Q3 2020 Adaptive Biotechnologies Corp Earnings Call
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Ladies and gentlemen, thank you for standing by and welcome to adaptive Biotechnologies third quarter Twentytwenty Conference call.
At this time all participants are in a listen only mode.
After the speaker's presentation, there will be a question and answer session to add.
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I would now like to hand conference over to your speaker today Ms. Katrina call Sylvia. Thank you. Please go ahead ma'am.
Thank you went out and good afternoon, everyone I would like to welcome you to adopt the technology third quarter 2020, earning conference call.
Earlier today, we issued a press release reporting adapted financial results for the third quarter of 2020. The press release, you have animal and adopted by technology Telecom.
We are conducting a lot what cost of these calls and we will be referencing sleep like presentations that have been posted to the investors section you know Fred what's like drink.
During the call management will make projections and other forward looking statements within the meaning of federal Securities law regarding future events and the future financial performance of the company.
These statements reflect management's current perspective on the business of today Act.
Actual results may differ materially from today forward looking statements depending on a number of pockets, we talked about for public financial statements with the FCC and in the 10-Q filed today either.
In addition, non-GAAP financial measures will be discussed during these calls and a reconciliation from non-GAAP to GAAP metrics can be found in our earnings release.
Joining the call today are Chad robbing parts meal and go longer you didn't really think our president and Chuck Cohen, Our Chief Financial Officer inhibition, Harlan Robbins adaptive Chief Scientific officer, and co founder will be available for acuity with that I will kill the part that call to chat right.
Thanks Greener good afternoon, everybody and thank you for joining us on our third quarter 2020 earnings call.
Once again I want to thank all of our adaptive employees for their unwavering dedication and flexibility over the past several months.
During the quarter, our financial performance was solid and we made substantial advances across all business areas.
These results continue to validate the value of our immune medicine platform as a clinical product development engine.
On slide three let me walk you through some of the key highlights for the quarter.
We reported revenues of 26.3 million, representing 25% growth versus prior quarter and 1% growth versus prior year.
Related to our research business, we are working with two top tier vaccine developers to use immuno seek T map coated in a subset of patients from their late stage trials.
This is encouraging as we strongly believe that measuring the T cell immune response of vaccines is necessary to understand durability of the immune response.
It critical diagnostics Klocek test volumes grew sequentially, 28% and we also launched quota seek for patients with CLL.
For our diagnostic pipeline product formally known as immuno CTX. We are pleased to announce the new new brand name is key to TEP.
Representing the power of T cells to detect disease.
Today, we released topline results showing that to detect outperform serology to confirm past infection.
Which further supports the upcoming launch of T. detect coated and.
In addition, we have also identified a clinical signal for crow's disease, demonstrating a consistent cadence in our R&D pipeline.
And last but not least and our drug discovery business. We are extremely encouraged that we have successfully identified two highly potent neutralizing antibodies against our scope to which we believe to be best in class.
Our neutralizing antibody work is another proof point of the potential of our immune medicine platform shown here in slide four to be a critical product development engine.
We have unique and proprietary capabilities to understand the genetics of the immune response to disease and translate that data into multiple opportunities across research diagnostics and drug discovery right.
Remember the adaptive immune system season, most diseases in exactly the same way, including Cove it.
Once we characterize the immune receptor data specific to the virus, we were able to develop key detect cobot as the clinical diagnostic test offer immunoassay T map cobot as a research tool for vaccine developers and identified potent neutralizing antibodies for a partner to potentially commercialize.
Importantly, the infrastructure that we built in just seven months for cobot is being leveraged to accelerate similar commercial opportunities in multiple disease states.
Before I pass it on to Julie I want to share two exciting data announcements related to our cobot efforts.
On slide five as we announced today, we have new data further demonstrating that T cell based testing with key detect outperforms antibodies urology to can confirm test Sars curve to infection. This.
This data from a study performed in collaboration with the University of pattern in Italy shows that adaptive to detect cobot identified 97% of PCR confirm past infections, while surajit identified only 77% this.
This follows on the heels of our publication earlier this fall showing superior sensitivity of T. detect versus two leading serology test in a real world population from our new rates study.
Together with Microsoft and in parallel with other publications from around the World. We are contributing to the growing recognition of the importance of T cells to understand the complete picture of the immune response to any disease. This is the foundational thesis for T. detect.
Now on slide six I will walk you through our neutralizing antibody findings.
As you know back in April we deployed our platform to discover fully human neutralizing antibodies to treat COVID-19 as such we used our high throughput method of screening immune cells to find the best antibody or antibodies, which neutralized the virus.
We started with blood from over 300 patients and hundreds of thousands of antibodies of which we synthesize and characterize over 1600 antibodies to various parts of the virus.
We identified two candidates that neutralized live virus at 13, and 16, Pico molar, which means that a very small amount of each of these antibodies is able to block the virus from infecting cells also.
Also these antibodies are synergistic and we expect a cocktail to further enhance performance.
To put this into context antibodies in antibody cocktails currently in the clinic have reported higher peak of more concentration for the same amount a neutralization.
While others in the industry have made progress improving the clinical effect of neutralizing antibodies against COVID-19, there is certainly room for improvements in efficacy and questions around manufacturing and administration of therapy at scale.
