Q2 2023 Adaptive Biotechnologies Corporation Earnings Call
Okay.
Good day, and thank you for standing by welcome to the adaptive Biotechnologies second quarter 2023 conference call.
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Now I'd like to hand, the conference over to your speaker today, Karina, Cambodia head of Investor Relations.
Thank you Sandra and good afternoon, everyone I would like to welcome you to adopt they play a technology second quarter 2023 earnings conference call.
Today, we issued a press release reporting adopted financial results for the second quarter of 2023.
The press release is available at Www dot adopted by the Dot Com. We are conducting a live webcast of this call and we will be referencing to a slide presentation that has been posted to the investors section in 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 perspective of the business as of today actual results may differ materially from today forward looking statements depending on a number of factors, which are set forth in our public filings with the SEC and listed in his presentation.
In addition, 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 release.
Joining the call today are Chuck Robbins, our CEO and co founder I'm, Tycho Peterson, our Chief Financial Officer additional members of our management, who will be available for Q&A.
With that I'll turn the call over to Chad Robins Chad.
Thanks, Karina good afternoon, everybody and thank you for joining us on our second quarter 2023 earnings call.
As always I want to thank all of our adaptive employees for their continued dedication and execution we're.
We're halfway through the year with solid six months results and key milestones achieved.
As shown on slide three revenue for the quarter was $48 9 million, representing 12% growth versus prior year.
This growth reflects strong performance from policy clinical testing and the achievement of our first milestone in drug discovery, which more than offset an anticipated reduction in our genentech amortization.
Our R&D programs in oncology and autoimmune disorders continued to progress.
Both programs in cancer with Genentech are advancing and we're very pleased to see the IND acceptance for our first candidate in cell therapy.
In addition, given our efforts to streamline our organization and improve operating efficiencies, we achieved cheap gross margin improvement up eight percentage points related to sequencing alone versus prior quarter.
We are laser focused on achieving operating leverage and ensuring our path to profitability with current cash on hand.
Earlier today, we announced that knitting should head of our <unk> business is leaving adapted to take a new position and a multinational public company Susie.
Susan Tobolski, who has led the clinical business for the past five years will assume additional responsibilities and report directly to me.
I'd like to thank Nick for his leadership and the important contributions. He has made in laying a solid foundation for our <unk> business and we wish him success in his new endeavor.
Let's now take a closer look at <unk> business on slide four.
Total <unk> for the quarter, including clinical testing in pharma grew 22% versus prior year.
On the left side of the slide you can see strong policy clinical volume growth with all metrics trending in the right direction.
Tests delivered grew 52% year over year with double digit volume growth in all marketed indications.
Myeloma continues to be the largest contributor in the main growth driver.
<unk> health care providers, and ordering accounts grew 44% and 37% versus prior year respectively.
Blood based testing increased in all indications and grew 16% sequentially now approximately 37% of all MRV tests are in blood.
Community accounts, a key factor to accelerate penetration in blood continues its growth trajectory quarter over quarter, and now contribute 21% employment seek volume versus 11% a year ago.
As shown on the right side of the slide <unk> pharma grew 14% excluding regulatory milestones.
The slight slowdown in growth this quarter reflects macro factors impacting the broader biopharma industry as trials are getting extended and portfolios re prioritized.
That said strength in bookings reflect healthy demand for the business going forward.
Zooming into quality test volume on slide five.
We continue to set record high volumes quarter over quarter.
This quarter volume grew 13% sequentially to over 13660 tests delivered.
Our strategy to drive closing volume is working and we reaffirm our commitment to end the year with over 50% volume growth versus 2022.
Asp's.
Were impacted in the quarter due to growth in out of policy indications and higher Medicaid contribution however.
However, we have a targeted ASP plan focused on closing remaining payer contracts and policy gaps as well as increasing resources for claim management to improve collections.
We are confident these initiatives will enable reacceleration of ASP growth for the next several years.
Related to ongoing initiatives to expand Klocek utilization.
<unk> integration is progressing well and we're excited to bring our first pilot sites live this month with additional integration sites to follow.
