you're looking more closely Athena.

And just let me clarify Doug the question is whether CMS will.

Approve and pay for blood based dosing.

For well by moment in yellow yeah, as you move as as we think about some of the indications that you're moving into where we hope to get or where you already are but theyre. They haven't traditionally reimbursed blood based in general and I think we've all expected that to happen at some point I'm just wondering if maybe they're getting a little more.

You know aggressive with timelines given the ease of use with a blood based test, which wouldn't require folks to go in a to their doctors.

Yes, Doug as a matter of fact, we we've already got a positive coverage determination in blood testing for Halo multiple myeloma in CLL, we did not press release it because we're currently.

In into the FDA on the CLL submission, so we can't yet market market the blood based testing as a product for any of those until we get an FDA approval, but we already being covered.

And we offer in a clear service environment.

Currently and this was this was recently.

Recently put into place and we can we can point, we can point you to the coverage policy and the and a subsequent letter that was provided us from molded clarifying the coverage determination.

So that could be a nice tailwind in the current environment right I mean may maybe.

It's you already have a good product. Its reimburse you have been held back a little bit by promoting it but practically speaking.

Arguing even better alternative in the current environment for the reasons I noted.

Yes, correct.

Okay.

Okay, Alright, thanks, really appreciate all that detail I.

Thank you Doug appreciate it.

Thank you. Our next question comes from Tyco Peterson with JP Morgan You May proceed with your question.

Hey, Thanks, I'll start with one for Julie just on the recovery path for common seed volumes here in the near term I think you talked about to pursue it's amazing some improvement how should we think about patients coming back or they already kind of starting to come back than anything on the private payer front, we should be keeping an eye on I know you had it not limited streak last quarter.

Yes, So I think what were what we're really seeing if it's a little unclear when restrictions will be looked at uniformly and.

And I think this will continue to vary region by region and even institution by institution in the coming month as you and I, both no New York and.

Probably under more strict of a lock down then let's say the bay area. So I think it varies we do have seen throughout the entire country and they are working closely with their their customers and doing what the appropriate and each of their respective region.

But as as you heard we are starting to see an uptick in the early part at night and receiving some requests for in person appointments by some conditions scattered throughout the country at this stage.

We are we've increased our coverage to over 200 million covered lives.

Throughout the first part of this year, so continue to add on.

Additional coverage as expecting on the team I'm, just doing a great job working with additional payers to both.

Oh regional and national.

And then just talking about kind of the the Halo effect from some of that could work you know you talked about central perimeter seems to be used vaccine development and work on Biomarkers can you just give us a sensor the scale of what you're talking about here in terms of number of projects and programs you think that can incorporate immediacy that they don't work.

Sure. So I I should we don't have numbers that were sharing at this stage I will say that the team, which is really the immunoassay team and the ones that are working on a daily basis with all of our pharma partners are beginning to get a fair amount of inbound requests.

And have signed a couple of projects already.

It's early days and we suspect that will grow, particularly as we share that data connecting receptors to antigens and I think more pharmaceutical companies begin to understand the value and measuring immune response or perhaps even longitudinally in patients that they are attacking drunk scoring in their trials. So we do anticipate that growth.

Overtime.

Last one on Amgen and I appreciate the additional color on the deal and we had gotten the question as well as to whether Michael Jordan Anybody's is over so I. Appreciate you kind of clarifying that but you had mentioned that there may be evidence that neutralizing antibodies by other programs may not working all populations I'm curious if you can kind of elaborate.

Really did behind that at this point and then do we have evidence whether antibodies against Covre 19 actually give your media buyers have exposed in the future. That's another question. Thanks.

So with that second question.

Last one.

Yes, let antibodies against over 19 give you a muted because a virus exposed in the future.

Yes, so both good questions.

Yes.

So I guess earlier I was speaking a little more generally I think I think the the in terms of the.

The drugs being applied to to cover the 19 are are quite broad. So so some of them a few of them are neutral and attempting to be neutralizing antibodies, but I think in general.

Most of these different drugs will probably be not globally efficacious in terms of neutralizing antibodies somebody depending on the strategy somebody early work in particular.

It was before we had all the genomic information about about what's truly conserve what are the new strains emerging in different parts of the world and if you're antibodies is by a binding against something that that the virus can escape from.

Either either the it will only work in the population that has has that strain to the virus or it will be quite limited and and so theres. There's it's challenging to make a defined antibodies with that.

Right property, it's probably going to be a cocktail the few that can truly new neutralize this virus broadly and and across a wide variety of patient. So I think there is going to be a long game and there's a lot of opportunity, but it's not it's unlikely that someone's going to solve this problem in of in a very short term so.

Some of the some of the early guys who might have a jumpstart that doesn't that.

It'd be great. If it works, obviously, because we'd love to have this have a cure but but.

Let's.

Maybe that's not the the ultimate that right now.

Okay, and then as far as.

Creating immunity to get were you asking about whether whether as a.

A vaccine could create immunity what reacting to create a you know a lower lease anybody's again could actually give you alluded to the virus exposed in the future right. I mean, there is kind of fear that it comes back in some cases do you have.

On on that.

Yes, so I mean I think this is it. So unfortunately the evidence that we have with with the strains of the force transit Corona virus that cause the common cold are are such that that.

You can we get reinfected with the same straight a virus.

Repeatedly so it is true that you do gain immunity for some period of time. It just doesn't last very long. So I think the belief right now the kind of the common belief would be that it's the same that theres you you're you would get some someone's of immunity, but they wouldn't be protective for a substantial period of time.

The hope is that enough cross protective that at least the severe cases are dampened no kind of like how the flu evolves from from something that's that's truly LIFO to overtime as you get some cross protection is.

The morbidity mortality drop so as this becomes more endemic in our population and more and more people have it. The next round of infections, hopefully are much less severe but but hum.

The other thing is is that this should shape vaccine strategy right, which is that you can imagine.

You want to really think about timing and design a strategy that can be boosted on a regular basis, just like the like influenza.

Okay. Thank you.

Thank you. Our next question comes from there to rule with Bank of America. You May proceed with your question.

Hello, and good afternoon.

Hey, I actually just wanted to jump off on that in terms of sort of like applications and vaccine research and there was that additional avenue, where you're getting some inquiries on on helping develop and study there I'm just curious on what sort of your opportunities are there.

Okay.

Julie do an S I mean as a.

You go ahead.

Yes. So certainly this has been an active area of discussion with multiple different players I mean, we we.

We do think us as with the rest of world. The if we could get a a functioning vaccine.

That would allow us to reopen reopened society and so so we're doing everything we can and decoding and mapping out the exact immune response, we think is vital for this effort. So so allowing.

And sharing that data and then also digging into it to.

Into more specific cases that would allow particular vaccine strategy is to to hopefully be more efficacious I mean, effectively what you want to do as you want to target the old vaccines intent is to trick the immune system into thinking it's already seen that pathogen. So that the next time it gets it it's ready to fight it again and so were.