Well of course, we are excited about all the progress recently announced in the fight against Cobot. We also recognized that the virus is now endemic and effective therapies are still needed. We hope that the antibodies that adapted discovered could contribute to the solution.
And with that ill hand, it over to Julie.
Thanks, Chad and thanks to all of you for joining us today I want to Echo Chad Thanks to our incredible employees. It has been another busy and successful quarter during an uncertain time.
Turning to slide seven I'm going to start with our life Science research that.
Our research business, although the most severely impacted by COVID-19 last quarter has experienced some encouraging uptake during the third quarter. In addition, as we continued to execute on our pipeline for future revenue year to date bookings have more than doubled from this time last year.
That said sample of rival continue to Bury month by month and recoveries at a slower pace than our clinical business.
Additionally, we are still seeing delays or cancellations of clinical trials and other disruptions impacting predictability in the business.
We are tracking its trajectory closely in light of rising cases in recent weeks.
This quarter, we have made great progress driving adoption of our upgraded immuno seek are you. Okay. We.
We have signed 24, new core lab partnerships with well respected lab that institutions, such as MD Anderson, Fred Hutchinson Cancer Research Center, and the University of Pittsburgh Among others. These core lab will purchase our kit and offer any sequencing to their internal network of researchers in their institution.
Enabling academic core lab as centers of excellence with our gold standard immuno seek our UL kits is expected to set the foundation for long term growth going forward.
We have also made significant progress with immuno seek T map cogan.
We launched this product extension in August for vaccine developers to accurately and Reproducibly measure the T cell immune response to vaccines and track the persistence of that response overtime, we hope to be able to answer many outstanding questions about durability and safety and potential differences in efficacy across patients.
Good.
Our Tina products offer significant advantages over other technology to detect and monitor T cells at Yale using a small amounts of fly without the need for life sales that requires special sample handling.
Measuring the T cell response in a vaccine trial is also important when disease severity is a clinical endpoint another.
Another finding from the work with the University of catalog showed that the T. Cell response is directly correlated with increasing severity of disease, while antibody levels show no correlation to disease severity. This is another reason why incorporating a well validated scalable sensitive and specific T cell assay like immunoassay.
Tina Colgate should be incorporated into the development and evaluation of the vaccine.
To date, we are sequencing a subset of patient samples from trials sponsored by two top tier vaccine developers from this work our goal is to understand the difference in the T cell response between vaccinated individuals, who do and do not get infected with the virus.
This has the potential to lead to a novel Carly the protection that may accelerate the understanding of vaccine efficacy and duration of response in a broader population. In addition, we are also in late stage discussions with several companies developing next generation vaccine.
In our MRV pharma research business, we announced today, a collaboration with glaxo to assess MRV in Glaxo's portfolio of hematology products. Our second portfolio wide deal. We are very pleased to work with glaxo and look forward to generating data supporting the clinical value of monitoring NRG in the context of patient care.
Steel continues to grow the total value of the corner seek brands, who adopted combining clinical testing with sequencing revenue and potential future milestones from our pharmaceutical partners.
Switching to our clinical diagnostic business with close to speak on slide eight.
Close to Q3 sequencing volumes grew 58% versus prior year and 28% versus the prior quarter.
One of the peak is now used in all 30, NCCN cancer centers and has been used to treat more than 14000 unique patients to date.
Over 685, new health care providers or HCP is were activated to order corner see year to date and new ordering HCP is have contributed 16% of order volume so far this year.
We have observed a healthy recovery in the business since the peak impact of code Nineteens and we expect growth to continue unless could lead to a systemic drop in cancer testing.
We believe that classic future is bright.
As you know we received FDA clearance in CLL in August and launched a significant corresponding commercial efforts, including a new patient campaign earlier.
Early launch indicators are trending positively in a 12 week since clearance, albeit starting from a small base. The total number of accounts ordering call healthy for CLL patients has increased by over 60%, adding 22, new ordering account.
To date, we are also seeing around 60% of CLL MRV tests being performed in the blood and importantly, we have achieved good initial traction within the community oncology settings, where most CLL patients are treated.
We remain bullish about 2021 being an inflection year for the classic business as we continue to build traction in CLL, while also deepening penetration in our previously cleared indications of multiple myeloma and AOL.
We will continue to expand into blood testing in AOL multiple myeloma and NHL.
Blood based NRG testing has the potential to increase the number of tests run per patient overtime.
For blood based testing and AOL, we have completed the clinical validation work required by the FDA and we plan to submit this data to the agency around year end.
In the interim we are increasing marketing support for classic usage as a CLIA validated lab developed testing service, we're samples for any lymphoid cancer indication and a range of sample type, including blood is acceptable and payer coverage is already in place for blood based testing in AOL and myeloma going.
Going forward, we will continue to evaluate the optimal commercial path at FDA or CLIA for each additional indication.
Turning to slide nine first.
First as you heard we have a new brand name for our T cell based diagnostic immuno CTX now called T. The tax.
40 detect Colgate our data demonstrates that T cell based testing outperform serology to confirm past infection in a real world setting. These data combined with other data showing that T cells are detectable earlier than antibodies show up in all people infected with the virus and persisted longer than antibody.
Continue to build the case for measuring the T cell response to inform our understanding of immunity.
Based on these results and conversations with the FDA, we will bring the product to market. After Thanksgiving followed by our FDA submission prior to the end of the year.
