Q4 2020 Adaptive Biotechnologies Corp Earnings Call
[music].
Ladies and gentlemen, thank you for standing by and welcome to day adaptive Biotechnologies fourth quarter financial results Conference call. At this time all participants are in listen only mode. After the speaker presentation, there will be a question and answer session.
Ask a question. During this time you will need to press star one on your telephone keypad also if you require any further assistance. Please press star zero I would now like to hand, the conference over to your speaker today, Mr. Kirby Knuckles Abelia. Thank you. Please go ahead.
Thank you, Jeff and good afternoon, everyone I would like to welcome you to adaptive Biotechnologies fourth quarter and full year, 'twenty and 'twenty earnings Conference call.
And today, we issued a press release reporting adaptive financial results for the fourth quarter and full year of 2000 and twice the press release, it's available on adaptive biotech dotcom.
We're conducting a live webcast of this call and we'll be referencing per flight presentation that has been posted to the investors section on our corporate website.
During the call management will make projections and other forward looking statements within the meaning of federal security laws regarding future events and the future financial performance of the company. These statements reflect management's current and perspective of the business as of today.
Actual results may differ materially from todays forward looking statements depending on a number of factors, which are set forth in our public filings with the SEC and leased and in this presentation.
Additionally, non-GAAP financial measures will be discussed during the call and a reconciliation from non-GAAP to GAAP metrics can be found in our earnings day.
Joining the call today are cat loving, our CEO and co founder Julie Rubinstein, our president and Chuck on our Chief Financial Officer. In addition, Harlan Robins adaptive Chief Scientific officer, and cofounder will be available for Q&A with that I'll turn the call over to Ted Wahl and chat.
Thanks Karina.
Good afternoon, everybody and thank you for joining us on our fourth quarter and full year, 'twenty and 'twenty earnings call.
What are your.
Once again I want to thank all of our adaptive employees for their unwavering dedication flexibility and execution and a <unk>.
Very challenging 2020.
Yesterday marked a pivotal moment for diagnostic testing.
Adaptive launched Cheetah take COVID-19 proving that it is possible to read how T cells detect disease and the blood.
This test is now validated for Covid, but it's just the beginning.
T cells and see all diseases and the exact same way and to detect will translate this natural capability of T cells into a broadly applicable test that will change the diagnostic paradigm.
We recognize that it may take time for <unk> to become mainstream but the stage is set the FDA has reviewed and provided encouraging feedback on our EUA submission.
Ta is working through how we can implement a new T cell testing category.
And clearance under the EUA pathway when received will be the next milestone for T detect and one of many to come as we realize that value over time.
In addition to the larger piece of debt Covid all the efforts we've put in place to combat the pandemic are being leveraged to accelerate a variety of development and commercial initiatives that will drive the future execution of our platform to power the age of immune medicine.
Let me walk you through the significant progress we made throughout the year.
As shown on slide three.
Despite the impact from COVID-19, we grew our business and ended the year with over $98 million and revenue up 16% versus 2019 and revenue and the fourth quarter also grew 25% versus prior year to $30 2 million.
As you can see the amount of progress was significant and demonstrates our ability to execute across our business areas, which are all driven by the same platform.
Starting with clinical diagnostics and addition to the launch of Peter's debt Covid. We also advanced key detect for other future indications.
Immune <unk> studied strategic take a lime was launched and is expected to be completed in 2021, we identified another signal and crohn's disease, which may represent a significant opportunity to reduce the expensive and time consuming diagnostic Odyssey that crohn's patients currently undergo.
We are also advancing at an increasingly rapid pace and many other disease states.
<unk> also achieved important milestones during the year, we obtained our first label expansion with the FDA for CLO, and both blood and and bone marrow and I'm pleased to announce that we recently filed with the FDA for the second label expansion of ALLL into the book.
<unk>.
We are hopeful that more patients will be able to know their <unk> status from a simple blood draw as data continues to support this approach.
And our life Science research business, although the most impacted by Covid Redeveloped and three important ways.
As a result of findings from the immune code database, we launched immuno C. T map COVID-19 to elucidate the T cell response to vaccines and vaccines in development for COVID-19.
Second we further extended.
T map to cancer with our recent partnership with Astrazeneca to map T cell receptors to cancer antigens and astrazeneca portfolio of cancer medicines.
And third we entered into several contracts to expand distribution of our research use only kit with partners, including prominent Crows and core labs and.
In fact yesterday, we announced an expanded partnership with Labcorp to enable broader access to our growing portfolio of immune driven clinical diagnostic and research products.
And drug discovery, we made significant progress on the TCR discovery front with Genentech with both the shared and private products. The path is set for important milestones in 2021, including IND filing by Genentech on the first shared product generation of a data package by adaptive for a possible second shared <unk>.
Correct.
And proof of concept on the private product.
In addition, we leveraged our immune medicine platform to build world class antibody discovery capabilities that can benefit society for years to come.
Our powerful technology allows us to search and deeper and find more potent neutralizing antibodies against a wider variation of targets at very low concentrations.
We have already found potent neutralizing antibodies against parts of the Sars Covid two virus it could potentially treat patients impacted by a wide variety of variance and we are in advanced discussions with several potential partners.
As you can see 'twenty and 'twenty was a busy year for adaptive and laid a strong foundation for our 2021 plan, which we will discuss in detail throughout the call.
But before I pass it on to Julie to provide details of our in line products and our pipeline I want to take a minute on slide four to re Orient to the fact that everything we do at adaptive derived from using the genetics of the adaptive immune system as the source code of our platform.
Our platform and transforms this code into data to enable the development of diagnostics and therapeutics for almost any disease.
The massive and growing amount of immune receptor data that we generate with over 58 billion immune receptors and is it really the epicenter of all of our business areas and the scalability of our platform and our data enables us to become a clinical product development engine.
I am more confident than ever and our open ended growth story as we have made substantial progress and had development activity underway in various stages and life Science research clinical diagnostics, and and drug discovery and with that I'll hand, it over to Julie Julie.
Thanks, Chad and thanks to all of you for joining us today.
Wanted to Echo chad's, thanks to our incredible employees. It has definitely been a challenging but successful year, starting with clinical diagnostics and the exciting launches to detect COVID-19 on slide five.
