Q2 2021 Adaptive Biotechnologies Corp Earnings Call
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Good day, and thank you for standing by and welcome to the adult stable Biotechnologies second quarter financial results 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 ask a question. During the session you will need to press star 1.
On your telephone please be advised that today's conference is being recorded if you require any further assistance. Please press star zero I would now like to hand, the conference over to your speaker today Ms. Karina Cal familiar. Please go ahead.
Thank you Nelson and good afternoon, everyone I would like to welcome you to adopt Atlanta, neurology and 1 or.
2021 and earnings conference call.
And yesterday, we issued a press release reporting adaptive financial results for the second quarter. The press release is available at Www Dot adaptive com. We are conducting a live webcast of this call and we'll be referencing to slide presentations that have been posted to the investor section in our corporate website.
During the call management will make protections and other forward looking statements within the meaning of federal securities laws regarding future events and the future financial performance of the company.
These statements reflect management's current and perspective of the business and stuff today actual results may differ materially from todays forward looking statements depending on a number of factors, which are set forth and our public filings with the SEC and lifted and his presentation.
In addition, and non-GAAP financial measures will be discussed during this call and a reconciliation from non-GAAP to GAAP metrics can be found in our earnings release joining.
Joining the call today are Chaco and <unk>, our CEO and cofounder and Julie Rubinstein, our President and Chuck Collins, 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 Chad Robins chat, thanks, Carina and good afternoon, everybody and thank you.
And for joining us on our second quarter 2021 earnings call.
We had another strong quarter and momentum continues to build across our business areas.
<unk> reflect our commitment to applying our immune medicine platform to transform disease diagnosis and drug discovery.
Adaptive incredible employees are dedicated to the company and the patients we serve and it's been awesome seeing desk fill up and meeting new hires for the first time and person.
But we also realize the pandemic is an evolving situation will continue to monitor our return to office initiatives.
We are energized by our progress and the data emerging from our platform.
Moving to the floods and star.
On slide 3 our second quarter results demonstrate solid performance revenue and the quarter was $38.5 million, representing a significant growth of 83% versus prior year.
We saw substantial progress across our products and our pipeline.
Our COVID-19 efforts continued to gain traction, especially in light of the Delta variant as more stakeholders act on the relevance of including T cells to understand the immune response to the virus and vaccines.
Recent data to understand the Astrazeneca and J&J vaccine response to variance using immunity T map Covid were published and in New England Journal Medicine and in nature, respectively.
Also we are pleased to announce we signed an agreement with Mcdonough and which immuno seek team that COVID-19 will be used to measure the T cell response to their second generation Covid vaccine and their Zika vaccine.
In addition, we signed a license agreement and our drug discovery business with Baxter body. This is the first time that our T cell data will be used to inform the design and development of a T cell based Sars cov 2 vaccine.
And importantly, adaptive technology may inform the design of an entirely new class and vaccines that elicit a T cell response from many disease states.
We are in active discussions with the FDA and NIH CMS CDC and the White House administration to include the T cell response, and funded studies to enter critical questions related to the vaccine durability breakthrough infections and efficacy in immunocompromised patients.
Our view has been that this virus is endemic and the population and the T cells may answer many many of these questions.
We are making progress and we will keep you informed on these discussions.
Beyond Covid, our TD Tech franchise continues to advance.
Results from our case control data set with Johns Hopkins, which just published as a preprint and serves as the basis for clinical validation.
In addition, our immune cell study for T detect lime will complete enrollment in the fall together. These studies will support bringing tests online and our CLIA lab around year end.
We continue to progress towards you detect IBD as a differential diagnostic with more than half of the 5000 samples from Crohn's and ulcerative colitis patients already analyzed.
We expect to share the data towards the end of this year.
We have also made significant progress and other autoimmune disorders, and we are encouraged by an early signal that we have and multiple sclerosis.
For those of US who are friends and family suffering from this debilitating disease. We know firsthand that early blood based diagnosis may alleviate use of and uncertainty and more effectively guide the treatment path.
Autoimmune disease diagnosis is a critical next step for adaptive and we are prioritizing our development efforts in this area.
Okay.
In addition, the overall value of our current Chic brand continues to grow as evidenced by both strong currency volumes and the signing of yet another major pharma MRV collaboration.
Importantly, our team has been building the case that measuring MLD regularly for patients with blood cancers is best practice.
Last week and international panel of multiple myeloma expert published a call to action and clinical cancer research to guide the use of MRI in the clinic for patients with multiple myeloma.
And note. The publication also builds the case for the use of mrna as a regulatory endpoint for which adaptive has significant associated regulatory milestones.
And our drug discovery efforts efforts with Genentech, our collaboration continues to advance and both the shared and private products. We remain on track to deliver the net shared candidate data package to genentech and extend our proof of concept and the private product from 15 to approximately 60 cancer patients this year.
In summary, we are delivering towards our 2021 goals and we are enabling opportunities stemming from our platform.
Before passing the call on the Giulia on slide 4 on slide 4 I wanted to provide some color on how we are using our COVID-19 efforts as a model to unlock multiple commercial opportunities from the same underlying immune receptor dataset.
By D code and the fundamental biological link between our immune system and the diseases with which they interact adaptive can create value and any disease categories across research and diagnostics and drug discovery in this case, we applied our immune cold data from our research product called.