Our go to market approach is a soft launch that will focus on targeting people, who want to know for certain if they had profit 19, including self pay consumers employers concierge medicine and public health agencies are.
Our market research shows that there are many people who could not access testing earlier. This spring and are still curious about a previous infections, particularly those who are skeptical skeptical about their antibody test results. This is even more pronounced in those that may have been exposed, but asymptomatic or had a mild infection. Additionally, our research.
Which indicates high interest among consumers in understanding immunity to COVID-19. Therefore, our go to market strategy will benefit public health because it will also include the ability to contribute to on market research to quantitatively.
Assets the duration of immunity as defined by the persistence of Sars co two specific T cells.
All of this is a stepping stone to the longer term vision for to detect where a blood sample will be able to give you multiple answers about what your immune system has seen or is currently fighting and that will likely have to include Colgate due to the wide range of long term symptoms in causes.
I want to reiterate that our work building the commercial and operational infrastructure needed to deliver to detect Colgate will be critical as we move to detect forward and all indications.
These efforts will set the base of our near term commercial focus in infectious diseases, including COVID-19, unlined disease, and a medium term expansion into autoimmune disorders.
Moving on to slide 10.
For T. detect line as you know we launched the immune sense study over the summer with the goal to enroll 990 participants.
Based on current enrollment rates and even though line visits and diagnoses are down approximately 60% due to covance. We expect to have around 800 participants of the 990 by the end of the year.
We plan to continue to enroll the remaining needed patients and expect to file with the FDA. Once the study is completed which is now expected by end of 2021.
However, given that we are building the infrastructure for to detect coded and based on our robust previous case control data. We are exploring commercial acceleration of T. detect line as a CLIA service offering in 2021.
Results from our case control data set to be published with Johns Hopkins demonstrate a doubling of sensitivity of our test compared to standard two tier serology test in acute patients.
We have also seen that our test confirms an ongoing infection in patients who were treated with standard two to three weeks of doxycycline, but still have lingering symptoms.
In terms of other t. detect indications in the pipeline today. We are also pleased to announce the confirmation of our third clinical signal in Crohns disease.
Relative to the GI disorder that is often confused with other conditions with similar since and presentation and there is a significant unmet need for a highly specific and sensitive noninvasive test.
Data will be shared in a scientific forum next year.
Other indications such as affiliates ovarian cancer and other auto immune disorders continue under development within our R&D funnel and we will update you on future progress as they advance.
Now turning to our drug discovery business on slide 11.
On the TCR discovery from Genentech remains on track for an I. NZ submission in Q1 2021 for our first shared product we.
We continue to screen and characterize TCR against clinically relevant targets in solid tumors and we are in late stage characterization of several promising CCR that could be considered by genentech for the development of a second shared products.
On the personalized approach we are scaling our R&D efforts to inform our private product product strategy with Genentech, we started screening blood from cancer patients to identify TCR specific to a patients tumor mutations and our goal is to generate proof of concept data by Q1 2021. So.
To support our near term and long term objectives for our private products. We plan to open our dedicated prototype lab in South San Francisco in Q1, 2021, which will have capacity to perform first in human clinical trials.
For our neutralizing antibody efforts as you heard from Chad, we identified two highly potent neutralizing antibodies against our coke too in terms of the path forward. We have delivered a robust data package to amgen for them to decide if they want to exercise their right of first negotiation and we believe our candidate can be part of the treatment paradigm for coal.
19.
Now pass it over to Kathy who will provide you with a financial update.
Thanks Julie.
Turning to our financial results on Slide 12 total revenue in the third quarter was 26.3 million, representing a 1% increase from $26.1 million in the same period last year, and a 25% increase quarter over quarter.
Our revenue mix for the third quarter consisted of 43% of our revenues coming from our sequencing category and 57% coming from our development category.
Sequencing revenue in the third quarter was $11.3 million, representing a 3% decrease from the same period in 2019.
But a 41% increase quarter over quarter.
This year over year decrease was primarily driven by a $1.9 million drop in revenue generated from our Biopharma partners, partially offset by a $1.4 million increase in revenue generated by our clinical customers.
[noise] clinical sequencing volume increased 58% in the third quarter 2020 to 4023 clinical test versus last year as we saw cancer centers continue to open up and patients return to regularly scheduled MRT diagnostic testing.
Testing volume increases in Q3 reflect a normalization of volume growth after a Q2 slowdown impacted by coated.
Research sequencing volume, which includes sequences reported to both our Biopharma and academic partners.
Decreased by 38% to 6541 sequences from 10618 sequences in the third quarter 2019. The decrease primarily reflects the ongoing challenges we recognize as many of our bio pharma and academic customer centers remain operating at a lower capacity or in some cases shutdown due to covance.
In terms of our expectations for the balance of the year, we expect our research business volume to grow at a modest pace due to the headwinds discussed above.
And on our courtesy diagnostic business our expectations are for continued growth versus the third quarter on the assumption of more normalized testing patterns for Marty.
Development revenue in the third quarter grew to $15 million up 5% from the same period last year.
This quarter development revenues includes a $2.5 million milestone related to an F.D.A. regulatory approval and which are data was used as a secondary endpoint by one of our MRT pharma partners.
As part of our strategy, we continue to execute on new collaborations with pharma partners. We're close to seek as used in trials with MRT as a clinical endpoint.