Yesterday, we began marketing to detect COVID-19 with new features that we develop since our early access launch back in December.
This is a big milestone for adaptive and the first steppingstone for <unk> success.
The test is available at G fast attack dotcom, where a virtual provider depending on eligibility will now authorized a prescription. Additionally patients now have the option to get their blood drawn at one of over 2000, Labcorp patient service centers or value mobile phlebotomy free at their location of convenience, including their home.
And.
We have filed to the SEC COVID-19 with the FCA via the EUA pathway and are actively working with the FDA on final details including labeling.
We anticipate obtaining EUA clearance as the first T cell based tests to be validated by the FDA.
As mentioned and the path, we are offering to detect COVID-19 for sales to consumers and concierge medicine practices, who are receptive during the early access launch.
However, we know that the Covid testing world is highly dynamic and we are paying close attention to the evolving to the evolving environment in light of vaccine rollout.
And importantly can you detect COVID-19 has enabled us to educate the FDA for future submission activate work to prepare labcorp as a second site or through the SEC testing under EUA guidance and build awareness.
The food and consumer.
Additionally, all consumers to detect COVID-19 will have the option to participate and research to explore the potential role that T cells play in annuities and natural infection or vaccination.
To date, we have had a 60% Austin rates from current consumers and we believe this is going to be very helpful. As we all continue to navigate the pandemic.
And we look to share learnings from our on market real world data and appropriate ways with the scientific community and consumers over time.
We are very excited as the launch of <unk> to detect COVID-19 marks the beginning of the commercial journey for heat attack and also enables acceleration of future indications under development.
As you can see on slide six we are focusing on accelerating disease mapping through the R&D pipeline and.
And the near term we believe.
And that we will be able to offer to the tax to improve upon the standard diagnostic paradigm and Dizzy.
These specific and specific disease states, including line Crohn's celiac and others.
Let me see detect COVID-19, we expect the launch and he's attacked line and our CLIA lab and Q4 of this year.
We will continue to enroll the remainder of the immune sense line studies. During this year's line seasoning and these data will support our commercial and regulatory effort.
We are also actively progressing and crohn's disease with several thousand Crohn's tasting full samples expected to read out throughout the year.
And we intend to share these data iteratively as we have done with Covid.
In addition, we have completed and extensive commercial analysis of Crohn's disease, which confirms that the escalating testing from initial blood and stool tests by the primary care provider to invasive colonoscopy and slide the Gi specialists and Clos.
Anywhere from 8000 to $22000 per patient.
With and incidents of approximately 18000 patients with crohn's disease per year, and the United States multiplied by the number of people with Gi symptoms that are somewhere along the side Gnostic testing Odyssey.
<unk> of our highly specific and sensitive blood test for chronic diseases apparent.
We also expect a readout of our 1000 patients Helios studies later this year.
And we are excited about the progress you're making and these two.
And two Gi diseases, and are evaluating future development and commercialization possibility.
GI conditions Navy, a good cluster and diseases.
We can develop a panel to offer a differentiated diagnosis of patients with shared symptom.
Our panel approach has always been the plan for the second phase of the <unk> product development lifecycle.
To expedite this we are exploring several ways to enable testing and validation of disease classifiers in parallel.
We hope to be able to share more details on this novel clinical validation approach and the near future.
Longer term, we intend to reach our ultimate goal of enabling population and then on.
Whereby the Saks and become one with many results all driven by the same blood sample that informs the general health of a person or a population.
Turning to slide seven with policies.
Quantity Q4 sequencing volume grew 40% versus prior year and 12% versus the prior quarter, although the business did experience some impact from COVID-19 and towards the very end of the year.
Good day more than 2000 clinicians have been activated to order quantities of which nearly 850 were activated in 2020.
Hcp's ordering for the first time in 'twenty and 'twenty can trigger contributed approximately 20% of order volume in the year and in Q4, 'twenty and 'twenty alone orders were submitted by 738 unique HCP.
More than 15000 unique patients have had one or more fussy tests per day in.
In 2020, approximately 6900 patients received quantify testing of which around 50% of tested patients each quarter with a new classification.
In Q4 of 2020 orders were submitted for approximately 3100 patients exceeding numbers achieved and all previous quarters.
We expect growth to continue and Kona seek volume to double in 'twenty, and 'twenty, one with rates increasing quarter over quarter as the year progresses.
To reach this goal and we're focused on deepening our penetration and so a significant ramp up of commercial effort, including direct to patient to patient advertising and peer to peer educational programming for finishing.
We also expect to expand our commercial reach and have increased the size of our specialized sales and customer support organization, adding resources focused on community oncology and integrated delivery networks.
Generally we have entered into a collaboration agreement with Labcorp under which Labcorp integrated oncology sales force will promote on OCC hematologists and the U S.
Will enable new customers to leverage lab course already established send out testing workflows for corner peak ordering and report delivery.
Through these investments, we expect to increase adoption across institutions, particularly in community oncology setting where the majority of PLL patients are treated and then and myeloma patients are also seen.
And as always expanding into blood testing is also a key strategy for quantity and is it as it is less invasive and more seamless for patients.
Since receiving our FDA label expansion for C. L out in August of 'twenty, and 'twenty, we've seen more than 70% of CLO MRV tests being performed in the blood.
We are pleased to announce that we have submitted a five 10-K application with the FDA for a L L and blood and with ongoing data generation and validation efforts, we expect to continue to expand into blood testing for other indications such as multiple myeloma and on H L.
2020 results provided the quantity business with a solid foundation on which to continue to build during 2021, which will be an important year and classics lifecycle that said, we will continue to monitor any potential impact of COVID-19 on testing volume.
Turning to life Science research on slide three.
During the fourth quarter, we just continue to be on mostly passive business area by Covid.
On the academic side as anticipated and experienced delays and sample arrivals as academic centers, we're still not fully operational for non COVID-19 related project.
Although it is still at a slow start in Q1, we are beginning to see more academic labs reopening and higher usage.
On the pharma side, we did have some delays and cancellations of clinical trials, which impacted our ability to recognize revenue.
And the team increased the total value of our new pharma bookings by over 20% in 'twenty and 'twenty versus 2019, which is encouraging for future growth of our pharma business.