Immuno <unk> Covid, which is now being used by vaccine developers academic institution and advocacy groups leveraging the same data source, we launched cheetah take COVID-19 the firm.
First indication for our clinical diagnostic TD Tech franchise.
And we signed a drug discovery agreement with Baxter body for the design and development of next generation T cell based vaccine.
This concept of 1 dataset stemming from multiple opportunities is an approach that we are pursuing and many of the disease states that we are mapping so now I'm going to hand, the call over to Julie Julie Thanks, Chad moving to slide 5 with T detect T.
You don't have Covid trends continue to ramp up and now over 10000 customers have ordered the test we did observe downward pressure and orders in June and early July as the vaccines rolled out our concerns with the Delta Varian has renewed interest.
We expect to launch a COVID-19 immune response website later this month to enable customers to gain additional research insights about their T detect test results.
To start it will include a personalized comparison of the strength of and individuals' T cell response to that of others with confirmed Sars Cov..2 infection next we expect to add more information profiling, a person's T cell response to vaccines.
So can you detect line as Chad mentioned results from our case control data set with Johns Hopkins had been published these case control data demonstrate that our highly specific T cell test is 3 times more sensitive than standard 2 tiers serology and the first few days post infection and nearly 2 times more sensitive and the first 1 to 2 weeks.
In addition, the data also support at the T cell response precedes the antibody response to the barilla bacteria.
And do you sense line is enrolling nicely, which will enable us to complete validation and make the test available in clear around year end.
During the first half of 2020, 1 data emerging from our TCR mapping efforts have given us confidence and the ability of T cells to be used to detect a variety of autoimmune diseases. These are diseases that afflict millions of patients and are challenging to diagnose and treat with highly specific clinical tools. In addition to the exciting data and IBD we are.
Encouraged by the signal, we are seeing and multiple sclerosis, because it appears to be strong not only in patients with later stage disease, but also and patients at much earlier stages, which is where MFS is particularly challenging to diagnose and we have more samples arriving and the next couple of months and look forward to improving the sensitivity of our MF signal.
And later this year.
Early sensitivity, we are seeing and line MF and other diseases supports the premise that T cells are the first specific defense sales to see disease antigen and should be able to deleverage for true early and specific detection of many diseases from blood.
Switching gears to quantity on slide 6.
On the left side related to clinical testing you can see policy clinical testing volumes of 5000, and 475 tests in the quarter grew 75% versus prior year and 15% versus the prior quarter. During the quarter orders were placed were placed by approximately 950 <unk> unique HCP.
Spanning 248 accounts for approximately 3400 unique patients tested and policy has now been used to treat more than 18500 unique patients.
Importantly, we observed double digit growth quarter over quarter and tests delivered in each FDA approved indication AML multiple myeloma and CLO and within community accounts. This growth reflected recovery and the second quarter and was a result of our continuous sales marketing and educational initiatives that.
And the spread of the Delta variant poses challenges to the back half weighted growth. We had anticipated in 2 main ways first Wap access to clinicians and second reduce clinical visits recommended to our specific blood cancer patient population, who are immunocompromised as such it is now becoming unlikely that we will double our policy volumes.
By year, and well continue to expect healthy growth and the second half of the quarter.
The recent paper that shad highlighted is a key indicator of the growing sentiment that MRV does make a difference and the treatment of multiple myeloma patients. These prominent international Kols and FDA regulators state that quantitative accurate standardized and sensitive MRV testing may provide greater information relevant to tumor.
Iology and likelihood of relapse, when performed and a sequential fashion over multiple time points during a continuum of care. They go on to say that complete response provides a false sense of disease control and.
And at any given stage in the disease evolution achievement of <unk> negativity will predict a better outcome compared to patients at a similar stage, who have not achieved the same depth of response with any given therapy.
Of note. The paper also aggregates information from almost 40 ongoing phase III trials more than half of which utilized policy and are evaluating <unk> directed therapy or <unk> as an endpoint endorsements like this are a very important call to action to change behavior and the clinic.
I also want to highlight our recent policy publication and the journal of clinical oncology focused on deal Bcl patients, which showed that Cte DNA based surveillance of patients with D. L. Bcl undergoing car T therapy with Axa fell maybe a useful adjunct to radiological assessment of disease status and this is 1 of many ongoing studies.
As we pave the path for future quantity testing and NHL.
On the right side of the slide you can see the number of publicly disclosed pharma partnerships, where commodity confused and clinical trials.
And we're close to seek use and clinical trials continues to growth. This quarter, we signed another pan portfolio Pan indication MRV partnership with Janssen, which includes both the sequencing and potential future development revenue.
We also recognized and additional development milestone revenue based on use of MRI data as a clinical endpoint, which brings a total of $8.5 million and recognized revenue from development milestones and year to date.
Lastly on slide 7 we are continuing to make good progress on our Genentech collaboration.
As you can see and the chart the shared and private product programs are complementary and many ways. There are significant learnings across T cell identification engineering and manufacturing that we plan to leverage from our shared product to inform our private product approach and in fact, just this week, we had our quarterly JRC and we are in lock step towards.
Both on both of our programs and we look forward to sharing more details at the appropriate time.