The key there as you need to make sure that the that you're making the the vaccines targeting the immune system on exactly the right thing so that when the real virus comes it's targeting the right thing and so identifying exactly what the parts of the virus are that are being that are being attacked by the immune system is really what we do.

Thats, the kind of vital information for for creating.

The.

An effective vaccine so.

Yes.

So yes, we're in both at a BD context as well as Ana.

Working with other other players as well as just offering information for on a on a service basis is we're doing both.

Got it Hey can you talk a little bit about the.

Sequencing revenue business I mean, you mentioned academe down 75% in your clinical volumes down.

Your clinical volumes down in the 50, 60% range I guess is that a sort of.

Similar that how you sort of would characterize how we should look at the second quarter.

And maybe modest modeling a little bit of pickup in the third quarter I'm, just sort of any looks like any so the guidance on how we should look at back coming back.

Truly want to tell that or do you want I'll just start I'll start just to clarify a couple of things I think on the.

I think what I had said was that there are about 75% of academic labs loans, but that's not our our numbers and the research sequencing volumes were down more than 60% range, 50% to 60% range and then the corner speak volumes were down more in the 30% range just to clarify that point.

And then I'll pass the Chad calling to give guidance.

But in general as I've mentioned, we're working in close contact with our customers. Our field based teams are working really closely with all of them meeting with them regularly virtually to prepare to generate demand from when the.

World kind of reopens.

But I will let Chad pulling speak to any particular guidance.

So so derrick away, we're looking at things here and we're not providing any sort of official guidance because it right again, all this is pretty pretty hard to predict but from the the vantage point, though that we have obviously the second quarter appears to be the bottom of the curve.

With hopefully the return back to sort of Q1 levels happening sometime between the third and fourth quarter.

We are seen as Julie mentioned in her script some some.

Central for some bright spots and the most recent weeks.

But I did see sort of depression of those numbers that you mentioned in the weeks sort of.

Toward the there's a couple of weeks toward the back of March and most of April that obviously impacting our ability to predict.

Our sequenced volume confidently at this point.

Got it and since I have you Chad.

Sort of some commentary on the Opex.

Look for it I mean Q1 quite a bit higher than we were forecasting just some general commentary I mean, obviously, you've got a lot of investments going on.

And just sort of the cost side of the build out in south San Francisco any sort of additional color.

Yes, so the way I think about our investment trends from here on out as we've been adding somewhere between four and $6 million of in the incremental investment per quarter. Historically, if you look back at least over over 2019, and if you look and looking forward I think that trajectory is going to continue we do have some heavier.

Our investments coming online in the fourth quarter sort of vis-a-vis the new build out of our South San Francisco.

Prototyping facility, a little more office space down there and some retrofitting in addition to our new headquarters up here in Seattle for which we have a capex investments that's going to be pretty heavy as well as obviously new leases that are going to have to start being paid as at the end of the quarter sorry as of the end of the last quarter the year.

So when you layer on the opex growth of that sort of $4 million to $6 million per quarter slightly heavier maybe in the fourth quarter and on top of that sort of provision I'd say between 20 and 25 million in full year Capex, you'll get a sense for you know sort of the trajectory of our overall investment for the year.

Hopefully some of that colors helpful. There.

Got it and so I guess, what's that and then the next question is you've delivered the package to Genentech and then what sort of a next steps I mean, obviously, it's in their hand, and they've got a lot of things going on just any sort of sense of timing of comes we will hear some data on that.

For some new slowing that.

Julie Jude joint Esa.

You can go ahead.

[laughter] hardware not missing you can go yet so the the district, we're working on a on a library of T cell receptors that can be used for therapeutic use the intent would be to also deliver.

The second one later this year in terms of commercializing the first one.

Our goal was to is on track for filing.

The an eye on d. towards the end of the year.

And also getting the prototype set up for the for the personalized version. So I think when you ask.

Mm.

My guess and obviously this is going to be engine and tax court for the for the for the.

Non personalized version for these shared products.

Once we deliver the full package, which we which we have been working to confirm everything that's needed for the I'd filing in the safety package and all that once that's been completely delivered per package. Then then the ball as engine Gentex court unless theres feedback from the FDA et cetera that we need to do more stuff.

So were then switching onto the next set of receptors as well as the.

Private.

The personalize version so we expect towards the so basically what I'm, saying is that is the data coming out will be in genetics hands as to when they deliver it. So we don't really have timing.

Great. Thank you.

Thank you. Our next question comes from David Westenberg with Guggenheim You May proceed with your question.

Thanks for taking the question so on this one's for Chad Cohen.

If we did see maybe a second or third wave.

Of Covance.

Well, what levers would you plan on polling in in terms of expense line.

So I.

I really believe that we have our hands on a number of levers this business as you know our.

Cost structure is primarily comprised of headcount.

And already we've made a lot of decisions with respect to the amount of volume that were seen in the second quarter as well as the volumes that we are forecasting through the end of the year in terms of a number of heads that were originally slated to be on plan to effectively be put in a pending or hold position until we see the return of that volume. So that's that's.

Pretty significant from from our perspective in terms of levers that were already utilizing to help us sort of modulator. Our overall overall investment for the year.

We've also made additional.

You know cuts in terms of investments that would have normally.

Been purpose to drive near term revenue and topline production and have really been thoughtful about cutting back on some of those areas and either deferring and or.

Using those investment areas to re purpose to continue to build out applications and platform extensions. So there are a number of.

Levers that we have in the business, but primarily they relate to head count because that's 40% to 50% of our cost structure.

The number of experiments that we run and the consumption of materials and reagents and sequencing.

Pushing out on some of our Capex investments are they sent that their volume related and then there's a whole litany of other discretionary expenses sort of underneath all that.

With respect to marketing professional services consulting and other levers that we have to slowed down our rate of investment and or prioritize the rate of investment if we were to see another wave.

Thank you very much on and just sticking with the effectiveness of infectious disease platform meet you got lime early and expected you're working on it kind of attached to.

It just comes if cobot come sooner than most expect do you maybe split before on the accelerator in infectious disease franchise deemphasize, maybe just simply asking.

Auto immune diseases or or just how should we think about that in terms of success here.

Yes, I think there's a great question and Fortunately the way our platform is set up the the cost and effort upfront to generate the signal is actually relatively low. So we can do though a lot in parallel for signal generation and then pivot based on that so we're we're absolutely.

We have have put together.

As an effort to to go after larger numbers of infectious diseases in groups and and to start really leveraging the the.

Kind of grouping that we can get by running the same assay on the same blood, we need we need to.

Started going after tests that you'd want to outperform on the same patient.

And so that's really the way, we're thinking of to really leverage the the true value. The platform. How do you how do you get since we're running the same test in the same blood sample with just multiple algorithms.

How do you get to the point, where where you would want the same.

Like 10, 15 different test to be run on the same patient because you want to.

Assess different disease stat status for that one patient, so thats really our thinking and whether or not.

The.

And of course, autoimmune and cancer were still excited about and our and our pushing on those directions to if we get a signal.