This marks a milestone for our partnership with epic and demonstrates our commitment to investing in the quality customer experience.
We also continue to expand meaningful data readouts at the Ash conference, particularly highlighting blood based testing in multiple myeloma.
As shown on slide six the final analysis of the Master study was presented during the EAA conference in June .
This study shows that for patients who discontinued therapy. After two consecutive negative currency tests over 85% of them in the standard or high risk category did not progressed after a three year follow up data.
These data have been very well received by physicians and are driving adoption of <unk> for making critical therapy decisions for patients.
In summary, the setup for MLD is strong in both clinical testing and pharma and we look forward to continuing to fuel its growth.
Switching to our immune medicine business on slide seven.
We generated $23 million in revenue this quarter from drug discovery in pharma services with drug discovery contributing more than 75% of the revenue our iam pharmacy services business was impacted this quarter by a macro effect factors affecting the broader biopharma industry, including strategic Andrew our budget re prioritization.
In addition year over year comparisons vary as the <unk> pharma business is lumpy throughout the year.
This was an important quarter for drug discovery, we recognize the first development milestone from our cell therapy partnership with Genentech. This milestone represents a new revenue stream to help offset the decrease in the genentech amortization this quarter.
Let's take a closer look at our cell therapy program with Genentech on slide eight.
Genentech secured the FDA IND acceptance for the first neo antigen directed T cell therapy product candidate.
Importantly, this IND acceptance reaffirms the value of our TCR discovery platform and our ability to identify and characterize clinical grade therapeutic T cell receptors, which is a cornerstone of our drug discovery capabilities. We're thrilled by this acceptance and look forward to supporting Genentech as it gears up for the first in human trials.
While with this potentially lifesaving therapy for patients with solid tumors.
In addition, the personalized program is also maturing we are on track to standardize our end to end workflows and are making good progress in building the required regulated infrastructure and our dedicated South San Francisco Laboratory, our focus with Genentech is to build the product development requirements. This.
Year that laid the foundation for clinical readiness.
As you can see in slide nine in addition to our cancer cell therapy partnership with Genentech, we're executing to deliver on our key R&D proof points in autoimmunity.
This includes focusing resources on high value R&D programs to discover novel targets starting in multiple sclerosis, we aim to identify at least one novel disease specific target by year end.
We're excited by the progress, we're making and we look forward to providing an update of where we advance. These programs during the second half of this year.
Now I'll pass it over to Tycho.
Thanks, Chad.
Turning to our financials on slide 10.
Revenue in the second quarter was $48 9 million with 53% from <unk> and 47% from immune medicine, representing a 12% increase from a year ago, which was primarily attributable to growth from the <unk> clinical business and the Genentech R&D milestone.
M&A revenue grew to $25 9 million up 21% from a year ago with growth from both clinical testing and pharma partnerships, partially offset by a lack of MRV regulatory milestones.
Closing test volume, including international increased 52% to 13664 tests delivered from 8998 tests in the same period last year.
Immune medicine revenue was $23 million up 3% from a year ago, driven by recognition of the Indy milestone, which more than offset the decline in genetic amortization and pharma services.
Now moving down the P&L on slide 11.
Total gross margin for the quarter was 63% representing a 13 percentage point increase versus last quarter and a six point decline versus a year ago.
The sequential increase was mainly attributed to the IND milestone as well as a 4% decrease in cost of revenue.
Other opex, including R&D sales and marketing and G&A declined 5% in total versus a year ago, mainly due to a 13% decline in R&D.
In total opex, including cost of revenues remained stable year over year and sequentially, while revenue grew 12% and 30% respectively. During the same periods.
We look forward to continuing to optimize our processes to further enhance margins through a number of efforts, including streamlining the organization.
Disciplined R&D investments and completion of the lab move with updated lab information management systems.
In addition, we are evaluating switching from next week to Noetic X, which we expect to contribute to significant savings going forward.
Finally interest expense from our royalty financing agreement with <unk> was $3 6 million, which was offset by interest income.