I also want to highlight the relevance of our new license agreement with Baxter buy backs and body is using adaptive identify viral antigenic peptides that are driving T cell responses to develop a second generation T cell based Sars Covid 2 vaccine.
This vaccine may provide more complete viral protection against known and future variants of concern.
Phase 1 and 2 trial is expected to start in Q4 of this year and will include testing and on vaccinated and fully vaccinated individuals to be able to assess the true potential of this vaccine candidate as a universal booster I'll now pass it over to Chad C for a financial update.
Thanks Julien.
And to our financial results on slide 8 total revenue and the second quarter was $38.5 million, representing an 83% increase from $21 million same period last year.
And our revenue mix for the second quarter consisted of 48% of our revenues coming from our sequencing category and 52% coming from our development category.
Sequencing revenue and the second quarter was $18.6 million and increased 132% from the same period and 2020.
Growth and sequencing revenue was driven by both significant ASP and volume increases over prior year, and our pharma research business and also a volume growth and our closing business.
Research sequencing volume increased to 6900 sequences up 65% from 4185 sequences delivered and the second quarter of 2020.
Clinical sequencing volume, excluding our to detect COVID-19 volume increased 75% to 5000 and 475 clinical tests delivered from the second quarter of 2021.
Up from 3136 clinical tests delivered during the same period and 2020.
Development revenue grew to $20 million and the second quarter up 53% from the same period last year. The largest driver of our development revenue continues to be the amortization of our genetic upfront.
We also saw a $2.2 million increase over prior year and revenue generated from our <unk> development agreements, which includes a $1.5 million regulatory milestone that was recognized in Q$2.2021 from 1 of our Biopharma partners.
Even as the milestones materialize, we continue to replenish and grow the available milestones that we can participate and from ongoing demand for using mrna as a regulatory endpoint and clinical trials.
Shifting now from our revenue to our operating costs total operating expenses for the second quarter of 2021 were $88.3 million, representing a 53% increase from $57.9 million and the same quarter last year.
Working down our operating expenses cost of revenue was $10.8 million during the second quarter of 2021 compared to $4.9 million for the second quarter last year, representing a 119% increase.
Higher cost of revenue was primarily driven by increases and labor and overhead costs as well as and increasing revenue sample volume, which drove higher consumption of materials and related items.
We also saw growth and allocated facility expenses stemming from our new high throughput labs and office space under construction, which is quickly approaching completion.
Research and development expenses for the second quarter of 2021, we're at $37.8 million compared to $26 million and the second quarter of 2020, representing a 45% increase.
The growth was largely related to an increase in personnel costs driven by innovation, South San Francisco cellular lab molecular product development and software engineering teams and increase and cost of materials and allocated production lab expenses.
Sales and marketing expenses for the second quarter of 2021 with.
$23.2 million compared to $14.3 million and the second quarter of 2020, representing an increase of 62%.
The majority of this growth was due to increased personnel costs, particularly related to teams supporting our clinical diagnostic businesses and medical affairs as well as large marketing efforts to support our inline products.
General and administrative expenses for the second quarter of 2021 were $16.1 million compared to $12.2 million and the second quarter 2020, representing an increase of 31% and.
This was primarily driven by growth and head count and personnel costs.
Net loss for the second quarter of 2021 was $49.3 million compared to second quarter 2020, net loss of $33.5 million.
Just the EBITDA for the second quarter of 2021 was a loss of $35.6 million compared to a loss of $28.5 million and the same period of the prior year.
We ended the quarter with approximately $690 million and cash cash equivalents in marketable securities and we had no debt.
With respect to our outlook for the year, we are narrowing our full year revenue guidance range to $148 million per $155 million up from our prior range of $145 million to 155 million the.
And the increasing the bottom end of our range reflects the additional $1.5 million MRI day milestone payment and the second quarter as well as strong execution year to date.
We still anticipate sequencing revenue represent between $50 to 55% of our total revenues for the full year.
We are encouraged with our with our first half results and are confident and our ability to achieve our full year commercial and development goals. We will continue to closely monitor any impact from COVID-19 variance and the second half and look forward to to price and look forward to providing you with further updates next quarter.
I will now turn the call back over to Chad Robins for final remarks.
Okay. Thanks, Chad I'm very encouraged with the progress we're seeing across all business areas and looking forward to executing on the catalyst as outlined on slide 9.
And what I'm. Most excited about is the data emerging from our platform, which we expect to monetize from multiple opportunities and research diagnostics and drug discovery.
Before opening up for questions and answers today, we announced and important addition to adaptive management team I want to welcome to 10 sued as our chief as our new Chief Commercial officer, who will oversee our in line product portfolio. The Tim will lead us through a critical next phase of commercial expansion, including multiple and.
Dissipated product launches and international growth with that I'd like to turn the call back to the operator and open it up for questions.
Thank you.
And it to all participants to ask a question. Please press star 1.
And our first question is from Derik Debruin of Bank of America. Please go ahead Sir.
Okay.
Yeah.
Hi, good afternoon.
Hey, Thank you for the updates can you elaborate a little bit more on the backs of the body agreement and.
Just what youre doing there, specifically and just sort of what the terms of that are and also during.
During our relationship and just some incremental information and that would be would be helpful.
Sure.
Thanks Derek.
So did Harlan.
And so.