Then we will.

We get really good signals there will have to make some decisions on on the next steps, which are more expensive commercialism regular regulatory commercialization et cetera.

Got it thank you very much on the right there.

Thanks.

Thank you and I'm not showing any further questions. At this time I would now like to turn the call back over to Chad Robbins for any further remarks.

Thank you everyone for joining the call today, please stay safe and stay healthy and we'll.

See you next quarter on the call bye.

Thank you ladies and gentlemen, this concludes todays conference call. Thank you for participation you may now disconnect.

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Ladies and gentlemen, thank you for standing by welcome to the adapter technologies first quarter financial results Conference call. At this time, all participants listen only mode. After the speaker presentation. There will be a question answer session asking question during the session you'll need to press star one or telephone please be advised the today's call.

<unk> is being recorded if you require any further systems. Please press star Zero I wouldn't Alexander conference over to your Speaker today carried Amendable Investor Relations. Please go ahead.

Thank you earlier today adaptive Biotechnologies released financial results for the first quarter ended March 31st 2020.

Do you have not received this news release or if he likes the added to the company's distribution list. Please send an email to investors out adaptive biotech dotcom.

Like most of you many of US you're working from home. So please bear whether they encounter any unforeseen issues with today's call.

Before I begin I'd like to remind you that management will make statements. During this call that are forward looking statements in the meeting a federal security bought these statements involve material risks and uncertainties that could cause actual results or events to materially differ from doesn't get paid it.

Additional information regarding these risks and uncertainties business section titled forward looking statements in the press release adopted as you today for more completely description. Please see the risk factor section. The Companys annual report on form 10-K supplemented by the risk factors set forth in the Companys. Thank you for the first quarter to be filed today.

Dr disclaims any intention or obligation to update or revise any financial projections or forward looking statements, whether because of new information future events or otherwise except as required by law. In addition, nongaap financial measures will be discussed during this call. Please visit Yakima can press releases for a reconciliation to the left.

Directly comparable GAAP measure. This conference call contains time sensitive information that's accurate only as of the light broadcast may 12, 2020, but that I'd like to turn the call over a child, Robyn basket co founder and Chief Executive Officer Chad.

Thanks, Gary Good afternoon, and thank you all for joining us on our first quarter 2020 earnings call.

I hope that you in your loved ones are staying safe and healthy as we navigate through these challenging times.

Given our current environment I'll start off by reviewing our efforts in contributions towards a fight against Copenhagen.

Explain all these endeavors are enabled by our existing platform.

And review our long term vision for the company.

Next Judy will give an update across our commercial business and clinical development pipeline.

Which will include detail on the impact to covert 19, the find a way so Q1 and into April.

Finally, Chad see will provide a more detailed look at our financials and then we'll open up for questions.

I want to start off by saying I'm truly are to be part of the adopter team.

That adoptive we're focused on translating the genetic or the adaptive immune system into clinical products, so detect and treat disease.

We're committed to leveraging our immune medicine platform in any way that we can to support the averaged to combat the coping 19 pandemic.

Led by October Nike response Committee are intercompany shown unwavering dedication and flexibility over past few months.

In early March we moved quickly to protect the health and safety of our employees and join the fight against opened 19, all while ensuring that our labs remain open to service, our patience and our partners.

In addition, I've never felt more privileged to be part of the broader health care community and the biotech industry.

It's been incredibly motivating to see so many entities and and in some cases our competitors.

Actively collaborating to solve this global pandemic.

It has always been our vision is adopted that the immune response should be broadly incorporated into the diagnosis and treatment of disease.

The world is not watching this unfold in real time information about patients immune response with a corona virus is publish on almost daily basis.

However, there are still many outstanding questions with respect to the immune response to the virus.

Why are some individuals virtually asymptomatic, while others have severe complications.

Beyond using age unknown risk factors can we determine ahead of time, who may have a more severe immune reaction or acquire hospitalization.

Versus being able to recover at home.

How can we identified with more certainty whether an individual has or has had the disease. Even if antibodies are not detectable.

And our certain strains are the virus more variable than others.

Our immune medicine platform was built intentionally to answer questions like these in response to many diseases, including infectious diseases.

No we are using our platform to help deliver diagnostic and therapeutic solution for people suffering from Kobin 19.

Importantly.

This is not a new effort for adaptive.

In fact, you send to build trading has covered 19 is to society the immune system seizes as it would any other disease and our platform work in exactly the same way.

Specifically, we are applying our platform to assist in two ways to help solve this crisis.

On the diagnostic side, we extended our partnership with Microsoft Decode the immune systems response to covert 19 virus to potentially develop a test that will measure the presence of fiber specific T cells and the immune system.

Much like we are doing in line and other disease States. We're measuring the presence of T cells that identify disease early on and then clone themselves to combat infection.

Well, there's been great progress made in a short amount of time with PCR tests that look at the present sort of Iris itself and so we're always you tell us that look at a patients antibody response.

Both have standardization and biological issues that make a challenging to understand how widespread the virus really is and who is truly developed immunity.

To generate immune response data to address these issues. We're proud to have recently announced the launch of our immune race study to enroll at least a thousand patients and 24 metropolitan areas across United States.

We're collecting de identified blood samples from individuals currently diagnosed with recovered from or exposed to covert 19, using a labcorps enabled mobile Badami service.

Immune cell receptor from these blood samples will be sequenced and then map to add to gens that had been confirmed by our platform to be specific to stars koby too.

Leveraging Microsoft's machine learning capabilities in the is your cloud platform.

The accuracy of the immune response signature will be continuously improved and updated online in real time at more trials are sequence from this study.

The immune Ray study data will be combined with data from thousands of additional unique patient samples from many institutions around the world.

The list of participating institution is growing as we continue to work with other investigators in the U.S. Europe, Australia Asia Africa.

To collect in sequence valuable patient cohorts.

We expect to have preliminary data to share within a matter of weeks and we will making our findings publicly available to health officials academia and industry.

That way in addition to potentially advancing our own test we can offer equip others with our data to include their immune response into their own efforts.

On the therapeutic side, we've partnered with Amgen to use our immune medicine platform to identify and develop therapeutic antibodies from the blood of patients who are either actively fighting or recently recovered from covered 19.

Like others, we think neutralizing antibodies, maybe efficacious since this virus seems to mutate more slowly than other already viruses and mutated strains are genetically similar.

There's been some early successes using convalescent plasma therapy to boost the ability of patients with severe cases of covert 19 to fight off the infection.

This is great, but unfortunately this approach is hard to scale and standardize.

In collaboration with Amgen, we're using our high throughput method of screening immune felt immune cells to find the best antibody or antibodies.

Once which neutralize the virus.

These could be used to treat patients fighting the disease and to potentially prevent disease and those with heightened exposure such as healthcare workers.

The key to neutralizing antibodies as their ability to fight effects infection alone or in small groups, meaning that they have to do the job of what normally takes hundreds of antibodies to do on a typical immune response.

But finally, the most efficacious neutralizing antibodies is challenging because the vast majority is antibodies don't neutralize virus.