These collaborations represent over $300 million in future milestone payments that we can potentially participate and although we do not anticipate any additional milestones for the remainder of the year.
We expect development revenues from our Genentech collaboration to continue to grow in the mid single digit percent range quarter over quarter.
Shifting now from a revenue to our operating costs total operating expenses for the third quarter of 2020 were $63.3 million, representing a 44% increase from $44.1 million in the same quarter last year.
Working down our operating expenses cost of revenue was $6.1 million during the third quarter 2020, compared to $5.6 million for the third quarter last year, representing an approximate 8% increase.
This increase was driven by investing in higher overall production capacity, which was largely offset by allocating more of that capacity to R&D volume growth in the period.
Research and development expenses for the third quarter, 2020, or $30.3 million compared to $20.5 million in the third quarter of 2019, representing a 48% increase.
The increase was a result of higher levels of spend across initiatives as we continue to accelerate our investment in our antigen map and TCR antibody discovery efforts.
Additionally, we began ramping program specific spend around our t. detect diagnostics diagnostic initiatives during the quarter.
Sales and marketing expenses for the third quarter 2020 were $14.5 million compared to $9.1 million in the third quarter 2019, representing an increase of 59%.
The increase was primarily driven by hiring activity and marketing investments to support existing and emerging klocek indications as well as continued investment in shared corporate marketing initiatives.
These increases were partially offset by savings related to in person customer events as we continue to implant virtual programs during the quarter.
General and administrative expenses for the third quarter of 2020 were $12.1 million as compared to $8.5 million in the third quarter of 2019, representing an increase of 42% yeah.
The increase was driven primarily by increased headcount and personnel costs as well as an increase in legal accounting and tax professional fees.
Net loss for the third quarter, 2020 was $36.7 million compared to third quarter 2019, net loss of 14 million.
Adjusted EBITDA for the third quarter 40, 20 was a loss of $28.4 million compared to a loss of $12.7 million in the same period of the prior year.
These uncertainties related to covert remain guidance will remain withdrawn.
Overall, we had a solid financial quarter, which puts us back on our growth curve, our balance sheet remains robust as of quarter end with approximately 852 million in cash and securities and we had no debt.
We are well resourced to tackle our future opportunities with that I'd like to turn the call back to Chuck for his closing remarks. Thanks Chad.
That adaptive we have many exciting upcoming milestones for the next 12 to 18 months on the commercial and development fronts across all areas of the business listed on slide 13.
We are more confident than ever in our value proposition as we continued to deliver on our promises and demonstrate the capabilities of our platform.
With that I'd like to turn the call back over to the operator and open it up for questions. Thank you.
As a reminder to ask question you will need to press star one on your telephone to withdraw your question press the county, and please limit your questions to two or one plus one follow up.
Your first question is from Titan Peterson of JP Morgan Your line is open.
Hey, good afternoon, I'll start with Amgen now that youve handed over to antibodies just latest thinking on timelines for them.
For finding other candidates to pass along and then I guess, most importantly, given what we saw from Pfizer yesterday with a 90% efficacy on the vaccine does that change your view on the monoclonal antibody opportunity at all on code.
Yes, Hi, Joe Let me, let me start with the final question.
And I'll reiterate something I said in the speech is that first of all like like everyone were thrilled.
There is a vaccine that has potential to have the widespread efficacy that being said, we think coverage endemic in the population and that people are going to get sick forward for a for a long time to come Unfortunately.
Therefore, having therapeutic solutions is going to be part of the patient treatment paradigm and we do feel that they're kind of first wave of therapeutics, while showing limited efficacy has a pretty significant room for improvement and therefore kind of standing up a platform and delivering antibodies with superior perform.
As Kurt characteristics, which we believe have superior performance characteristics. We think are going to have a hopefully a place to kind of be part of the solution.
That being said so we handed over our data packages to Amgen.
And to the question of whether we have additional antibodies. We do we are continuing to kind of characterize and synthesize and put them together to see to see the synergy between.
To be between the antibodies and we.
We were going to hear back from them relatively soon obviously a lot of factors from their perspective go into making this decision as well which are beyond our control and we'll see where we land, but as you know we also have many many pharma partners out there and we will we'll be talking to them as well if amgen elects not to move forward.
Okay.
Okay, and then on the Epogen math you a couple of moving pieces here like the timelines are kind of pushed out relative to that is what you said last quarter with a year as filing last quarter. So can you maybe talk to the delayed there and then I didn't hear any mention of julianna, because that kind of dropped off on the priority list.
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Sure. This is really my take on it just to clarify in case there was confusion.
The Lyme disease is moving forward.
We had always anticipated launching line at the end of 2021, we in fact anticipate launching line a little bit earlier than that.
Because we will bring it up in a CLIA environments and will prepare the FDA filing towards the end of next year. So the commercial implications in the commercial launch of Lyme disease is in fact, a bit earlier than initially planned CEOC is still in what we call stage four of our five sales.
R&D pipeline, we have an early signal there we continue to study it further.
The signal in Crohns disease is particularly strong and something that we're really excited about but we are we continue to assess still yak and lots of other disease states as well.
I would I would say that we we learned a lot from the speed with which we characterize the T cell response to.
To cope 19, this year and that's actually helping to expedite the R&D pipeline for many other disease settings, and we expect to announce clinical signals at a faster clip over the coming quarters.