To start with the reason we partnered with Baxter body is that they have a unique capability to truly targeted T cell response, whereas the primary mode for how basically all vaccine instead of ever been put on market work have been targeted towards towards the generate generating and antibody.
Response and.
And as we're learning and the viruses and Sars cov, 2 as quickly or escaping antibody neutralizing antibody response, and the T cell responses, becoming of greater and greater importance and so in order to generate a very broad overall protection, we think that debt.
Sure.
T cell responses vital and since they have this unique capability.
And we are.
To target T cell response, and we are able to determine kind of best in class what to target. We thought it was a kind of a perfect marriage and beyond that love the love the management team there and the scientific team and we've really wells added them, we've actually given them.
And some sets of targets already and they are they are already.
Generated.
Some vaccine response and and.
Animal models that has been nice and robust they've been vetted by the genentech as well.
And then in terms of the deal.
It's a.
Our royalty based deal, where we're sort of and it together and think there's huge long term potential here.
Okay.
Great.
And Laurie.
Yes.
Yes.
The majority of relationship yes.
Yes, we've had a long a long standing relationship with Madonna and obviously the world is just seeing how great a company. They are and we're really excited too.
And really work with them to help understand the.
The T cell response to their vaccine just in relation to what I, just said a minute ago.
They're taking advantage of our T map product, which is our research based product.
That that gives considerable more information that are just straight diagnostic products on exactly what their back.
<unk> seen what the specifics other vaccine are inducing in terms of.
What part of the the virus they are getting a T cell response to how broad that responses etcetera.
And really.
Allowing them to to understand.
And I think it wasn't even well understood. They are vaccine is.
Proving to be efficacious, even in cases with reduced.
Neutralizing antibodies, and we think and that it's that the T cells that are helping out but they are inducing from their vaccine.
Great and then just 1 more.
The comment that youre, not going be able to double kronos seek volumes this year and just.
Curious.
Are you already seeing dropbox and demand.
Now or is there something that you're just.
Operating and happening because of the variance just curious in terms of what youre seeing in the markets right now and how that factors in to your debt are you basically do is there still the potential to hit that number or are you just being cautious and right now.
Yes, it really Derrick as Chad I'll put this in context, I mean, we had a good quarter. We continue to expect strong growth and the second half, which is kind of back half weighted we are.
We're continuing to grow here and we haven't seen much of a drop off at all actually it's just in light of the Delta variant and what we're seeing right now with limited access by kind of the field team.
There are certain uncertainties and uncertainties, especially with kind of the impact on our patient population, which Julia had mentioned and kind of and.
And and in her prepared remarks. So therefore, we really want to take a measured approach and we're looking at taking a modest reduction.
No.
It is helpful and just kind of what Julie close with I will reiterate that I want to kind of put in context that this is just 1 component and drove the overall and a value of <unk> and the MLD kind of brand, which is growing across clinical and pharma and research and international so, but yes and we.
And we want to take a kind of a measured approach here as we look at it.
Got it thanks.
And our next question is from Brian Weinstein of William Blair Go ahead, Sir.
Hey, guys. Good afternoon, thanks for taking the questions.
Hey, Brian.
1 just on the guidance here. So it was a good quarter obviously.
And you beat I think where most people whereby.
And like $7 million or something like that and you raised the bottom end of the guide just $1.5 million. So can you just maybe talk through kind of the thought process. There was there was there anything that was pulled forward in this quarter that was expected later in the year is the is not raising by the full amount of the upside.
And having to do with its current.
More conservative stance, just just any color that you can give us kind of how you thought about the guidance.
Yes, Neil maybe I'll start with that 1 hey, Brian and checkout.
Yes, I mean, we made a lot of progress and the second quarter as you can see by our results we had strong.
Sequencing and numbers, we grew those 132% year over year really delayed by our condensate numbers.
Strong.
Peter take Covid even committed.
Contributed to some of that our research business sort of across the platform.
And really strong quarter and continue to expect that really nice growth and our sequencing.
Sort of category through the end of end of the year, we were just south of 50% of our.
Revenue is going to sequencing and the and the first half of the year and expect about close to about 60% and the second half getting to a sort of 50% to 55% range for the full year. So strong growth I think just.
Given the emergence of the variance.
At this time are just passing along really the $1.5 million milestone that dropped and the quarter that was outside of out of the guide we have really strong conviction and the numbers that we're presenting as our full year guide and bringing up the bottom end of the range, but yes, chats, and we're being sort of measure or a meter and response to what we are.
And with the variance.
Got it it makes it makes a lot of sense.
Next question on the new signal that you guys are talking about and MF. So it seems just in general that these signals are starting to come a bit more are coming a bit more regularly at this point can you talk about the expected pace of being able to find these new signals and then as you're finding those.
And have the proper resources right now to be taking multiple signals to the next phase here and then if I could just.
And I know I'm throwing a lot at you on this topic, but you've also talked a lot about infectious disease and now autoimmune is there any update on any of the progress on the oncology side I thought that was an area that you guys were clearly looking at before haven't heard much and kind of any signals on that side, sorry for other questions, but thanks for the answers.
Yeah, Brian maybe I'll.
And if you provide some framing and then pass it to heartland to take the first part of that which is kind of expediting signal generation and how we think about it across categories of infectious disease. Obviously now we've got progress and accelerating progress and autoimmune and then kind of where we are in.