We are approaching this search for neutralizing antibodies with Amgen in much the same way that we work with genentech to identify T cell receptor for use in cancer.

The key is our scale and speed to assess hundreds of thousands of possible antibodies against a wider range of targets to select those that neutralize Sars koby too.

Growing up in Chicago, and bringing impinging on the less dense Harlan I equate the thing that Michael Jordan of antibodies.

The search passed to include the ability to Scott every single High school basketball basketball player and the entire country at the exact same time not just the players in one high school, one city or even one state.

Once we have narrowed down to a set of the most promising antibodies Amgen and then leverage its world class antibody engineering and drug development capabilities to develop and manufacture antibodies to bind and neutralize Sars koby too.

Well, it's still early days, we are ready moving fast and see some insight exciting results and they are confident that we can deliver potent antibodies to amgen in the coming months.

We have always said that our platform presents an open ended opportunity across many disease states.

Our ability to move quickly on these solutions for Cobot 19 demonstrates the power and versatility of our immune medicine platform.

Turning to the first quarter.

We ended the quarter with just over $20.9 million in revenue up 65% over the first quarter of 2019.

While our business started off strong we did start to see an impact from the spread of Coburn 19 over the last few weeks of March.

Julie will discuss this impact in greater detail during her review of the commercial business and Jay Cohen.

During his review of our financials.

Due to the evolving and significant uncertainties related to the impact of covert 19 pandemic, we're withdrawing our full year 2020 guidance.

Well, our near term revenue may be impacted due to the macro challenges in our health and economic environments.

More confident than ever in our vision for adaptive and the importance of broadly incorporating immune response into the diagnosis and treatment of disease.

We are well capitalized to continue to invest across our business to execute on our vision and move into this next phase of growth.

With that I'll hand over to Julie will walk you through more detail across each of our product areas as well as provide more detail on the impact from covered 19.

Really.

Thanks, Chad and thanks to all of you for joining US today I really hope you and your families are safe and healthy I want to Echo Chad. Thanks to our incredible employees, who have shown tremendous dedication and fortitude. During these uncertain time.

I'm going to start with an update on our two commercial products quantity and immuno seek followed by more operational details about our clinical diagnostic pipeline in units CTX and our drug discovery program.

Starting with quantify peak.

In the first quarter test volumes grew 75% to 3518 Tac compared to the first quarter of 2019.

The quarter started off strong and in line with our expectations throughout the quarter corner speak with ordered by over 500, HCP at 120 institutions for more than 2003 hundred unique patient.

We attribute this to the growing incorporation of corner seek MRV testing into clinical practice the important progress on both the reimbursement and regulatory front and the significant investments we have made in our salesforce.

However, beginning in early March volumes began to drop off as cases of close to 19 increase across the U.S. and patient visits to hospital slowed dramatically to prevent exposure to the virus.

Coming out as March and through April we saw an approximate 30% lower clinical path volume than in the first eight weeks of the year. However, we are starting to see positive trends in our order volume in the first week of May which we're closely monitoring order volumes are a strong indication of future clinical test volumes.

As you likely know cancer patients are among the highest risk group recorded 19 and are facing numerous challenges.

Practices are limiting in person appointments important treatments are being de intensified or delayed to avoid immunosuppression and some procedures are being canceled or deferred.

These adjustments to patient management have made the bone marrow draws use to conduct MRT testing increasingly difficult to obtain yes, the need for MRV testing to inform patient management per se.

And in some cases, maybe even greater as providers try to understand the implications of unplanned change into patient care protocol.

Clinical volumes may continue to be impacted until oncology practices open up more consistently across the country. However, we have ramped up and instituted a number of efforts to continue engagement with physicians and patients during these unusual pipe.

First and perhaps most importantly, our medical team has been communicating with the clinical community about blood based MRV testing via our CLIA service.

Welcome to seek is not an FDA cleared for blood based testing yet in AOL and multiple myeloma Barclays service, Ron the exact same assay and is covered by Medicare and many private insurance payers.

We are pleased to announce an important partnership with labcorp to enable remote blood collection to make MRV testing more accessible.

Patients will soon be able to visit Labcorp patient service centers, nearly 2000 across the us to access corner seek after he has been ordered by their clinician.

We are also negotiating agreements with some home with some home blood collection providers to further support patient access to quantity.

Looking ahead, even after kobin restrictions lifted we believe these solutions may continue to benefit patients by enabling a convenient and safe alternative to inpatient visit when possible.

In the field our team has done a remarkable job staying positive ensuring a best possible customer service and continuing to engage the clinical and patient communities via a regular cadence of virtual education.

Finally, our regulatory milestones for corner remain on track Youre preparing for the launch of corner seek for monitoring MRV in CLL from blood following clearance from the FDA, which we anticipate midyear and in the second half of 2020, we're on track to file our second label expansion to the FDA for monitoring.

Ll from blood samples.

We may foundational investments throughout 2019 to ensure that has many patients if possible can benefit from quantity and as stated on the last call. We have seen increasing clinical acceptance of MRT testing.

While adoption of quantities will be temporarily impacted as a result of the pandemic. We're confident that volumes will continue to grow as clinics reopened and new customer sites complete onboarding.

Moving onto immunity.

Research sequencing volumes, which include sequences reported from both our Biopharma and academic customers increased by 23% to 6030 sequences from 4891 sequence is in the first quarter of 2019.

The quarter started off strong however, several pharmaceutical sample sets were slated to ship in Q1 that got pushed out to subsequent quarters due to slow clinical trial enrollment sample delays and impact of cobot 19.

In Q2 to date, we've seen a 50% to 60% decline in samples arriving at our lab as more trial that halted and new study start delayed due to covert 19.

We anticipate sequencing revenue from pharmaceutical clinical trials will be significantly impacted until these gating factors are reimbursed.

Partners have been Transparence, and giving up their best estimate for example shipments and our laboratory, it's fully functional and ready to run these samples as they arise.

While we have limited visibility into the timing for receiving sample due to cope with 19, we are still actively signing on new pharma partners and encouraged by the growing interest in incorporating immuno sequencing into clinical trials.

We are seeing similar challenges in the academic research setting where 75% of labs are closed and the remaining Leds are operating at reduced capacity.

As a result, we slowed our investment in are you all kit launch activities, including marketing and training until we have more clarity about the return to work.

We are bullish in the medium to longer term because our team is busy ramping up adoption in advance.

We opening up the lab.

In fact, we're drawing between 80 to 100 participants at each of our immuno seek virtual webinars at least every two weeks.

We also continue to progress on key partnerships with CRM to enable sequencing and other qualified lab.

Finally in addition to our two proactive Covidien, Michigan. We are also receiving many inbound requests for immuno seems to be used in other researchers could work such as vaccine development and identification of Biomarkers of immune response to the virus.

Moving onto our clinical pipeline for immuno CTX and drug discovery.

With regards to immunologic deck. The work, we're doing on Cobot 19, and Lyme disease has solidified our initial commercial focus for immuno CTX in infectious disease.