Okay, and then just one last one for quite hop off by the UK vaccine Task Force I had a T cell tender are you able to talk about that process at the Oxford.
Oxford, but you are you able to talk about how that played out at year end.
Well I am not we we did not participate.
Hi, Jeff.
I can tell you we're in conversations with with Oxford, but.
Ken can comment on the process.
Okay fair enough.
Thanks.
Your next question is from Derrick Derrick the swing from Bank of America Here line is now open.
Hey, good afternoon.
Good afternoon, Hey, Hey, could you talk a little bit.
I mean, how do you see the key to Tecogen rolling out in 21 as more people get vaccinated.
And.
I guess do you.
Do you do you see more people getting tested.
See they havent memory T cell response on this I'm just sort of curious if there is like how do you think you may see us getting laid out.
Sure. So we see that we're rolling out in phases over time were essentially starting with an indication to confirm past infection and we believe there is actually quite an appetite for among people knowing whether they had COVID-19 and also participating on market research to country.
Have you to really understanding immunity.
Through through through the T cells that that is really guided by by the T cells.
We think that over time.
The question about immunity from both a natural infection from the virus as well as vaccine is going to be continue to be important over time, particularly the duration of immunity at even in a world where some people are vaccinated in some people arent and people are still getting infected and we haven't been.
Well to fully contained the disease, we do believe that really understanding where you stand remains important and it's also important for employers and public health.
Surveillance organizations, who are responsible for understanding the status of the organizations. They think they they're responsible for in the long term. What we're really seeing is that there's there's actually so much clive from Colgate that can last quite a long time and a large percentage of people who get.
Cobot are in fact asymptomatic and never knew they had it but yet you know months later or perhaps over the next couple of years, we'll have lots and lots of people have.
Hundreds of thousands of people with ongoing symptoms and when they go to the Doctor one of the first questions that I think will they will be after one of the first things were going to have to find out is if you had a co infection. Given this range of long term symptoms. So we do see an evolving value proposition over time again, starting with.
Past infection, confirming cats infection participating in on market research understanding immunity and how understanding the duration of that immunity.
Exists.
Changing world, that's getting ever more complex with vaccines and then overtime I think it's just going to become part of life and when to detect down. The road is able from a simple blood test to tell you everything that your immune system has seen or is currently seeing it will include covance.
Great that was a good answer and then just two quick follow ups.
How do you think about your commercial launch and how do you expect to commercialize. This unexpected line technically is setting I mean that you don't have the salesforce per se for the infectious disease and how many of your and whats the opening percentage of your academic customer labs, just sort of any sense on the academic environment, where that says.
Sure. So I'll answer the Lyme disease first so similar to co video. These these are going to be very targeted launches.
We are told that its largely digital marketing for Lyme disease, we will be bringing on sales force.
And also looking to partner.
For additional outreach.
As we move into the primary care setting absolutely I think your second question was about the academic research business.
The academic research business just yeah, Yeah, just tell me your percentage of labs that are still open or partially open hi, shark invoicing quarter, Yeah sure sure. So we are seeing more lab opening there we think of the estimate we're working with on and from research we're seeing it from our own experience about 70% of labs are open, but they're not fully staff. So there is a big there is still.
On a lot of change going on but we do see more labs opening and we are.
Getting more traction in that setting.
Great. Thanks.
Your next question is from.
Just to fund of Morgan Stanley. Your line is now open.
Hi, This is yuko on the call for Jason Thanks for taking our questions.
[laughter] elaborate on the pricing strategy for Lyme going this offtake on shares service.
Would it be discounted versus the earlier is Steve talked about in the past.
Sure sure was that for a long time.
I just want to clarify the question.
I think it next two things.
So the the concierge medicine.
Sort of target is really for Covance.
Is that part of our soft launch strategy as one group that we believe.
What would be interested in offering to detect cobot to their patients.
For line.
If the pricing strategy that is separate from concierge medicine, just like top clarify that.
In the initial research.
We we had done we we were hovering around at a price range of 600 to $800 per.
Per line test we've done some further research that's showing up that it will likely be in the lower end of that range and we're going to be entering into one more round of pricing research as we get closer to our CLIA launch toward later this year and we'll we'll finalize the pricing at that time.
Got it thank you.
Follow up could you provide your current thinking on the strategy for Kronos seek how does the IDR process in Europe and Patrick Thanks.
Sure so.
Absolutely.
Our international strategy is evolving quite nicely, we started with a strategy of tech transferring the assay to select site in select markets to begin generating data, which is a very important process of expansion internationally by the end of this year, we'll have seven of those.
Ill tech transfers with our CE Mark products.
We are closely.
Monitoring all of the IDR compliance regulations on and incorporating it into that product as we continue to advance those tech transfers.
Thank you.
Your next question is from Doug Schenkel of Cowen. Your line is now open.
Hey, good afternoon. Thank you for taking my questions just starting on your commentary on clinical trial cancellations.
Thank you had that in your prepared remarks Julie.
Just just curious has this improved relative to last quarter and are there specific indications, where cancellations or more or less common.
That's an interesting question. So it is pretty much the same I think if anything.
There's there's studies here and there that are getting canceled what we're seeing more often is that timing of sample collection and shipment is unpredictable.
And it doesn't really seem to be more or less in any disease state.