And in the cancer space, but as I think you're pointing out is signal generation is 1 component of it and then kind of at the back and is having a product on market and between that you have.
Significant amount of steps in terms of kind of clinical trial and analytical validation health economic analysis market access work with the payers and regulatory all that goes into defining kind of product market fit and where they are kind of clinical utility is for a doctor treating patients and all.
And all of those areas and this is such a massive opportunity and we're investing and hiring a phenomenal team and putting resources into kind of really defining the buckets to go from signal generation 2 kind of ultimately.
Your products on market and then also thinking about how we leverage.
And kind of what are what are kind of share resources versus kind of where we need to hire kind of specific discrete kind of medical expertise and disease areas and we've put a lot of thought behind that but maybe I'll turn it over heartland.
And we respect their kind of how we're thinking about and expediting signal generation.
Sure. Thanks, Chad so.
In terms of the research side and the development side.
Sure.
We're working hard to to get and economy of scale by sort of standardizing our methodology and so for example.
And we're able to.
Now each each different disease class requires algorithmic development and it and.
And.
And chemistry, the chemistry is United among all of our all of our different assays right. Now we literally have 1.1 delivery mechanism, which is just the same for <unk>.
And at that Covid is that will be to detect everything. So the same sample type same chemistry et cetera. The only thing that potentially can change the algorithms and we're uniting at least within.
Disease class those algorithms, which is why we've been able to really expedite on the infectious disease side, we have a few.
And that our Covid on market line coming soon and we just published a paper on that and there is multiple other.
Infectious diseases that we have really nice probably clinical grade signals and already separately and the autoimmune space, we're making progress across multiple different autoimmune space and we've talked about IBD, we just talked about MFS and we have some others that we're working on and at the same same concept right.
<unk> are uniting and trying to get.
Cross learnings from from 1 where we can then get much faster at the other so what does this require this requires us to get.
A certain amount of samples with patients with those diseases and we've been collecting those per.
Quite a while now and we have have either samples sequenced already as we told you already and multiple.
And MFS as well as and.
IBD, but we have others coming and other autoimmune diseases and other infectious diseases as we go.
All of those are progressing really nicely and we're very pleased with the direction, they're going you asked about oncology.
<unk> is a much broader set of questions and we are working and the research setting here. The class of drugs is enormous and the number of companies working on them is huge and so we're working to help all those companies.
Really understand how to how to use those drugs et cetera, and terms and but that does feed on and customs from our connecting T cells to antigens at scale and the day issue here is simply that the immune response.
Cancer is so broad because the potential antigenic space the things that your immune system can see is huge so it's just a harder problem, we are making progress, but it's going to be on a longer timeframe just because of the scale of the project. So so.
We're moving it's coming but it's going to be a little while on that side, we're going to have a more and more near term.
<unk> successes.
Youll see we had hit in <unk>.
Infectious disease and autoimmune space.
And that was all for great. Thank you guys. So much I appreciate it.
Our next question is coming from Doug Schenkel of Cowen and <unk>.
Ask your question.
Hey, good afternoon, and thanks for taking my questions.
My first 1 is I guess the guidance question 1 of the key assumptions embedded and full year guidance is that the commercial expansion that you are in the midst of it.
<unk> takes hold and supports and material ramp in second half diagnostic revenue.
And just want to see how youre thinking about that now obviously, some nice growth sequentially and that category maybe.
And maybe that is evidence enough that things are going well, but I'd love for you to expand a little bit more on what youre seeing and.
And how comfortable you are with this high level assumption that things will continue to ramp and this category as a result of the commercial build out over the balance of the year, especially keeping in mind, yes, there might be some risk.
Got it.
Related to the Delta there in terms of the opposition office access.
Sure. Thanks, Yeah, I think the way the way you just frame. The question is exactly right, where we're absolutely experiencing as we mentioned in the remarks double digit growth and each of the indications for which we have and FDA label and <unk> and we continue to see really nice growth and the back half of the year barring some of the comments Chad need related.
2.2 and Delta variant, but specifically you're absolutely right, we've invested quite a lot and commercially and both and the sales force as well as on our medical team and so we have a lot more focus on peer to peer education, we're seeing the results of patient education and.
And we're really focused also on it.
And making sure that we all newly diagnosed patients as regularly as possible and our new accounts we're growing.
Reach of our targeted account population quite a lot I've talked a lot and the past about tier 1 and tier 2 about 250 accounts that where our target universe, we've really expanded that to over 900 accounts now that we're in the community with Cielo and we're seeing nice progress and penetration in that broader universe of TARP.
And good accounts.
So that's just some of the <unk>.
Hypes of initiatives, we have underway that we're doing together with our commercial and our expanded medical team to grow and usage of Corona and seek in in the clinic.
Excellent and quick follow up on that 1 specifically.
I won't hold you to generating the same type of sequential growth.
Did and that category.
Moving forward because that was pretty impressive in the quarter, but but fair to assume that you are expecting continued sequential growth over the balance of the year from diagnostics for other reasons, we just talked about.
Yes, absolutely yes.
Okay.
And then just a product question on T detect crohns IBD.
I think and maybe I had it wrong, maybe I did and before I was I was thinking of this as a single disease test now it looks like.