We are focused on driving revenue for our research business in 'twenty and 'twenty, one and a few ways.
From a product perspective, we are expanding adoption of the updated and you're going to seek our you will see for core labs, and two hours and the new and municipal cleanup Covid product extension for vaccine developers.
Regarding our you will kick in 'twenty and 'twenty, we signed 35, new core lab partnerships with well respected labs and the U S. And we also signed contracts with two global CRM, Q squared and labcorp to enable them to become immuno sequencing and centers of excellence for their biopharmaceutical customers.
Regarding cannot Covid. We are currently working with several top tier vaccine developers, including Astrazeneca and Oxford University in conjunction with Phil and on the Gates Foundation to assess the T cell response to various COVID-19 vaccines and their studies.
Well its challenging to integrate into the incredibly needed and successful seed vaccine files and the back half of 'twenty and 'twenty, but with the new variants on the right understanding of T cell response across the entire genome of the virus is becoming increasingly necessary.
Interestingly, we are also seeing several orders foreseen up COVID-19 from academic labs, who are studying the impact on vaccines on patients receiving other immune mediating therapies, such as cancer immunotherapy.
But to see more usage of cleanup COVID-19 on these kinds of studies and perhaps even in conjunction with research being performed by the NIH and the NCI post EUA cleared.
As Chad mentioned and you have seen that doesn't just apply to COVID-19 it applies to any disease.
Such and January we announced a multiyear a pan portfolio partnership with AZ to NAV T cell receptors to cancer antigen and AZ portfolio of cancer Medicine.
This is our second application of and you have to clean up and as our first data play and oncology stemming from our antigen that Microsoft Microsoft collaborations.
From an organizational perspective, we are focusing our investments and research sales and two key ways first we are opening our European business entities to support International expansion. We believe there is a lot of interest and immuno sequencing of core labs outside of the United States and we want to improve our ability to capture that business and secondly, we are span.
And our organization to include and inside sales teams and more marketing colleagues to grow our kit business and data monetization opportunities.
Moving on to drug discovery on slide nine.
Progress continues full speed ahead, and both shared and private T cell mediated product and unfolds.
For the first shared product and he had anticipated the IND submission by Genentech in the first quarter of this year.
Based on productive interactions with the FDA. So non tech decided to file in the second quarter will include additional information requested by the FDA that was initially planned proposed filings.
For the second share of product we have characterized several promising CCR is currently being considered by Genentech and the development of a second share product.
We expect to conclude our second PCR data package this year and if this TCR candidate was selected by Genentech. This could result in the potential development of our second share and sort of using our troops. We'll see our approach. In addition, we continued to build a pipeline of two PCR candidates.
Additional targets that we prioritize the day.
And in fact.
For the private product, we have started screening and identifying patient specific TCR against specific tumor mutations using blood from each cancer patient we are.
And on track to deliver a proof of concept concept from an initial 16 cancer patients switching on tech by Q1, 'twenty and 'twenty one day.
Data and results from additional cancer patient samples will be used to establish a prototypes on the second half of this year.
The scale of private product development. We are building a dedicated lab that will be opened by the end of this quarter. This additional space will accommodate our and and personalized product workflow.
And importantly, this space has the capacity to accommodate early phase clinical studies.
We are also and the process of growing on product and process development team and hiring dedicated ftes for this purpose as you can see lots of progress and exciting milestones ahead, and our partnership with Samsung.
Looking now to on neutralizing antibodies on slide 10.
Moving our true a D antibody discovery approach, we identified several lead antibody candidates that strongly by and to different parts of the virus.
Our growing portfolio of novel antibodies include candidates that not only bind to the RBC region, but also binds and F. One timer and ask to just put on.
And important advantages and the Pos sales strategy that targets different mechanisms of action, so inhibits the virus and potentially virus value.
We are advancing discussions with potential partners. So similar and we believe that our antibody candidates may provide a differentiated solution and a week of the value.
Building on our success and identifying differentiated antibodies historical too as a first clinically relevant targets. We are exploring additional future applications of our true discovery approach as.
As part of our drug discovery growth strategy, we aim to identify additional naturally occurring fully human antibodies against several targets and infectious diseases and autoimmune disorders, particularly where we can sell a strong unmet need.
I'll now pass it over to Chad, who will provide you with a financial assets.
Thanks Julie.
First review, our fourth quarter financial results briefly describe our full year financial performance and then we'll provide an outlook on 2021.
Turning to slide 11, total revenue and the fourth quarter was $30 2 million, representing a 25% increase from $24 2 million on the same period last year.
Our revenue mix for the fourth quarter consisted of 42% of our revenues coming from our sequencing category and 58% coming from our development category.
Sequencing revenue and the fourth quarter was $12 7 million and decreased 8% from the same period and 2019.
This decrease was primarily driven by our research business and partially offset by growth and our clinical business.
Research sequencing volume decreased by 46% to 5970 sequences from 10898 sequences and the fourth quarter 2019.
Trial enrollment delays and project deferrals, resulting from the COVID-19 pandemic were both contributing factors to the decrease on a year over year basis.
However, we did see growth and our pharma business related to MRV Registrational studies.
On a sequential basis from the third quarter, we did see modest growth and our pharma business and respect to volumes, but our academic business continued to feel macro pressure from the current environment.
With respect to our clinical diagnostic products critical sequencing volume, which now includes our T. Detect COVID-19 volume increased to 41% from the fourth quarter 2020 to 4539 clinical tests from 3218 clinical tests from the fourth quarter of 2019.
We've seen a recovery of our clinical sequencing volumes with our fourth quarter 2020 volumes up 13% from the previous quarter.
Development revenue grew to $17 5 billion and the fourth quarter up 69% from the same period last year.
The increase was largely due to growth and revenue generated from our genentech collaboration based on ongoing aggressive investments into our drug discovery efforts.
Shifting now from our revenue to our operating costs total operating expenses for the fourth quarter 2020 was $74 4 million, representing a 54% increase from $48 4 million and the same quarter last year.
Continuing to work down our operating expenses cost of revenue was $6 2 million during the fourth quarter 2020, compared to 6 million for the fourth quarter last year, representing a 3% increase.