We are using mobile phlebotomy to collect samples for our clinical validation in both cobot 19, as Lyme disease to work around the difficulty of running clinical trials that traditionally require in person.

We're confident that we will be able to develop and commercialize diagnostics based on PCR signatures for infectious diseases that can address the needs for more accurate testing for patients at multiple time points.

For the coping 19 program. The team is currently focused on recruiting patients to the immune rate study.

Defining our product specification.

Planning for product development activity.

Hey, we already have over 300 people consented to participate.

In particular, we're studying three possible use cases for the product.

One diagnose infection from the virus early on potentially even in asymptomatic patients.

To identify immunity to determine who has either recovered from or been exposed to the virus and three.

Treat patients into risk categories based on their immune response, something that we believe no. Other test is capable of doing today.

We're also beginning to plan for market development and commercialization efforts, assuming the data is strong which we expect to confirm in the next few weeks.

In Q1, we made several investments to advance EMEA CTX.

We hired and Onboarded, our commercial SVP, a new head of research for the antigen map and a new Chief Technology Officer, all of whom have already contributed enormously to our ability to execute on our vision for this product.

We also completed important market research in Q1, which confirmed the commercial viability of an improved diagnostic for Lyme disease.

Of the 3.4 million U.S. patients to get tested for line. Each year. We are focusing initially on over 1 million of those who are either newly diagnosed or can or will continue to have recurring symptoms, even after a traditional antibiotic treatment.

We are launching our clinical validation study with Ikea, one of the largest clinical research and information companies in the coming weeks.

Over time, our clinical development plan will extend into the remainder of the 2 million patients with nondescript symptoms, who get tested for line every year in the U.S. alone.

Early pricing research indicates arrange that confirms a healthy margin profile supporting our decision to move forward with commercialization of aligned diagnostic.

We're on track with our plan to submit a line diagnostic application form unit CTX two the FDA by the end of this year.

Although we had suggested that line would be our first the mission. There is a chance that we may submit a covert 19 diagnostic prior to that.

In line with our immuno seat Dx product strategy, both indications cobot 19 and line will support the development of a single test that is capable of delivering multiple results within and across the disease areas.

This is just the starting point as we layer on more diagnostic results to the same test leading to a truly outsized margin profile in the future.

Moving onto drug discovery, we continue to leverage our immune medicine platform to enable the discovery and development of novel Therapeutics now, including both TCR discovery for cellular therapies in oncology with Genentech and antibody discovery for neutralizing antibodies against stars Coke to with Amgen.

Both of these drug discovery programs leverage that unique capabilities of our platform to accurately screen immune receptor and further characterize and prioritize them for therapeutic.

We remain on track for our work with Genentech, we have delivered to Japan Tech and I, Andy enabling GLP compliant data package for our lead PCR candidate against the should the selected shared antigens and they are progressing on the engineering and development of our first shared products for I Andy submission.

In parallel we have expanded our lease in south San Francisco to build a prototype lab for the personalized cellular therapy product and anticipate opening the lab in Q1 of 21.

The work, we're doing with Amgen follows a similar discovery funnel, where we identify naturally occurring therapeutic candidates from human blood and advanced them through our proprietary screening and characterization process.

We are confident in our ability to deliver on both of our drug discovery commitment to date, we've started to screen for Starz Coke to neutralizing antibodies from the blood of more than 45 Cobot 19 patients at the rate. We are moving we anticipate completing sample collection from donors by the end of Q2.

We will confirm this subset of antibodies that are specific for the virus and then screen for those that are neutralizing to various strains of the virus.

We are working closely and collaboratively with Amgen teen and feel confident that we will have antibody candidates to advance into early development and testing by Amgen in a few months.

I'll now pass it over to chassis, who will provide you with the financial update.

Thanks, Charlie.

I hope, you're all staying safe and healthy similar to prior earnings calls I'll run through our financials and compare results for the same period in the prior year.

For this call I will also provide some additional details in order to better characterize our financial results against the backdrop of the cobot crisis.

Turning to our results total revenue in the first quarter was $20.9 million, representing an increase of 65% from 12.7 million in the same period last year.

Our revenue mix for the first quarter consisted of 45% of our revenues coming from our sequencing category and 55% coming from our development category.

Sequencing revenue in the first quarter was 9.5 million and grew 56% from the same period in 2019.

This increase was primarily driven by growth in revenue generated from our clinical customers as well as growth in revenue generated from our biopharma and academic customers and their related sequencing volume.

Conversely, clinical testing volume increased 75% in the first quarter 2020 to 3518 clinical tests from 2011 clinical tests in this first quarter of 2019.

As Julie mentioned volumes were impacted by the spread of Cobot 19, starting in March and testing volume slowed over the last two weeks of them up.

Research sequencing volume, which includes sequences reported to both our biopharma and academic customers increased by 23% to 6030 sequences from 4891 sequences in the first quarter 2019.

Development revenue grew to 11.4 million in the first quarter, which is up 74% from the same period last year.

The increase was primarily due to revenue generated from our Genentech partnership.

And this was largely in line with our own internal expectations.

Shifting now from our revenue to our operating costs total operating expenses for the first quarter of 2020 were $55.5 million, representing a 70% increased from 32.7 million in the same quarter last year.

Working down our operating expenses cost of revenue was $5.3 million during the first quarter 2020, compared to 5 million for the first quarter last year, representing an approximate 7% increase.

Increases in clinical and research volume offset by cost per unit reductions help manage down the overall increase and our Cox from prior year.

Research and development expenses for the first quarter, 2020, or $23.9 million compared to 12.5 million and the first quarter 2019, representing an increase of 92%.

The increase was primarily attributable to growth in people and lab costs to support overall platform development efforts I mean to seek Dx and TCR antigen map development and our drug discovery efforts.

Sales and marketing expenses for the first quarter 2020 were $14 million compared to 7.8 million in the first quarter of 2019, representing an increase of 79%.

The increase was primarily due to additional personnel costs and external sales and marketing expenses to support mark market adoption of quota seek and to a lesser extent increases in cost to support our broader corporate marketing initiatives.

General and administrative expenses for the first quarter 2020 were 11.8 million as compared to 7 million in the first quarter of 2019, representing an increase of 69%.

This increase was driven primarily by increased headcount and costs associated with being a public company.

Net loss for the first quarter 2020, with 31.4 million compared to the first quarter 2019 net loss of 18.4 million.

Net loss attributable to common shareholders for the period was also 31.4 million or 25 cents per basic and diluted share compared to $18.6 million net loss or $1.45 cents per basic and diluted share in the first quarter 2019.

Our earnings per share are based on approximately 126.1 million and 12.9 million weighted average shares outstanding for the first quarter of 2020 and 2019, respectively.

Adjusted EBITDA for the first quarter of 2020 was a loss of 28 million compared to a loss of 15.2 million in the same period for the prior here.

We ended the first quarter of 2020 with approximately $656 million in cash cash equivalents and marketable securities and we had no debt.