<unk>.
It's designed to distinguish across multiple Gi disorders, including UC and Crohn's.
Is this now should again, maybe I just had it wrong, but if I did it should we be thinking about this as essentially a panel tests for that category.
Yes.
Thanks, Doug so.
The goal is to as generally is definitely to create a panel tests and include UC and Crohn's.
Yeah.
Obviously, it will be dependent on the on those.
And <unk> signal and timing and everything else, but but that is the goal we have.
We are presently analyzing sets of samples and both crohn's and UC and as well as.
A few other related indications and.
The goal is.
Both both in the near term to create a.
A differentiated diagnosis and then to continue to add more to the panel as we as we create additional signal I should actually mentioned with our broad and that too I mean, that's our goal for each 1 of these tests is to have.
It's a differential diagnosis and put it starts with kind of getting a beachhead and 1 disease state and then getting.
<unk> has high sensitivity level.
<unk> and very high specificity level, and then kind of moving across to other diseases that have shared symptomatology.
It's a very first thing we can do is kind of rule out other diseases, but the identical over time is to be able to definitively have not only ability to rule out with high sensitivity and each 1 other diseases. So that we can definitively diagnosed each 1 other diseases will share sort of symptoms.
Got it yes, actually as Youre, describing that and I think about your typical playbook that makes a ton of sense alright, well. Thank you. Thank you for thank you for your time on both questions.
Yes sure.
And our next question is from pages sovereign of Morgan Stanley. Please ask your question.
Hi, This is Hugo on the call for T cells. Thank you for taking our questions.
In light of day emergence of the Delta very and questions about durability and vaccine response could you comment on what you're seeing in terms from teeth attack Covid uptake and what kind of upside case look like.
Yes.
A great question and obviously, it's super important.
We are seeing that.
T cell response to the vaccine is long lasting.
Now we've seen samples over over a year and.
Certainly it 11 months, we had good statistics to say that.
And at least by <unk> standards, we could we could detect is positive and over 90% at 11 months. However, the at 6 months the quantitatively the.
And number of T cells specific to the to the index.
And just by the vaccine is waning at 6 months. So so theres some some lost there so.
We're working with.
Certainly a variety of investigators and some and.
And the set of vaccine makers to.
Hopefully incorporate that.
As we move I'll pass it to Chad.
Okay.
Yogurt and the upside case, and again I just want to make sure reframing and the right context, because you brought up the term upside case will sogou talk specifically about those 3 areas, which could have potential upside and 1 is.
And the research business.
Government decides to fund large shelf signage and large scale studies to truly understand the show you and immune response or the T cell response.
Due to the virus, such theres potential upside for us in that.
And that well actually and the same day and let's stay within research if and we're working on this if the FDA kind of mandates that the vaccine manufacturers and include a measure of T cell response, and their clinical trials that we upside right now there are opting in to do it as evidenced by the most recent signing with <unk>.
And so those are the 2 outside of the research from a change and tech standpoint, it would be if we could figure out how to get reimbursed for a TD tech COVID-19 test that would be and.
Outside and a third is and the drug discovery category. If if we if our partner Baxter body shows that their vaccine.
Which is a DNA based vaccine that doesn't have kind of the cold chain storage requirements.
Is it proves to be effective.
And on a standalone or as a universal book booster that would be.
A tremendous upside case, but again, just characterize those all as upside and not not baked into.
And any way out and our guidance assumptions for the year.
Thank you so much and then.
A quick follow up would you provide any thoughts from timing of potential milestones over the next 18 months from Genentech and any other collaborations.
I think it's.
And as we said, we're going to be delivering our.
Data package to them and and this fourth quarter of this year, but we are we have not yet kind of specified kind of timelines as to when we are going to be expecting.
And milestones to hit but we should hopefully be able to we're soon as we know we will be able to provide an update to you.
And you guys and any additional milestones and there would be upside to the guide we're getting.
Great. Thank you.
And our next question is from Tycho Peterson of Jpmorgan. Please ask your question.
Okay.
Hey, guys good afternoon.
I'm wondering if you can comment more on the <unk> deal.
And how you're thinking about.
That opportunity.
Is that something where you get back and economics, if you could just touch on both the Covid piece and obviously the Zika vaccine you mentioned as well and press release.
Yes.
With respect to both journal of this this is 1 that falls into kind of our research bucket of revenues and T map T map Covid, where we're helping more journal assess.
And the cellular immune responses with <unk> T cell response to a vaccine and kind of what what is inducing outside of the antibody response and so there.
There is there is no kind of backend economics.
Associated with that feel like there is with our drug.
And with our Bachelor body deal, where we're kind of part of the design and development.
Okay, and then on television and Tech obviously, you mentioned the multiple sclerosis and signal can you, maybe just touch a little bit about how you're thinking about net opportunity and timeline.
Sure.
So we're in.
This is early days for us obviously and so it's an early signal and there's some more work to be done, but we are beginning to explore that market and we.
We understand the incidence is and isn't huge it's about 12 to 15000 patients diagnosed annually in the United States. However, as you probably know the process of getting their involved a lot. There's a whole variety of clinical scores that needs to be met.
And our eyes that and that need to occur and lumbar punctures and some other.
A relatively and invasive and expensive and tests that create a diagnostic odyssey that can be challenging so.