Okay.
And then another follow up on your commentary from your prepared remarks, I believe both in your commentary as well as in the really well put together slides.
You commented on community hospital adoption.
Wondering if thats driven by a more commercial detailing and then kind of on the flip side your higher volume legacy accounts have they resumed ordering at three pandemic levels.
The those legacy accounts, Hey, Doug as Chad the legacy accounts some of them still are not back online some of our kind of largest historical.
Historical ordering accounts, we still have some that aren't aren't back. However, they are the ones that are back our ordering but I wouldn't say there yet at pre pandemic levels.
As far as kind of the community I do think the commercial detailing is contributing it's still small but good but we've got a nice growth curve from the community based on the work that we've done.
Including in putting restaurant to a two.
So in the community hospital setting.
Okay Super helpful and one last one on you as was noted in the press release said earlier in this call.
You guys really well capitalized.
While operating spending decreased Q3 to Q4.
You still came in a smidge light of what we were forecasting.
Now that that that could just be a function of our model, but I, but I think that the bigger higher level question is are you holding back on growth investment at this point.
Given on uncertainties in the existing environment or at this point are you now fully playing off balance when it comes to R&D investment as well as commercial buildout.
Yeah. So Doug we were we're fully playing a we're looking for ways to fully play offer as I should say in a sense that.
The key to tech is a great great great proof of concept for the broader strategy that a single blood tests can detect many diseases. The same time and we're looking to accelerate spending to be able to prove out that concept and then commercialize kind of a broader based blood test to detect many diseases at the same time.
Additionally, having stood up the an antibody discovery platform, which is another extension of the immune medicine platform.
To to discover go therapeutic opportunities. We are also going to go do we have a search and evaluation team and are assessing ways that we can continue.
Exploring opportunities in the therapeutic space.
And just to add on top of that in terms of pressing our advantage I mean, we did expand our operating expense line by about five and a half million dollars core.
Quarter over quarter from Q2 to Q3 up 44% year over year, you're going to see that could reaccelerate in the fourth quarter trending up closer to 50% year over year in terms of Opex spend next quarter.
Okay Super helpful. Thanks, Thanks, Jim.
I think Doug.
Your next question is from Salveen Richter of Goldman Sachs. Your line is now open.
Good afternoon, I'm getting the Glaxo announcement can you just comment on your BD strategy and look forward with regard to quantities and potentially other programs as well.
Sure sure.
Sure so and so the the Glaxo announcement is is much like many of the previous MRG deals that we've signed with various pharma partners.
And it remains an important part of our strategy for colonial seek it.
It's.
A big part of demonstrating clinical utility for for the product.
We even so glaxo is another one of those deals although it is the second that we sign that hand portfolio. So some of the previous deals are specific Q1.
Asset one compound one drug for a pharma company in.
In this particular case, it's multiple.
Drugs in development across disease States and.
Moving forward right now most of our the rest of our pharma work has been on in units each side, but moving forward, we do see opportunities to move into diagnostic partnerships with pharma four exceeded tax in the future much like we done for NRG today.
And then with regards to can you detect for cause of 19, what Steve earlier that you would expect FDA clearance or anyway, and then secondly on the.
Antibody here could you just comment on that the cocktail approach in the <unk> and the work maybe you've done there and you've mentioned superior performance characteristics. So how you think this is stacking up versus the.
Antibody data that we've seen to date.
Sure Hi, Salveen I'll take the first question, we intend to file the way by the end of the year, depending on FDA is kind of turnaround time, we could expect to add that it's hard to predict when we could expect to have that but I can say the engagement level has been extremely high and weve been as as we've got.
An information continue to pass it along so hope hopefully sooner that sooner rather than later, but thats our FDA dependent.
In relation to the synergistic capabilities of the antibodies I'll turn it over to Harlan to answer that question.
Yes so.
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Each of our antibodies separately in live virus neutralization has.
As we said were they were it's 16 Pico Moeller IC 50 in 13 vehicle more IC 50 to just put that in context, each individually is significantly.
Neutralizes live virus, a significant lower concentration than than anybody else's con cocktail on on clinical trials right now that thats at least that we're aware of and.
But we know.
Through what's called the pseudo virus neutralization assay that when we put the two our two lead.
Candidates together that we're getting.
Another significant bump in fact up somewhere between.
A third of the of approximately a third of the concentration of each individuals when they're together we'll have news.
Neutralize the live virus, so we expect sorry, the pseudo virus so when we.
Get the live virus version, we expect the cocktail to have a significant boost in performance over the individuals.
Thank you envision.
Very helpful. Thanks.
Your next question is from Brian Weinstein of William Blair. Your line is open.
Hey, guys. Good afternoon, thanks for taking the time.
Okay.
So starting out on the on the Tms coated product here you guys have obviously you said you expected some revenue in 2000 and Youve now said that you have some vaccine manufacturers onboard kit can you just give us some idea on what we're talking about as far as what that revenue could be this year and then what the model still is it still sort of that flat fee pressure.
The tech access fee that you guys were talking about before is there any change to kind of how all that played out.
Actually signing these deals.
Sure. Thanks, Brian So for the for the first couple of deals that we signed.
Some of that revenue, albeit small will come in this year its a subset of patients from these ongoing trials.