At chart as Chad our mentioned given the uncertainty that cobot 19 has put on our ability to confidently forecasts are financial indicators, we have formally withdrawing all guidance, including our revenue and quality testing volume outlook.

While our near term revenue as uncertain due to the macro challenges in our health and economic environments, our long term goals and vision for adaptive are both squarely intact.

We believe that long term, we have a number of economic advantages in our business model that we can make modest investments to develop applications on top of our platform, which open up huge opportunities for us to capture significant market share and large addressable markets.

During these times, we understand the need to be strong stewards of our capital. We are using this moment to balance our short term investments, which would have normally driven near term revenues against driving investment into long term platform extensions and improvements.

At this rate reprioritization, coupled with the strength of our balance sheet lead us to be incredibly bullish on the long term opportunity that stem from our platform.

That I'd like to turn the call back the operator and open it up for questions.

Thank you as a reminder, asking question you'll need to press star one on the telephone to withdraw your question first about Q. Please standby we've compiled the June a roster.

Our first question comes from Brian Weinstein with William Blair. You May proceed with your question.

Hey, guys. Thanks for taking the questions.

I guess just to start with them I think you covered it fairly well in the prepared remarks, but a couple of question Don uncovered 19 in general so just to be clear about.

How your diagnostic test a differentiated versus other things that are there in the market and then also.

It really does seem like you fits in pretty well with with the platform that you guys have in your capabilities here, but.

Maybe just wanted to expand on on.

On that a little bit and talk about.

What about your platform and capabilities gives you the April the opportunity to too quickly pivot into something like cobot, 19, and just sort of highlight that a little bit.

Oh, Harlan I'm going to have you cover what kind of differentiates with tests and then I'll I'll talk about how it fits in with the platform in long term strategy sure. Thanks, Brian.

So currently there's two types of tests for Coven 19, Theres, a PCR test that we you know as the nasal club and then there is the serology tests, which indicates exposure to the and potential immunity against the virus by measuring the presence of antibodies in the blood.

So, but there are gaps in both of these these tests the PCR test lack sensitivity in early time points, a lower respiratory virus. So sometimes it doesn't get the upper respiratory very quickly and is prone to operator error, because you have to stick the nasal slops really far up.

Leading to.

False negatives Soroti tests run the risk of cross reacting to other corona viruses, which caused a common cold leading to false positives as particularly dangerous for determining a path to reopen society.

Neither test is able to provide information to predict the severity disease, which would be very very helpful to determine treatment alternatives for new patients.

So adaptive and Microsoft believe a third type of tests can potentially address the gaps in the current testing paradigm, our testing strategy, let's see adaptive immune system directly tell us what seeing the T. Cell response comes up fast it's specific to the virus and it persists as immunological memory importantly, all evidence would suggest that the robust.

So the T cell response determines the severity of disease, which may help with triaging patients.

We believe our diagnostic which we call music, TX, which directly reef. The T cell response has the potential to fill many of these gaps so that I just talked about.

And what gives us confidence in the T cell receptor signature. We are developing is twofold first is that we get the compared to a set of controls for our massive database.

That we've already sequenced prior to.

Prior to covert 19 in other words, we've we've already applied our exact same technology to to patients before the virus even existed. So we know they're truly true negative so that is the first.

Okay, and then separately from that.

We've also done this before with line, which is what we're separately commercializing we have a signal that significantly better than standard of care, So which is a strategy test in line.

So once we confirm it TCR signature. We're also very interested to see if we can identify immunity and people who have been asymptomatic or mildly some dramatic but may have may may have already been infected. This is the true value that that's required that we're hoping for in this immune scan that we're doing.

As Chad and Julie discussed we're collecting samples from over 4000 patients a thousand of which are being prospectively collected from the immune rates study and we are leveraging this together with tens of thousands of negative controls already in our database.

As we said prior to cover the 19th.

And I'll check can you answer the yes, so I mean it Brian. Thanks for the question I mean in terms of how this fits into the platform. Our long term strategy our strategy to incorporate immune response into detection and treatment of any disease is awful as covert 19 is to the world. It's just.

Another disease, the immune system season, the same way that she's any other disease. So therefore.

Our Workover 19 directly extends our product pipeline, while allowing.

Commercial teams to continue to focus.

On the commercial products of immune to see concurrent to seek.

If we can break this down on the diagnostic side, it's a new indication for Mueller CTX.

We're leveraging the platform and infrastructure that we've already built with Microsoft.

And just pointing it towards this new disease. There are really three things that allowed us to move extremely quickly with Covance. Your first is the chemistry, which we built to connect receptors to antigens. The second is what Harlan just mentioned as we got larger set of controls in the world in our database and then.

Third with Microsoft we've already built a lot of the machine learning algorithms that are able to really really quickly find the disease specific immune response signatures. So going from a business model standpoint, it's always been to do this for disease after disease after disease and once once we can map.

Multiple diseases. It's the same tessa can be run on a person's blood and then deliver kind of multiple touch results for anything thats been map.

And then Correspondently, if we look.

Therapeutic side I work with Amgen is actually is a platform extension, it's something we always said that we do when the time with right.

Hey, we've built a platform to harness immune receptor.

As targeting molecules to kill disease.

While we've already developed this expertise and screening and characterizing T cell receptors for cell therapy in cancer with Genentech. We're now starting to apply this kind of methodology and screening technology to the characterization of antibodies with Amgen for therapeutic use in infectious disease and Joe did.

It's actually does.

Lock, a new core competency of future.

Your opportunity for us an antibody discoveries and Joe.

I guess looking at how does it really doesn't change our long term strategy as a matter of fact, it's it's just a great proof of concept for our strategy for both immuno Cts and and at a new era of drug discovery. So it's.

And on a positive size really helps solidify our focus on infectious diseases Bermuda CTX.

And again I think it represents a platform extension for drug discovery started that might have been a longer longer answer then you're looking for but I think it's really important to understand how does fit into the platform.

That was great and I think thats very clear.

Then Julie one for you talked about the blood based MRT via the Korea service can you talk a little bit more about what that entails and when you're running something on blood versus.

The the marrow can you just confirming just reviewed the performance of the assay.

In the two different sample types, if there's any difference at all thanks.

Sure. So we've always offered colonna seek via our CLIA service as I think you know.

But our reps are our market only the Ll multiple myeloma indications our FDA cleared.

And so really the CLIA services used for all different indications that we generally see pretty similar.

Sensitivity of the test in light as we've discussed in the path.

Only disease state where.

The sensitivity and blood, maybe a little bit lowering in multiple myeloma, but it's still higher than it is slow.

And so we're well just making sure that people know that disease in an option that's available to them and as I mentioned, we are also our partnering with Labcorp and potentially looking for other partners to just make make it more accessible to patients during during over time, then and beyond the most likely as.

Perhaps medicine may change a little bit all around.

Great. Thank you guys.

Thanks, Rob Thanks, Brian.

Thanks, Brian.