And there has never been as far as we know.
Blood tests to really be specific for MFS and that's what we're really most excited about is to be able to do that upon the earliest signs of symptomatology of MFS and and Thats really where we think that there is a room for huge improvement with our T detected potential <unk> and <unk>.
Application.
And maybe 1 last 1 Julie on the on the pharma side you had another MRV partnership interest.
And about kind of the pipeline from the back half of the year for some of our partnerships on the pharma side.
Yeah, I mean, it continues at a pretty regular cadence on all the time, our pharma business, both actually I should say on the margin side and the non <unk> side. So we're seeing a really nice.
Come back to life.
And then T cell pharma work that we do and we're also broadening beyond oncology quite a lot as a lot of the data and the places we're going and the kols were beginning to interact with them.
Our beyond oncology, so that the totality of the pharma business right now for MRV testing as well as non MRV testing is looking really bright for the back half of the year and Tiger 1 thing Thats Chad Cohen mentioned in his prepared remarks, and I just wanted to kind of call out again is kind of replenishing.
The milestones that are associated with these deals even though we did draw down kind of some other milestones this year and we've actually kind of more than replenish those milestones I think maybe next quarter, we'll provide an update on and what those numbers look like but we've more than replenish what we've what we've been able to take out over this year through new deals.
And what I would kind of a very robust pipeline.
And.
And the <unk> pharma category.
Okay. Thanks I appreciate it.
And our next question is from Mark Massaro of BPI.
Please go ahead Sir.
Hey, guys. Thanks for the questions I guess.
And I believe it was last quarter, you talked about having over $300 million and potential future milestones and MRV can.
Can you just talk about how the agreement with Janssen may have expanded that size and.
And I think it would be interesting to hear you pull down $1.5 million this quarter $7 million last quarter.
Yeah.
It feels like we're going to see.
Relatively steady cadence of these over the coming quarters.
Julie just kind of alluded to that but if there is any way you could provide any more clarity around that that would be helpful.
I'm going to start and then I'll pass over to Chad Cohen to talk more about the numbers, but again I want to highlight.
1.
And another call out from the prepared remarks, which is the really call to action. The multi myeloma paper that was published and the CCR.
Clinical cancer research that really called for use of MLD as a regulatory endpoint that when that happens that would be a catalyst that would make a significant portion of those milestones on the balance sheet available to us so there's kind of cash.
<unk> driven event that we've been well the field has been working on for some time and I think we're making significant approximate amount of progress with.
Specifics regarding kind of the quantum of dollars Charles do you want to come and yes, I mean, I can just comment that we continue to grow almost quarter over quarter number of milestones that we can participate in and so we're in a number of those greater than last quarter. I think we'll be thinking about how best to sort of provide you quantitatively with that going forward and at what.
Sort of time points and milestones that we reach.
I'll just say that.
Happy with the number of deals that we've been able to do it validates.
And our thoughts about the size of the market and how we can be and instructive to our Biopharma partners, alright, and using milestone and the clinical end points.
The majority of our milestones relate to primary endpoints with the second category of the secondary endpoints and.
And they cut across.
About a dozen different partners, but more.
<unk> studies, sometimes within each of those partners.
And in the U S and India.
And so there are quite a quite varied and I think they represent a really nice.
Really its optionality for us that we are improving really delivers on our on our P&L from.
From time to time and as you've seen for the past few years.
Okay.
Okay. Thanks, and then.
Congrats on the <unk> deal I guess quick 3 part question. The first I think I heard you say that this would be used as a universal booster.
Would that be obviously, a booster for both Madonna and Pfizer or can you comment on that and then secondly, I would imagine this is likely a non exclusive deal can you confirm that and then on the royalty side should we think of this as like a low single digit or could it be more lucrative and that.
Yes so.
I'm going to try and make sure I got those all and Margaret.
The first question the answer is yes.
We do see this as a potential universal booster and.
And the second point there is it also could be.
Because of the lack of cold chain cold chain storage requirements.
Moving to disseminate to kind of.
Around the world there is a potential there.
Number 1 in terms of.
We were not able to kind of specify the financial arrangements in terms of royalties, but I think youre thinking about it I think youre thinking about it and the right way and.
2 from a just from a T cell design and development perspective, there's kind of a limited set of exclusivity around what we're specifically doing with them.
Okay. Thank you.
And here's my last question from salary and which there of Goldman Sachs. Please go ahead.
Hi, good afternoon, and thank you for taking a question and this is Elizabeth on first Albion.
And I was just wondering if you had any thoughts about how that T cell based Sars cov 2 vaccine differs from great Stone bio's approach, where they're also trying to sort of develop that a.
T cell based vaccine and then I have a follow up question.
Around to be and that program.
Sure.
Harlan.
You too.
And I don't want to speak too much about grid stones approach, because I'm not I'm not fully familiar with them I know that.
And 1 of the big differences the reason that debt.
The.
In fact somebody wanted to partner with US is that is that our ability to.
And.
Basically use our cash.
Chemistry and technology to 2.
Our established immune response, not through and algorithmic approach, but through a direct assessment of the immune response. So so I think we're starting there but also.
The 1 thing Thats unique about <unk>.
Baxter body is their ability to.
Target the immune response to directly to the antigen presenting cells of choice. So as far as we know that there is a fair.