It is still we're still tracking with the same model with a fee for service per sample price plus the tech access fee for the antigen mappings, although for some of the larger.
Negotiations that were in the middle of they'll be a bit more bespoke given that theres tens of thousands of potential patients.
To be to be sequenced, but that is still the general approach absolutely.
The EMEA you between the subset of patients in these trials versus having is being used on all patients in the trial. What's your what's your thought there and how does that expand over time.
So I think what's really important there is there is a very critical set of samples that are necessary to understand that T. Cell response and that is the set of patients who've been vaccinated, who do and then do not get the virus and to compare that different.
Between those those those populations of of people.
In addition to obviously those who didn't get vaccinated at all and so we have really nice subset very well characterized well well.
Draw studies underway, where we're going to get to.
I understand the difference between those populations and that is what's going to give us a really good signal to take into the larger studies and into new studies and next generation vaccine studies, where we have the potential currently of protection that is very quantitative defined by the T cells that not just ours coaches.
Got it. Thank you and then on to the rest of it.
97 versus the 77% for surrounding what was just urology tough that was used as the comparator there.
Our own you want to.
So were we.
We'll have to.
Get back to you on that because it's part of a bigger publication with our with our collaborators, but its anyway approved.
Diagnostic surrogacy test and we'll also.
Supplement that with additional serology test from other manufacturers. So that's why we're not really thinking it's going to be more than just one.
Okay, Great and a restaurant for me on the Crohns product, maybe I didn't hear you say for what you said you have a strong signal here.
Can you just give us.
Some idea what that means relative to kind of.
What you've seen previously in terms of.
Signal at this point for other applications and then did you say, what the next steps where and when we would actually see data on that.
Yes.
Thanks, Brian so.
We the reason, we're particularly excited about about.
Kronos is that with the with a relatively small stuff.
The study subset about 350 people were seeing a signal in sort of the same caliber as we were in the coated case with with that number of people to develop a signal.
Really really high specificity. We're we're highly highly convinced the T cells that weve identified T cell receptors are specific to just to Kronos and and therefore.
There is still a us a subset of patients that were we to expand to pickup all crohns patients, but but were.
You too I would say that we're feeling as confident as we were at the same state as we were with coated where we're now almost.
Well in the upper Ninetys in sensitivity.
And well, but.
Since we only have 350.
Patients so far and there is a bunch of.
A bunch of broader questions, we'd ask me to collect much larger cohorts and so we're in the process of doing that we expect we expect some of the bigger cohorts to come in in the first quarter and then will will be published.
Publishing the results as as.
After we analyze and write up the larger data sets. So sometime and then publication always take a little bit of time. Unlike the cobot World, where you everything we've done immediately and normal publications.
You have to actually go through peer review before you published so so it will be a little bit of a delay on that relative but it should be next year for sure I totally understand okay guys. Thanks, so much for taking the question.
Thanks.
Your next question is from David Westenberg of Guggenheim Securities. Your line is healthy.
Hi, and thanks for taking the question so.
The crohns disease kind of Neenah, we are going to be looking at a Gi panel and kind of the near future and on the crohns disease that seem to come a lot faster than my expectations at least on when you're finding these diseases.
Is there a serendipitous the fact or is it really honed in on the beginning and on one hand, it's great. If you can just point in shoes, but I also think that maybe if there is some serendipity you can come up with new stuff pretty quickly.
Yes, let me answer the first question, David and then I will I'll pass the Heartland.
As the questions regarding.
Signal generation.
But in terms of let me kind of Reoriented you too that the strategy, which is first to go kind of disease by disease and single disease diagnosis and the second part of the strategy is to go get a differential diagnosis for a patient that comes in with the same set of symptoms and for us to be able to definitively tell that pace.
Ian and Dr. through a rule in test what they have and then the third part of the strategy is to have which is really what were kind of focusing on in terms of a lot longer term vision of a single blood tests that can diagnose many diseases at the same time, so yes as as we kind of mentioned that was feeling like Kronos is absolutely Crows weve three.
We believe would be part of it.
At least on medium term as part of a a Gi panel, where a patient would come in with a gastrointestinal symptoms and we'd be able to tell them, whether they have kronos or ulcerative colitis or CEOC et cetera. So we that's actually where we are tracking we understand this has been tried in the past, but with the sensitivity and specificity.
Sufficiency of T cells, we believe that we can we can we can distinguish no harlan I'm going to pass view to discuss go signal generation.
Yes. So so we have a team that is so.
So we we separated the world into infectious disease cancer and autoimmune.
And then Weve added some some other diseases that we didnt I don't think inherently.
Thought were immune mediated but have now come to look like immune mediated and then we went through and you and I would say we've created a ranking system for all the auto immune diseases.
And for the ones in terms of.
Need what we thought we know about the disease in terms the immune response, how we would interact with pharma all sorts of parameters and then.
And then of course, the size of the opportunity and Weve then.
We have a team that goes out and searches for well characterized.
Data sample sets that that from different repositories.
Where we can start doing signal generation with with already collected samples. This is I think the big advantage of moving failure immunology to a molecular assays. We we can use samples that are stored in someone's freezer.
And Kronos well.
Was definitely high up on the lift in the auto immune category. There is a bunch of others and for all of them Weve are in the process of collecting samples where we already have collected samples are in the process of analyzing so so we're.
Trying to just pick them off in a in a pre specified order, though according to our ranking system.