So the increase was relatively flat there were some material puts and takes year over year.
We invested in additional lab personnel lab management, and Capex and ensure that we came into 2021 with the appropriate capacity to operationalize our growth projections.
This increase and overhead drove up our overall cost of running our production lab, but was offset by a lower mix of revenue sample volume.
Research and development expenses for the fourth quarter of 2020, or $35 8 million compared to $21 2 million and the fourth quarter of 2019, representing a 69% increase.
The increase was to support our drug discovery activities related to our Genentech collaboration and antibody discovery for Covid as well as validation efforts for to detect COVID-19 and to detect pipeline development, along with investments tied to expanding our flow to seek indications.
Sales and marketing expenses for the fourth quarter of 2020 were $18 5 million compared to $12 6 million and the fourth quarter 2019, representing an increase of 47% the.
And the two primary drivers of the increase were personnel and marketing costs year over year. We continued our hiring process to support the quality brand and also made our first fully dedicated team hires to support our key detect COVID-19 launch.
We also undertook a large corporate rebranding effort and continue to deploy marketing investments to soft launch our team to take COVID-19 product and to support our <unk> brand.
Overall, these increases were partially offset by savings and travel and customer event related expenses.
General and administrative expenses for the fourth quarter of 2020, with $13 4 million compared to $8 2 million and the fourth quarter 2019, representing an increase of 63%.
The increase was primarily driven by growth and finance legal and HR head count and personnel costs.
Net loss for the fourth quarter 2020 was $44 6 million compared to fourth quarter 2019, net loss of $20 6 million.
Adjusted EBITDA for the fourth quarter of 2020 was a loss of $34 6 million compared to a loss of $18 7 million and the same period of the prior year.
Quickly turning now to our annual financial results for 2022.
Total revenue was $98 4 million, representing a 16% increase from $85 1.002 million 19.
Our revenue mix for the current year consisted of 42% of our revenues coming from our sequencing category and 58% coming from our development category.
Sequencing revenue and 2020 was $41 4 million and decreased 5% from 2019.
Sequencing volumes decreased by 36% to 22000, and 663 sequences from 35000, and 491 sequences and 2019.
As previously discussed trial enrollment delays and project deferrals, resulting from the COVID-19 pandemic have been contributing factors to this decrease.
Clinical sequencing volume, however, increased 50% and the current year to 15216 and clinical tests from 10168 clinical tests in 2019.
Development revenue grew to $56 9.002 million 20, and up 37% from last year.
The increase was largely due to growth and revenue generated from our genentech collaboration on.
Operating expenses for the year totaled $251 2 million, representing a 54% increase from $163 5.002 million 19.
The largest driver of Opex growth on a dollars basis was research and development, which grew $45 4 million up 64% from prior year, followed by sales and marketing, which grew $22 9 million and up 60% from prior year.
Earlier chat and Julie articulated the business rationale and opportunities available to adaptive which drove these investments.
Full year 2020, net loss was $146 2 million compared to $68 6 million and the prior year and adjusted EBITDA for 2020 was a loss of $119 6 million compared to a loss of $57 5.002 million 19.
We ended the year with approximately $807 million and cash cash equivalents in marketable securities and we had no debt.
With respect to our outlook for 2021 and light of and ongoing Covid recovery, we are planning and initial revenue range of $145 million to $155 million.
This outlook represents 52% growth at the midpoint of the range and a strong acceleration of revenues from prior year.
We are contemplating our sequencing revenues to represent between 50% to 55% of our total revenues for the year, which includes our expectations for effectively doubling our closing volumes.
And our development revenues category, we currently contemplate increasing revenue from the amortization from the $300 million upfront from generic tech from Genentech and based on increasing investments into the partnership.
Additionally, we anticipate a 10 million dollar genentech R&D acceptance milestone payment and the second half of the year, but it should be noted that this outlook outlook reflects only a partial recognition of the payment and 2021 of between $4 million to $5 million based.
Based on our proportional method of revenue recognition from our accounting literature.
In addition, we are also contemplating mid single digit millions and potential regulatory milestones and the back half of the year.
With respect to some of the trends for the year, we anticipate our research business to be back half weighted and we expect Q1 2021 to be our lowest watermark for the year.
This is due to normal seasonality along with the overhang of the fourth quarter Covid impact.
We anticipate that our strong backlog of signed pharma contracts coming into 2021, coupled with ongoing execution of new pharma bookings will contribute significantly to the growth. So long as we continue to get access to samples.
Regarding our operating expenses and capital investments, we expect closer to $8 million to $12 million and sequential opex growth quarter over quarter, resulting and a slight reacceleration of opex growth as a percentage of revenue versus the prior year.
These expenses will primarily support commercialization activities and investments and our immune medicine platform.
In addition, we are deploying more capital off our balance sheet to support large scale projects, which includes the opening of our new office and molecular lab facility and Seattle as well as the opening of our personalized cell therapy prototype facility to support our Genentech partnership.
We are excited for the next phase of growth and adaptive and with that I'd like to turn the call back to Chad for his closing remarks. Thanks.
Thanks, Chad C.
As you heard during the call we have many exciting upcoming milestones in 2021 on the commercial and development fronts across all business areas, which are listed on slide 12.
We're more confident than ever and our value proposition as we continue to deliver on our promises and demonstrate the capabilities of our platform.
With that I'd like to turn it back over to the operator and open it up for questions.
Yeah.
At this time I would like to remind everyone in order to ask your questions. You May Press Star then the number one on your telephone keypad again Thats star one on your telephone keypad, we'll pause for just a moment to compile the Q&A roster.
Your first question comes from the line of Doug Schenkel from Cowen Your line is open.
And.
Hey, good afternoon and.
Thanks for the call and for taking my questions and thanks for all the detail today, there was a lot there and it was really helpful.
Just starting with guidance.
And I'm sure. It's not lost on you that your guidance for the year is a bit below where most recent consensus was it's not far off but its a little bit lower.
I would imagine your SKU and guidance to the lower end of the error bars, given the environment keeping in mind that we're still just coming out of the pandemic, we hope and that it is early in the year if.
If you were to come in above the range. What do you think the top three things are that are likely as you sit here to drive ultimately be the key drivers to upside relative to where you are setting expectations for the year.