Thank you. Thank you. Our next question comes from Doug Schenkel Talent you May proceed with your question.

Hey, good afternoon everybody.

So obviously a lot of focus in your prepared remarks on your efforts with Amgen and Labcorps Covance to advance cobot 19 testing and diagnostic initiatives.

And clearly these partnerships and the fact that you're moving so quickly are nice affirmations of your platform and how nimble you can be.

That said, there's a lot of announcements about cobot out there and I think when it comes to you guys. Some wonder if.

I guess theres really two things people wonder about the first is.

Keep in mind that are already I think 210 treatments under consideration for co benign team and secondly, the practical need for rapid tests that are ideally Don near patients.

If those combinations those things really render these initiatives as not being really a good fit with what the needs are practically speaking of the market.

I think that could be further by the point that one you are just starting your your your therapeutic initiatives there theres no approval yet. So this is that it's it's an exciting but still a new area for you guys.

And secondly, your diagnostic infrastructure really an optimized to really go after a rapid decentralized market and.

Hopefully by the time to get to the market. The hope would be there is already therapies more diagnostics and maybe a vaccine on the market. So how do you respond to that specifically.

One what are realistic timelines to how do you get a diagnostic to the market Thats rapid and quick enough for the needs of the market at a decentralized away and third what would be the plausible pricing for both given many therapeutic player players have already indicated they're going to supply it cost and not make any money on these.

And given that diagnostic reimbursement per test out there seems to be up most around $100 from CMS.

Yes, so Doug.

I'll start and then.

How are we can chime in.

I think we need to break it down you're talking about diagnostics and therapeutics and we need to cover them kind of one by one so lets first let's first.

Take the diagnostic and some of it really depends on.

What the data says and how good it is so what the product market fit is so yes, there's there's a couple of different use cases.

That said, our test lends itself to and which potentially only our test can do you know the first is in terms of hospitalizations.

Triaging patients to whether they can stay home or whether they need to go to the hospital on this is a test that you can have you potentially a.

No longer turnaround time that is sequencing based.

The second one of the large markets as employers and kind of returning to work and so I think I think there's many many different urology to US again, none of them are standardized and I think there's a lot to open questions with whether they've got a truly provide kind of a immune scan to allow employers to two other there.

Poised to come back to work so some of it depends on that.

Secondly.

In terms of I think you bring up a good point with respect to sequencing I do want to say, we're we've already begun begun evaluating the ability to turn just kind of sequencing into faster deliverable tests with other technologies kind of recognizing.

Recognizing kind of the turnaround and kind of sample requirements for for sequencing.

So those are those are kind of two to two considerations that I think are really important to think about third in terms of kind of pricing as you mentioned kind of pricing has gone from $50 to kind of $100 for kind of high volume.

You are testing and this rallied you touching on getting 200 $100 that being said.

Again, depending on good but the utility of the data and again.

What it's being whereas specifically being used for I do believe that the the payer community both public and private.

Would support a higher price point test.

Then as we move to therapeutics. There are we believe that it's going to be potentially and I do agree with you on it might be a long time before we get a vaccine. There are other companies that are going to beat us to market with antibody strategies. However.

You can you review if you look at what the for the first the first set of therapies in terms of repurposing existing existing drugs.

Look at the ramp this severe right you're what it is working on severe patients reducing hospital stays right essentially and then you have done you're going to have kind of some neutralizing antibodies, which will be potentially beat the market, but they may not work on all population. So the call again, it's going to be the quality of how how good the new.

Analyzing antibodies are and I think theres going to be potentially room for kind of multiple strategies to effectively.

Neutralized the virus.

Okay and the timeline question.

For for the Dot so for the diagnostic we were kind of actively working on commercialization in parallel to accumulating the data. We again as we said we think we'll have a signal within the next few weeks and then kind of move move quickly on kind of product market fit and move.

Very quickly.

To the you pathway are you a pathway with the FDA and hopefully hopefully have something in.

In the coming months on the diagnostic front.

In the near term in terms of therapeutic all were commenting right now is.

The next actually I'll turn it over Harlan who is closer to the therapeutic efforts in terms of our time I, yes.

I mean, these are great questions and I think on on the therapeutic side.

The drugs that are that are front and center right now and that are getting a lot of the play time, our drugs that are been kind of re purpose that didnt work in other cases or do something completely unrelated and hope you know people are hoping we'll have efficacy and sure that we've seen in cases, where where there is.

Been sort of mild efficacy that might allow certain K certain cases to be.

To provide clinical value, but but the vast majority are either not providing any value or very very limited value to the.

This is not going away. This is going to likely be endemic in our population. So having a set of having a really good therapy, even if it takes a little bit longer it's going to be.

Vital and for many many years to comment and so we've we together with Amgen have really set set apart and said, okay, let's take a little bit longer we're not going to be necessarily first but but we'd like to be the the products that actually works effectively and so thats really the strategy there.

Okay, Alright, all Super helpful. Thanks for all those details just one more for me.

And this may be a Julie question are there any signs that CMS might accelerate timelines to reimburse blood based coal.

Close to seek for AOL and multiple myeloma in the face some challenges with patients actually getting into doctors' offices for.

Bone marrow draws.

Check.

Yes.

Yeah go ahead, but now you take that that you're looking more closely encino.

And just let me clarify.

Doug the question is whether CMS will.

Approve and pay for blood based testing.

Well by well many Hello, yes, as you move as as we think about some of the indications that you're moving into where we hope to tip, yet or where you're already are but theyre. They haven't traditionally reimbursed blood based in general and I think we've all expected that to happen at some point I'm just wondering if maybe they're getting a little more.

You know aggressive with timelines given the ease of use with a blood based test, which wouldn't require folks to going into their doctors.

Yes, Doug as a matter of fact, we we've already got a positive coverage determination in blood testing for Halo multiple myeloma in CLL, we did not press release it because we're currently.

In into the FDA on a CLL submission. So we can't yet market market the blood based testing as a product for any of those until we get FDA approval, but we already being covered.

And we offer in a in a CLIA service environment.

Currently and this was this was recently.

Recently put into place and we can we can point, we can point you to the coverage policy and a subsequent letter that was provided us from goldex clarifying the coverage determination.

So that could be a nice tailwind in the current environment right I mean may maybe.

You already have a good product its reimburse you've been held back a little bit by promoting it but practically speaking, arguing even better alternative in the current environment for the reasons I noted.

Correct.

Okay.

Okay, Alright, thanks really appreciate all those details.

Thank you Doug I appreciate it.

Thank you. Our next question comes from Tyco Peterson with JP Morgan You May proceed with your question.

Hey, Thanks, I'll start with one for Julie just on the recovery Packer common seed volumes here in the near term I think you talked about the first two weeks amazing some improvement how should we think about patients coming back or they already kind of starting to come back than anything on the private payer Congress should we keep an eye on I know you had it not limited streak last quarter.

Yes, so I think what were what we're really seeing.

It's a little unclear when restrictions will be looked at uniformly.

And I think this will continue to vary region by region and even institution by institution in the coming month.