And part of that I'm aware of this as a unique ability and.
And so it's not to say that other vaccine players aren't attempting to induce a T cell response, obviously from the primary.
As I'm sure you're well aware of the the primary focus of vaccine development throughout history, and and and with all the ones on the market right now where were designed to generate antibody response, not a T cell response, but they of course, everybody wants 1 and it's not like you're avoiding and T cell response, so maybe whats the point being that the.
This unique ability to target antigen presenting cells and adaptive propel.
Proprietary ability to to pick out truly.
The best Immunogenic.
Target is what that is what kind of sets.
Collaborations apart I think but I can't comment directly on.
The ins and outs of.
Chris Jones approach.
Yes, that's really helpful. Thank you and then.
Regarding to detect and M S.
Just wanted to know if theres anything sort of different about how youre thinking about the development.
And of the program here or maybe a different clinical consideration versus some of the other indications given there is an association of the viral origin.
Jim Barr virus for MFS versus other autoimmune diseases.
Where there is not such a close sort of viral tie.
Okay.
Alright <unk> so.
<unk>.
There is.
It was actually.
Pathogenic ties and or confusion and.
And a variety of these different.
Autoimmune conditions, but certainly I think some of the best studied as Youre, saying is for.
And Ms where there's.
Some direct connections, including some papers that we have.
And part of our publications on Hum.
We're trying to.
Fill out our our diagnostic approach and viruses that are focused.
Around let's let's say around the space of the autoimmune diseases of interest, though for example in and.
In.
IBD, where looking at pathogens that are.
Yeah.
Implicated in <unk> confused with the disease and the gut.
When we get to rheumatoid arthritis, we've actually got ahead of ourselves on the other vaccines on the viral side, where we are we're looking at a set of of viruses that can get confused with rheumatoid arthritis conditions and same with and that so so we're trying to package. These together, where we can either look at causation or and or look at.
A differential diagnosis, where the disease itself can be compounded with with the simple symptomatically. So so absolutely we're.
Exploring these.
And in various capacities and that's really driven and a lot of ways. Our our developmental efforts on the on the viral and the rest of the pathogenic side.
Got it thank you.
And we have our last question from maybe the Westenburg of Guggenheim. Please go ahead.
Hi, Thank you for taking the question.
So first and I'll talk about kind of the way to think about pricing and <unk> and what is a fair ash ESP I think historically I know Pete attack or immuno seek you used to call. It has.
Not really.
A major cost advantage versus competitors.
What do you think is actually.
A fair prices, we bundle kind of certain diagnostics I mean, what's kind of the bar.
Bar and I read.
I realize you probably can't give a specific price, but as we think about this cash and in the future and your ability to panel it or go after single indications I just come on and think about how you might think about fair pricing and I have 1 follow up after that.
Yes.
Hey, David.
So.
As we move from single diseases to differentiate diagnosis to what I would say kind of the Holy Grail for us was kind of being part of and immuno screen or a checkup.
And how we think about price points, along each 1 of those kind of.
Current continues wind up kind of being being different meaning.
Youre going to have kind of a regular checkup cost and the other day as part of our music screened and that has to be at.
And at a lower price point.
But as you look at kind of disease diagnostics a lot of it has to do with the market access landscape unmet medical need the non invasive nature of of your tests et cetera, and that usually and Y O Y. It brought up kind of market access and the payer landscape as payors and essentially are willing to pay.
And at least at this time kind of different different price points for different levels of.
And different types of tests for example.
Kind of well known that users are going to pay more for a cancer based test or and autoimmune related touch right. Now then and infectious disease related test so.
We continue to kind of work with the payer community and and we've talked preliminary and some other disease categories that we're looking at are some of the disease indications I should say that we're looking at about kind of touch points, but we're really kind of ultimately want to be able to kind of hit that sweet spot at the end of the day.
How much we can charge for it and that'll be kind of reimbursed broadly bye bye.
And by the by the payer community.
Doug do you want to.
And I agree with Chad's commentary I would say that.
And additionally from a from a margin perspective, the incremental cost of layering in additional signals within each.
And each test is going to be small.
And so from that perspective, as we sort of move up the value chain from a market perspective.
Margins the potential gross margins of the business.
<unk> just continue to grow.
And in concert with that so I think we're really excited about it and that if he does that COVID-19 was a beachhead and a stepping stone to a much.
Much bigger concept.
Got it. Thank you and then switching gears to <unk> just quick thinking in terms of.
Other potential indications I don't think T cell diseases or as big markets, but is there any other off label is there any off label usage or is that any consequential part of overall and in Kronos seek and I'll stop there.
Yes, there are there are and when.
And say off label because they are brought up under our CLIA lab under a kind of a.
And the regulated environment, there's 2 of them and I can say 1 is in the key cutaneous T cell lymphoma, or <unk> and the second is although most ALLL b cell derived theres about 8.8% to 10% that are T cell derived.
Acute lymphoblastic lymphoma, and so both of those populations, we do service right now through our free environment.
Got it thank you.
And that's it for our question and answer session and I would like to turn it over back to Harper centers.
That's all we have thanks, everyone for joining today.
Yeah.
And that concludes.
Our conference flow today. Thank you everyone for your participation you may now disconnect.
Okay.
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