Sure Doug I'll take that I think there is opportunities in.
Immuno C T map on on some of the.
On a additional data deals as we expand there.
Yes in terms of our life Science research business I think there's also potentially outside in and our kit sales.
And there may be potential too.
To hit some additional milestones on the development side, so theres potential across the business.
And outside potential and kind of all the potential business segments.
And obviously, we've got high hopes for the <unk> business as well, so theres certainly opportunities there, but as you said, it's you're kind of coming out of the pandemic, we want to we want to make sure that we're.
Guidance Street and are being.
And being cautious.
Okay Super helpful.
And then just a few other things just to follow up on based on the presentation.
It does seem like the timelines changed on a couple of things.
First I believe the timing of the Genentech and move from Q1 to Q2 and the Grand scheme of things if I have that right. It's clearly not a big deal, but I just wanted to see if theres anything to detail further in terms of maybe something that Genentech has further evaluate and prior to the submission and then the second thing is on.
On the launch of the clear baseline LDL, which I think also slipped.
Again, I may have those wrong, but if I if I have them right I'd love you to talk a little bit about what I just asked about on Genentech and then for Lyme.
Wanted to see how concerned we should be about timing given just how north American tick season tends to fall.
Yes.
Harlan and answer the genetic question just as far as <unk>.
We've been talking about two.
And 2021 clear launch so.
And im not I don't think the timeline and Swift there it looks like we're on we're on track to be able to launch.
During this year and a clean environment or do you want to cover Genentech.
Sure.
So thanks, Doug so.
Basically the.
Through informal interaction with the FDA and a set of consultants genentech decided to upfront.
Yes.
Let's say.
Studies.
And provide more information that they thought they were going to do between IND filing and and.
Sure.
And first in humans. So this the timeline for first in humans didn't change and also just a matter of where the IND filing is.
And is going to go relative to some of the other things that needed to be done. So I think we are.
And it was a.
And genentech's call anyways, but I don't believe that we think there's a material change and sort of longer term view of this product.
<unk>.
Hopefully that day.
Yes, that's helpful and one.
I'm, sorry, so sorry, Jeff.
Doug I just wanted to make one more one more comment on guidance I think your models had the $10 million kind of revenue recognition from the IND acceptance on the genetic deal.
The Street had.
And the model and we're just from a Rev Rec issue.
And and accounting principles are recognizing $4 to five so that's that.
$5 million to $6 million of it right there as well just to clarify yes, that's super helpful Bridge going back to that so thank you for that and then last one kind of as a follow up for I think Harlan and then I'll get back in the queue.
What are the next steps after successful.
Data is generated for the personalized T therapy.
I'm just trying to see if you've learned anything in terms of how ultimately the regulatory process is going to unfold here. After after that data is generated.
Yes so.
And so we're learning as we go we've been both.
Genentech and adaptive half half.
Many.
Consultants as well as internal capabilities to assess regulatory and we're interacting with the FDA. So it hasn't since it is new and it hasnt been completely worked out yet but but.
And.
I'm not sure I can answer that as directly as I would like yet, but we'll get back to you when we get more resolution on the on the details but.
And so far the FDA certainly seems.
On that.
I think they're excited about the possibility as are we but we have to see what the exact requirements are going to be and we're trying to dot every I and cross every T.
Thank you very much.
Yeah.
Your next question comes from the line of Brian Weinstein from William Blair. Your line is open.
Hey, guys. Thanks for taking the questions good afternoon.
On.
She just checked on Covid.
Obviously, a great milestone here for the company to launch a T cell based diagnostic can you talk on just you talked to and people.
If you ask me at the beginning about it can.
Can you just talk more about the importance of this and what it shows what it says about T cell diagnostics as a class of products going forward, and where and how it can be impactful across various conditions you've outlined several of those in the past, but just curious about you know kind of what this milestone signals signals do you think to since you guys a broader community and also curious.
<unk> talked to FDA has had about reviewing the T cell based product.
Sure.
Thanks, Brian.
And do you want to try and framing this and put it into context share.
Sure.
Thanks, Brian so.
Basically every every major diagnostic company and the World has put out a serology test for Covid and yesterday, we launched a test using a completely different technology.
And then the answer is some overlapping questions and as part of our data we've done head to head comparisons and our our test performs as well or better than almost any of these serology tests and even beyond that we're kind of getting better every week at both detecting COVID-19 as well as many other diseases.
And the pipeline, we've learned a lot from COVID-19 to apply there too so and I don't yet even know what the limit of how good we can be in terms of sensitivity and specificity and how broad this can be in terms of how many diseases. We can eventually include and the single task, but and already stands up to the premier tests for viruses.
In terms of serology from from the best companies and the world for and in the space of Covid and to be honest that was the thing we really learned I didn't know I knew we could detect COVID-19 I didn't know that we'd be able to do it with the sensitivity.
Sensitivity and specificity that really could compare to the kind of best in class and already and so that was what was kind of.
And if I.
Think about it so it's a good so if I think of a good analogy. So I would think of.
On Tesla from when they released their roadster a decade ago. So they're they released a product that probably wasn't designed to be a big commercial product, but they showed that on electric car could could.
Outperform a ferrari.
And if we would really been if I had been peg and tens and everybody else had really been paying attention I think we would have realized that it was at that point it was sort of faded.
<unk> to complete that we would all end up with electric cars, because adjusted was a totally different way of propelling the the automobile and and even with one engineer.
Engineering team by itself was able to to kind of blow away, what everybody else and the world was able to do over many many years decades of engineering. So so that's why we're kind of sitting on this precipice and I'm pretty excited about it because you can really tell.
No that's great.
Sorry go ahead.
You also asked about the <unk>.
EBITDA, Yes, just talked about how FDA.
And I was thinking about reviewing a T cell based product here, if you're if you have anything specific that they've kind of commented to you about.
Yeah, so so we've been and.
Good day.
We are in and the interactive review stage and and.
And so far everything.
And going quite well, where the FDA has been super supportive.
And and also quite reasonable so.
There is some day.
Because it's totally new there is some extra steps.