As you and I, both no New York and.

Probably under more strict of a lock down then let's say the bay area. So I think it varies we do have seen throughout the entire country and they are working closely with their their customers and doing what the appropriate and each of their respective region.

But as as you heard we are starting to see an uptick in the early part at night and receiving some requests for in person appointments by some clinicians scattered throughout the country at this stage.

We are we've increased our coverage to over 200 million covered lives.

Throughout the first part of this year. So continue to add on additional coverage as expecting mid teens I'm just doing a great job working with additional payers both.

Regional and national.

And then just talking about kind of the the Halo effect from some of that could work you know you talked about potential criminals seems to be used vaccine development and work on Biomarkers can you just give us a sensor the scale of what you're talking about here in terms of number of projects and programs you think that can incorporate a mercy.

We don't work.

Sure. So I should we don't have.

Numbers that were sharing at this stage I will say that the team, which is really the immunoassay team and the ones are working on a daily basis with all of our pharma partners are beginning to get a fair amount of inbound requests.

And have signed a couple of projects already.

It's early days and we suspect that will grow, particularly as we share that data connecting receptors to antigen.

Thank you our pharmaceutical companies begin to understand the value of measuring immune response or perhaps even longitudinally in patients that they are taking drugs for in their trial. So we do anticipate that growing over time.

Last one on Amgen and I appreciate the additional color on the deal and we had gotten the question as well as to whether Michael Jordan of anybody's is over so I. Appreciate you kind of clarifying that but you had mentioned that there may be evidence that neutralizing antibodies by other programs may not work in all populations I'm curious if you can kind of elaborate.

Really did behind that at this point and then do we have evidence whether antibodies against current 18 actually immunity to the virus exposed in the future Thats. Another question.

Yes.

So with that second question.

Last one.

Yes.

Antibodies against overnight can give you immunity to the virus exposures in the future.

Yes, so both good questions.

So I guess earlier I was speaking a little more generally I think I think the the.

In terms of the.

The drugs being applied to to cover 19 are are quite broad. So so some of them a few of them are neutral attempting to be neutralizing antibodies, but I think in general.

Most of these different drugs will probably be not globally efficacious in terms of neutralizing antibodies some of the depending on the strategy. Some of the early work in particular.

It was before we had all the genomic information about about what's truly conserved what are the new strains emerging in different parts of the world and if you're antibodies is by a binding again something that that the virus can escape from.

Either either the it will only work in the population that has has that strain of the virus or it will be quite limited and and so there's there's it's challenging to make a defined antibodies with that.

Right property, it's probably going to be a cocktail of a few that can truly new neutralizes virus broadly and and across a wide variety of patient. So I think there is it's going to be a long game when there's a lot of opportunity, but it's not it's unlikely that someone's going to solve this problem in the very short term so.

Some of the some of the early guys who might have a jumpstart that doesn't that.

Hi, it'd be great. If it works, obviously, because we'd love to have this have a cure but but.

Let's.

Maybe that's not the the ultimate that right now.

Okay, and then as far as.

Creating immunity to did were you asking about whether whether as a.

A vaccine great immunity, what reacting to a great well, let Larry bodies against could actually give you a minute you did a virus exposed in the future right. I mean, there is kind of fear that it comes back in some cases do you have thought on that.

Oh, yes, so I mean I think of it so.

Fortunately the evidence that we have with.

With the strains of the force transit Corona virus that cause the common cold are are such that fit.

You can we get reinfected with the same strain of virus.

Repeatedly so it is true that you do gain immunity for some period of time. It just doesn't last very long. So I think the belief right now.

One of the common belief would be that it's the same that theres you you're you would get some someone's of immunity, but that it wouldn't be protective for for a substantial period of time. The hope is that it's enough cross protective but at least the severe cases are dampened no kind of like how the flu evolves from from something that.

That's truly LIFO to two overtime as you get some cross protection is.

The morbidity mortality drop so as this becomes more endemic in our population and more and more people have it. The next round of infections, hopefully are much less severe but but hum.

The other thing is is that this should shape vaccine strategy right, which is that you can imagine you want to really think about timing and design a strategy that can be boosted on a regular basis, just like the like influenza.

Okay. Thank you.

Thank you. Our next question comes from there to rule with Bank of America. You May proceed with your question.

Hello, and good afternoon.

Hey, I actually just wanted to jump off on that in terms of sort of like applications and vaccine research and it was that additional avenue, where you're getting some inquiries on on helping develop and study there I'm just curious on what sort of your opportunities are there.

Julie do an ethnic let me data.

You go ahead.

Yes. So certainly there has been an active area of discussion with multiple different players I mean, we we we do think us as with the rest of world. The if we could get a a functioning vaccine.

That would allow us to reopen reopen society and so so we're doing everything we can and decoding and mapping out the exact immune response, we think it's vital for this effort. So so allowing.

And sharing that data and then also digging into it to.

Into more specific cases that would allow particular vaccines strategy is to hopefully be more efficacious I mean, effectively what you want to do as you want to target those I mean of vaccines intent is to track the immune system into thinking it's already seen that pathogen. So that the next time it gets it it's ready to fight it again and so were.

The key there as you need to make sure that the that you're talking making the the vaccine targeting the immune system on exactly the right thing so that when the real virus comes it's targeting the right thing and so identifying exactly what the parts of the virus are that are being that are being attacked by the immune system is really what we do.

That's the kind of vital information for for creating.

And effective vaccine so.

Yes.

So yes, we're in both at a BD context as well as in a.

Kind of working with other other players as well as just offering information from a service basis is we're doing both.

Got it Hey can you talk a little bit about the.

Sequencing revenue business I mean, you mentioned academe down 75% in your clinical volumes down.

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Your clinical volumes down in the 50, 60% range I guess is that a sort of.

Similar that how you sort of characterize how we should look at the second quarter.

And maybe modest model me, a little bit of pickup in the third quarter I'm, just sort of any looks like any sort of guidance on how we should sort of look at that coming back.

Truly want to take out or do you want I'll just start I'll start just to clarify a couple of things I think on there.

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I think what I had said was that there are about 75% of academic labs loans, but that's not our our numbers. So the research and sequencing volumes were down more than 60% range, 50% to 60% range and then the corner speak volumes went down more in the 30% range just clarify that point.

And then I'll pass the Chad calling to give guidance.

But in general as I've mentioned, we're working in close contact with our customers. Our field based teams are working really closely with all of them on meeting with them regularly virtually to prepare to generate demand from when the.

World kind of reopened.

But I will let Chad kolean speak to any particular guidance.

So so Derrick way, we're looking at things here and we're not providing any sort of official guidance because it right again, all this is pretty pretty hard to predict but from the the vantage point, though that we have obviously the second quarter appears to be the bottom of the curve.

With hopefully the return back to sort of Q1 levels happening sometime between the third and fourth quarter.

We are seeing as Julie mentioned in her script some some.

Central for some bright spots and the most recent weeks.

But I did see sort of depression of those numbers that you mentioned.