Great. Thank you and then I think this one's probably for Julie on an update on your thinking on T cell therapies outside of oncology.
You are on.
The partnerships in in perhaps vaccines any change of thinking there, maybe that's John but I think its Julie.
Okay.
Okay.
Neither one of us going [laughter] I guess I'll allergy dollar drove that and yes, we are.
Evaluating extensions of the therapeutic drug discovery platform to other areas, yes. Good T cell therapy for example, in autoimmune and vaccine the vaccine opportunities.
We're looking at that both from.
From an M&A perspective in terms of your tech both both talent and technology and we're looking at from an internal perspective as an extension of our capabilities. So we've got search and evaluation opera team out there looking and when when the time is right we will.
Well reveal more information.
All right. Thank you very much okay. Thanks.
Your next question is from Mark Massaro of CP Agee. Your line is open.
Hey, guys. Thanks for taking the questions I guess Chad first question for you can you just share a little bit of the logic behind rebranding immuno seek dx to T. detects and then as a follow up.
In context of alumina buying Grail, an exact spying thrive does that at all change how you guys think internally about potentially packaging some of the single test indications in T. detect for Cobiz line in CRE loans and other indications in the future and perhaps bundling them together as one multi cancer panel.
So let me answer the second question first and so I think it's a really interesting question and.
I'm not sure changes are taking when it's not multi cancer panel I would say multi disease panel, but.
But absolutely the goal is to have a multi disease panel and we we are looking to wait at ways that we can accelerate that vision of one of one blood as being able to answer.
As your questions and diagnose multiple diseases that all all at the same time so.
Yes and.
I would say I wouldn't say necessarily that does that change our thinking but that is our thinking.
And then I'm, sorry, Mark I guys well. The first question Julie you can as respect the Ditech branding, yes, I'll answer that the Ditech branding question. So when we initially started talking about the clinical pipeline immuno CTX. We thought it was really important to clearly communicate that the underlying chemistry for that future.
Pipeline of diagnostic for multiple diseases that Chad. Just described then it was really clear that that was the same bread and butter immuno seek out data TCR beta sequencing assay, which is our absolute gold standard.
Unlike as Harlan said, turning immunology into a molecular assay from blood Super scalable. We wanted to make sure that was really clear and that we were fitting out the all the T cell receptors in a given blood sample and then simply mapping those receptors to the antigens of disease that they see.
And so that was the initial strategy, but of course as a consumer test.
And as just a a test with a brand that you can kind of get behind in a diagnostic setting we thought that it was more important now we look forward to focused on the important role of the T cell in particular and how the T cell detect all diseases in the same way in the body and so we hope that everybody.
I understand that the underlying chemistry, the same at the need to seek out today, but that going forward that that you know.
Sort of more attractive brand name of T. detect really give credence to what that tech has the capability to do.
That's really helpful. Thank you and then.
Well the question is.
Fiscal year for clinical sequencing volume was quite strong beat my estimate.
Can you give a sense for the number of repeat.
For that work.
Third quarter, and then can you comment to what extent.
The availability of blood testing it is contributing to the top line.
You broke up there on your first question in terms of blood testing, it's still a pretty small component of our overall testing volume I'd say, it's significantly higher for indications like CLL, probably in the 60% range.
And then almost.
Almost rounding to zero with multiple myeloma, but representing new a decent component of our Ll bloodline, but overall, it's a it's a pretty low overall percentage of our of our block volume I'd say, it's somewhere around 20% or so and Julie He asked about what the Hell repeat how repeat testing is contributing to our.
In closing to seek as opposed to new testing I presume.
Oh, yes, sorry, I couldn't hear your connecting was garbled source. So we are we are still we haven't reported out yet we wanted to give ourselves a little more time to cover the full length of the full treatment cycle to sort of duration of treatment cycle for any given patient with any given lymphoid malignancies before we start reporting out on regular number of tests.
For patients, but were definitely seeing you know somewhere in the two to three range for tests for patients and we will continue to report out of that game the data matures.
And in terms of.
I think I commented in my in my script, we have about 685, new ordering HCP is this year and those new ordering HCP are taking a shorter amount of time to.
Begin taking up a greater percentage of the order volumes mitigated period, so whereas in the last quarter.
I think we mentioned it was about 8% of order volumes were from new ordering HCP is now were up to 16%. So we're seeing a shorter time to ordering went after sign up.
New accounts or new HCP I'm, not 100% sure. If that's what you were getting at but.
I tried to answer the question in sort of two different ways.
Yes. Thank you and then if I can one final one is there any strategy to kitting with Illumina and when do you think kronos could be available ultra kitted solution.
Sure. So we contractually have the ability to do that with Illumina as I think you know we continue to evaluate.
Whether or not that.
Whether or not to do so and what the timing would be of that process.
And that is given what you just said, which is really nice uptake of our service offering as a standout test and so we continue to evaluate we are.
Continually making upgrades to the assay, which with port right into a kit anyway. So the timing would would wouldn't be affected it's really more of a commercial strategy at this stage.
Okay. Thank you very much.
At this time there is no further questions and I would like to turn it back to presenters for any further comments.
No further comments at this time, thank you very much for joining today look forward to the fourth quarter.
Ladies and gentlemen, this concludes today's conference call. Thank you for participating you may now disconnect.
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