We haven't even thought I'd like for example, they don't know and there's no space on the FDA website for a test like that so they have to literally create on new space on their website and in order to put us on there. So theres. Some theres some extra like minor time delays here and there but in terms of our interaction and the data that we provided them and their feedback on it and the studies we've done.
And we feel very good about it and they've been great partners on us.
<unk>.
Great. Thanks, and then if I could sneak two more interest on <unk>.
On PV Tech and general first.
And I heard you talking about Crohn's and line is there anything on the oncology based diagnostics that you guys are coming up with I think ovarian was originally the one you were targeting first and then Chad C. Can you just talk about if there's to detect COVID-19 and tumor T map of Covid and the guidance and if so are you willing to quantify that.
So.
Eight.
We are working.
And a couple of different areas of cancer I do think that.
And that's going to be a longer time horizon and then.
And I think we have a.
A group of autoimmune diseases and other group of infectious diseases that are all.
And moving faster, mostly because the space.
Yeah.
Antigens is so broad and cancer that it's a sort of a bigger harder problem, but we are advancing and our partnership with Astrazeneca is going to accelerate that as well and I think we might have some other.
Partners that can help us in that regard.
And the future so we're.
We're.
Bullish about it but it's going to take some time on a cash side.
Brian on your questions on <unk>.
And tier Covid. So we do have some small studies that are contemplated with respect to T map COVID-19.
Sort of.
And the guide so to the extent that there are larger studies available to us throughout the year I think.
As Chad Robbins, and should probably represent upside to our outlook and then yes, <unk> is and our guide as well. It represents I think a very sort of low percentage, we're looking to see what the trajectory is from our full launch just the other day before we perhaps think about where that.
Might go from and upside.
Active but right now it's sort of low low single digits.
For the year.
Okay. Thank you.
Yes.
Your next question comes from the line of Salvino Victor from Goldman Sachs. Your line is open.
Great. Good afternoon, and thank you for taking our question as we go on to death on freestyle Dean I guess big picture and with regards to the drug discovery vertical and then.
So for other oncology.
And in General I guess could you speak to adaptive strategy for partnering assets share versus keeping programs in house and.
And then a second question. So in 2021, I guess could you walk us through the exact data that's going to be disclosed from the private product and and shared product candidate and if I heard this correctly and TLC.
POC data coming from 15 cancer patients for the private products.
And 2021, and we're just trying to get a sense of what that could look like thank you.
Sure.
I'll start with the first question and then I'll pass it off to Harlan for the second question with respect to.
And our partnering strategy versus how much we're going to take in house I look at it this way as debt.
To start with in terms of both our human capital resources expertise.
Right now we're learning from kind of the best we have the opportunity to partner with multiple companies, we've chosen and deck and cell therapy and.
And really have an opportunity to kind of learn as we go and over time, we will look to potentially kind of move up the value chain and vertically integrate.
As we as we learn more but for right now.
We're on the stage, where we think our expertise it kind of using immune receptors and finding them as targeting molecules per therapeutic uses our is our place in the ecosystem right now, but that could change over time, and we could make investments over time to expand our capabilities as we as we learn more.
And get that expertise.
And then as far as kind of what data is going to be presented.
Or available over the year with respect to kind of the shared and private product I'll pass it onto the heartland to.
To disclose if we can what can be available yes. So.
Since this is our partnership with Genentech.
And in most cases, they will have the final say over what gets released and how it gets released.
Resume that debt.
In terms of the private product the actual data itself will probably be little.
Released publicly.
And internal as of now and that and that we're going to forge ahead as fast as possible towards towards getting this and.
Filed with the FDA and getting getting into clinic.
And then on the shared products on.
Also I think as.
As we file our <unk> I think the the first shared product and what the target is will become known as part of that and then and then for the next one I think we'll let wil.
And we inform you when we trigger that next.
Product, but the actual target itself will become known upon filing I'm sure.
So probably not as.
So forthcoming in this case and it's because it's not really under our control.
Got it thank you so much.
Okay.
Your next question comes from the line of day Haas Sublets from Morgan Stanley. Your line is open.
Yeah.
Thanks for the time this evening.
One quick one chat for you on the Labcorp agreement.
Just what additional steps labcorp and meet the day care before performing key to tax on.
On site or is it essentially ready to go and then how quickly do you expect the.
Collaboration to result in accelerated growth for <unk> and immuno seek and at a very high level at least can you walk us through how the economics would work versus a direct sales for you.
Sure actually I don't have Julie answer the question on <unk>.
Labcorp.
Sure. Thanks, so much.
So the lab core agreement is actually as you noted had a combination of a variety of agreements that we signed with them. One is the extension of our blood collection for Chaetotaxy argued.
Okay.
Second sight lab as you mentioned and then.
So for the on site next step we are and the process right now of operationalized that there was a little bit of work that we need to do to make that happen, but the teams are already working together to identify those next steps and.
And it should be ready and a couple of months I would say.
And in terms of the growth timeline and the economics, specifically for the clone and seek agreement that is really on marketing program.
And whereby we cannot for compliance reasons.
Share economics in terms of.
Commission to reps and so forth. So it's essentially agreement whereby we are paying lab core.
A very nominal amount is actually to have the opportunity to include corner seek in the and there.
Oncology.
Rep bag, and so that they can and end market kind of speak to there.
<unk> oncology users.
Customers got it got it that's helpful and.
And how do you think yeah go on this one.
You asked also about the seller.
And.
And so we've been working from.
For a little bit of time actually to operationalized with labcorp that we'd be ready to hit the ground running with training and and get them ready.
Ready to sell in the field right away. So we do anticipate being.
It's on some amount of penetration through that relationship in 2021, but it is baked into our guidance.
Got it.
Got it perfect.
And then Julie do you accept expect us to sort of accelerate that transition from bone marrow to blood pretty meaningfully.
Okay by the third and fourth quarter of this year.
And by when should we expect a response from the FDA on <unk>.
Sure. So we do anticipate and hope actually that that there is going to be a larger proportion of.
Usage of quota and seek and blood what I can tell you to date since the launch of DLL and 70% of those orders are actually in blood.
I think it will be indications dependent and we're definitely seeing a tendency towards blood at least for that particular indication and that's really nice to see.
And just.
And we filed the ALLL and.
We don't we haven't actually provided I don't think.
Announcement of when we expected, but we expect it to follow the normal price.
Six month or so timelines from from the FDA.
And I've said Tejas.
CVR H right now is slammed right now with Covid and and backup and general across diagnostic applications. So I just want to make sure that set the stage.
It's really an industry wide problem.
Working through ads and that Dx.
To drive sales.
Got it that's understandable and one time on housekeeping one for Chad.
What do you as you mean chatter in terms of the Lyme contribution at the midpoint of the guide here.
I mean really.
Nominal.
Yes.
Perfect. Thank you so much.
Thanks, David.
Yeah.
Your next question comes from the line of Tycho Peterson from JP Morgan Your line is open.
Hey, Thanks, guys question on the trade the discovery efforts two parter first the Covid neutralizing antibodies you said your advanced discussions so should we assume that you've kind of baked something into guidance, there or could that be another source of upside and then I think the bigger question here is where are you doing with the discovery approaches on Entre AP.
Could you go after MRSA receptions from and there seems to be unlimited opportunities for monoclonal antibody therapy. So we're kind of the priorities for the research efforts.
So there's nothing and the guidance its not contemplating any contribution from that.
And do you want answer we're sure yes. So.
Yes, thanks, Tycho so we're evaluating a variety of different directions to go with our.
Antibody platform.
Does that include some of the things you're.
Mentioning, but we actually have.
A variety of other directions that we're exploring as well that I think.
And our sort of opened up by by a combination of our.
Immunology platforms as well as our true AB platform. So so.
And we'll give more information as we go because right now we're sort of and the.
We're.
And.
And planning phase and evaluating different options, but we're pretty excited about this and we're bringing on some new technologies as well and are evaluating some some potential partners as we go forward.
Okay.
And then on and music T map I'm just curious if you could talk a little bit about the level of interest and funnel beyond the initial partnerships with Astrazeneca on Oxford can you just talk to you and now.
What the funnel looks like there for incremental partners.
Sure, Doug and I'll tell you wanted to take.
Sure Yeah.
Scott I think and the fall obviously the trials were very far advanced and when we brought this product.
The vaccine developers and we're also thrilled about that I think there have been and obviously the introduction of the new variants as well as new FDA guidance that you might've seen recently on Immunogenicity.
And just.
Better understanding of the importance of the T cell response, the whole virus is definitely helping and advancing many of our discussions we have about.
More than the more than the companies were allowed to discuss.
That are working with us already on snap Covid and we're running.
A variety of different types of trials for them right now with the pharma companies as well as as I mentioned in my remarks.
On a nice set of trials on the academic side as well so we will have data.
And on almost all of the most advanced vaccines and I think from that data and we're going to learn a lot as well day that will really set the stage for the way that continues to progress throughout the year.
Okay and.
And then.
Modeling question just on life Science research are you, assuming kind of a sequential improvement here and sequencing and the first quarter or are we through the worst of it or do you think you could continue to be down.
Julia you on the thing that you want me to.
Maybe I can start and then you can.
Sure well either way.
I guess, what I just wanted to make a couple of quick remarks on that.
And with Life Sciences research.
And we.
Just to clarify as you know life Sciences research on the pharma side is made up of both the MRV pharma as well as debt.
Our pharma work that we do on the margin pharma work is quite advanced Registrational trials, which.
Which actually did quite well and 2020, it's really exploratory work that was most impacted by COVID-19 because it's non COVID-19 related.
Do you expect to see recovery on that front and continued growth with the margin pharma work that we do and I'll, let Chad kind of take you through and more specifically the net debt number.
Yeah, absolutely so the way we're thinking about it just as I mentioned on the script is that the first quarter really from a life science research perspective should be our low watermark for the year was progressing.
Revenues as well as bookings throughout the year for both.
Pharma contracts that are tied to those Registrational studies as Julie said on the NRT side and those that are more exploratory in nature. So we are assuming sort of sequential.
Growth across revenue and volume, but as you know it's also.
There's a ton of variability when it when it comes to some of these trials and so sometimes they can depending on the size of the trial they can impact.
Whether one quarters may be benefiting a little more than the next sequentially, but but short of some large volume samples coming in from from particularly large trials, we should see continued growth quarter over quarter.
Okay.
Last one I think you mentioned opening and European Lab can you just talk to the strategy there.
Sure. So we already have a small number of people in Europe, but in order to essentially access kind of core labs in Europe, we had.
Stablish.
<unk> and entity and that will allow us to kind of expand on the boots on the ground.
Field force there.
It's not a lab.
For opening.
We are effectively starting off with a legal entity and based on yours.
Okay got it thank you.
Your next question comes from the line of Derik de Bruin from back on Bank of America. Your line is open.
Hi, This is ideal for day to day. Thank you for taking my question.
And congrats on the TV had COVID-19 progress there and then.
And that from a partnership.
Just curious how do you see the tests rolling out.
Estimates show a discussion regarding herd immunity timing you both.
I'm just curious how that all plays out.
And then what have you seen and so.
Since you are soft launch back in December.
Sure Julie do you want to take that.
Sure Hi, Ivy.
So yes, so in terms of the early access launches as you mentioned I'll start there as I think you know we didn't have any virtual prescriber capability. So I was a little bit of a challenging ordering process and therefore, we didn't do any marketing, but yet we had over 650.
Ordered and delivered and 13 Concierge Medicine group signed up and as I mentioned, 60% participation in the opt in for ongoing research. So given the fact that there was a.
Available people have to sort of find it on their own and it was over the holidays, we feel like it does give you.
Depreciation and for interest and T cell testing with a full launch and the virtual priest.
Prescriber capability and lab core blood collection, and some of these segment already seeing and the media and hopefully eminence EUA and targeted marketing.
And for some period of time, we expect to see growth.
Of the tests, but we are as you mentioned very aware of the changing dynamic of the diagnostic market. We recognize that things may change with more vaccination widespread vaccination.
But what we do know is that the T cells matter and we are thrilled to be able to participate and understanding exactly what they need and we will continue to share that information and Thats really why we put those assets.
And we said from the start it's really about.
Validating both our platform and.
Utility bleeding T cells and blood across diseases, and we really think we're going to learn a lot from this from this experience to contribute to the future growth. It's really just the beginning chriqui detect.
Great. Thank you for the detailed Q&A a couple questions on the Lyme disease.
And I've always talked about the pricing around 500, and if I remember correctly last time could you update us on any thoughts there and number two could you share more details on it.
The current thinking on commercialization like.
Like are you, bringing on South Florida, we're also partnering with non core.
Thank you.
Sure. So right now that's still our target.
Price. We are we are continuing to do payer research as the data matures.
And that maturity of the data is also influencing our commercialization plans and we've talked previously about focusing exclusively on the acute line setting and we.
We are and faxing some interesting data that shows the potential utility of this and the what we call. The <unk> setting for those patients who had been treated with antibiotics, but have lingering symptoms. So a lot of those are sort of tied together and that data continues to readout and that will help us set the commercialization.
Plan going forward from an organizational perspective, we have hired a VP of sales who is putting together.
And his plans around exactly how we anticipate.
The final pricing and marketing plan for the test and we'll provide more details of that most likely on the next call.
Great. Thank you one final quick one just wanted to get an update on it.
Nacho pens and Thats still impacting net.
Thank you.
Hi.
Yes.
You cut out a little bit Ivy can you say that again, yes, I just wanted to get an update on the percentage of labs open.
As of <unk> or execute or exiting January and such.
And impacting the research business and on that thanks.
So our view is that the labs are our own.
And me Theyre in the process of opening and then and hopefully that will continue and.
Theyre not as fully staff like they may be more on the path, but we're definitely starting to see more activity more usage of the kit.
And annual and in fact, even with Tina Covid as I mentioned and a lot of the researches is shifting towards Covid and we're starting to see uptake of those opportunities with our academic business as well, but it still remains to be seen we don't have a very large field force on the academic research side. So we don't have the same sort of coverage we have with our.
And I think field force to to really hit all the ups and downs and on all the various locations throughout the country.
And so.
That also leads to a little bit more of the volatility that we're seeing but we're definitely seeing much more of on opening that we hope will continue as the year progresses.
Great. Thank you for the detail.
Your next question comes from the line of David Westenburg from Guggenheim Securities. Your line is open.
Alright, thanks, so lots already been covered so I just want to confirm and I think you said 600 cash and <unk>.
<unk> already been ordered and we want to make sure that's correct.
Is there any anticipation number that you have for.
Key to attack free this year, just given the fact that we're rolling out that vaccine.
But more importantly, I wanted to ask in terms of how meaningful the additional samples can be from a platform standpoint.
And from terms of R&D cannot help you get other cash out faster and then in terms of regulatory conversations that you have real world samples I mean, do you think that speeds up some of your timelines for <unk> Dx, maybe lime or some of the things that youre going to do and and.
And Gi and I'll just start with that question would be on the last question. Thank you.
Yes.
Sure David.
So first let me just start with the <unk> I want to confirm and kind of 600 tests.
Without marketing or.
And the virtual prescriber and in terms of projecting number test just keep in mind. This is a brand new category of testing. So it's very very hard to predict.
What are what our testing volumes are going to be with a marketing initiative. So.
Yes.
We're not going to provide guidance on that.
As far as how.
How T map.
Excuse me how to detect COVID-19 has accelerated signal generation.
I'll have heartland comment because it's been has been quite significant.
Sure Yes.
So I think what are the biggest two two.
And our learning was the.
From from Covid was a couple things one is on.
Obviously, everybody was sharing simple so we were able to get a.
And very large amount of samples and <unk>.
And they were super clean because the PCR based diagnostics of who got the disease and who didn't.
And is quite accurate.
We got many many thousands of positives and negatives that we're able to really use to improve our algorithms and understanding in conjunction with Microsoft and.
For example, we have been sitting on a.
Samples that from multiple sclerosis that we add to be honest haven't been making that much headway on and then we started applying some of our algorithmic learnings that we would add from.
From Covid and all of a sudden.
A really nice clean signals started appearing this is still and research, but we're pretty excited about this and and and it's improving our signal and in all of our studies, including.
Celiac and Lyme and and.
And Crohn's and a variety of others that we're working on behind the scenes as well so so we're.
This has been a huge boon to our understanding.
Hey, good and there was a third partner.
And it works.
Was there a third party and the only other third part would've been on the regulatory standpoint.
Oh.
Yes so.
No.
We are.
The nice thing about Covid for from our point of view. There is there is an EUA out there, which allows us to interact with the with the and and accelerated timeframe with the FDA and really get them to.
Dr data understand our assay.
And and they've been.
Really great about the whole process. So so I think that interaction, obviously, having that personal interaction and really understanding what theyre couldnt comments and concerns are and coming to an agreement on how to address them as has been.
A big Boon for us and hopefully will carryover into <unk> into other areas for as this product expands into into multiple diagnostics.
Thanks, guys and you had a great year. Thank you.
Hey, thanks.
Your next question comes from the line of Mark Massaro from BP IAG. Your line is open.
Hey, guys. Thanks for the question and I'll, just ask one and its for Chad Robbins.
And he's like rail and thrive certainly are pursuing multi cancer tests that can screen for roughly 10 or up to 50 different cancers. I know you guys are contemplating a panel approach on T detect but I think I also heard you talk about maybe a general health.
Panel in the future and so if.
If I heard that correctly can you just elaborate on that and just talk about the decision to pursue panels or maybe a really large panel.
Yes, it's a great question and thanks Mark.
We're really looking and as a three phased approach where right now we're going disease by disease. The second phase is.
Pant leg approach based on kind of patients who come and the door that have a similar set of symptoms, but at the same time, we're parallel tracking and we're actually exploring options for kind of large scale trials to be able to look at many different diseases at the same time to get to a really.
And I don't know if I'll call it a pan disease diagnostic, but many disease at the same time diagnostic and Theres theres different ways to do that and different different methodologies and partners that we're looking at as potentials to accelerate debt kind of multi disease panel.
Terrific. Thanks, so much.
You bet. Thanks Mark.
There are no more questions at this time per centers you may continue.
Thank you everyone. We look forward to a great 2021.
Ladies and gentlemen, this concludes today's conference call. Thank you for your participation you may now disconnect.
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