Net loss for the quarter was $47 7 million compared to $52 1 million last year.
We ended the quarter with approximately $417 million in cash equivalents and marketable securities.
Which as Chad noted in his comments will bridges to profitability without the need for additional capital.
Now turning to our outlook on slide 11, we are reiterating full year guidance of $205 million to $215 million in revenue.
At the midpoint, we continue to expect the contribution from our businesses to be approximately 55% from MTT and 45% from a new medicine.
Within our MRO business, we expect over 50% growth in policy test volumes as well as R&D regulatory milestones in the back half of the year.
We expect second half revenues to be more heavily weighted towards the fourth quarter, mainly attributed to drug discovery deals that we expect to close by year end.
As we continue to drive operating efficiencies. We are also reiterating our full year opex targets, including cost of revenue to be below 2022, opex of $385 million.
Cash preservation remains a priority and we now expect our burn for the remainder of 2023 to average $35 million per quarter versus the $40 million previously estimated.
Q2 financial results were solid and we remain committed to driving additional operating leverage and achieving positive EBITDA in 2025 and cash breakeven in 2026.
I'll now turn the call back over to Chad.
Thanks Tycho.
As discussed during our call our MLD and immune medicine businesses are performing well and we are looking at ways to maximize the potential value of each business to best serve our patients and our shareholders and our <unk> business, we are executing to increase <unk> penetration and solidify our mark.
<unk> leading position in.
In our immune medicine business, we continued to advance our partnered programs with Genentech and our internal R&D efforts and autoimmunity.
With that I'd like to turn the call back over to the operator and open up for questions.
Thank you.
We'll now conduct a question and answer session. As a reminder to ask a question. Please press star one on your telephone and wait for your name to be announced to withdraw. Your question. Please press star one again, please standby, while we compile the Q&A roster.
Our first question comes from Rachel <unk> of Jpmorgan Chase.
Please go ahead.
Hi, good afternoon, thanks for taking our questions here and the first app.
<unk> departure or can you just walk us through the management transition plan for NRG and if you expect to have any strategic changes in that business going forward and as a follow up you flagged some of the temporary delays around clinical trials and re prioritization and portfolio that pharma. So could you walk us through how long do you think that those delays in re prioritization can really weigh on the margin.
Yes.
Yes sure. Thanks for your questions Rachel first.
With respect to <unk> I want to say net new to us on the call ill turn it over to him in a minute to make some comments, but I wanted to thank you for all his contributions to the business.
Okay.
There's going to be a seamless transition that we are more than prepared for we have an incredibly strong bench, Susan but volesky is going to lead the clinical business and report directly to me. She has been actually leading the clinical business with direct oversight of the sales team for the last several years and it is really a fantastic leader that's been with the company for 10 years.
And the businesses are really good straight shaped and a strong foundation is there more fire firing on all cylinders closing volumes are growing at.
Very fast pace, we're committed to over 50% growth volume growth this year.
And as mentioned during the call all metrics are pointing in the right.
Direction in.
We're in very good shape and expect a very seamless transition.
Want to make any comments.
Yes, Thanks Chad.
This decision has been a difficult one.
As adaptive has been a truly rewarding place for me to work at.
And the MRO business is on a solid foundation and our latest quarterly results demonstrate that we have a market leading position in heme cancer that Marty with the best performing product strong clinical evidence broad reimbursement and we are the product of choice in pharma and Susan is a fantastic leader.
It has been a key player in building the business from the ground up we have a dedicated and committed team that's deeply passionate about improving lives of heme cancer patients and I'm honored to play by far in such a solid impactful business and I'm very confident in the extremely well in the future and continue on the growth trajectory that we've demonstrated over.
The last few quarters.
So there was not an easy choice.
And but again.
Really delighted that Susan is stepping up and the business is in a very strong strong footing Chad back to you.
And maybe just a comment there on clinical trials to re prioritization.
Ed you want me to answer that or do you want to take that first.
Okay.
Oh, it looks like they may have dropped.
Yes.
We've been closely monitoring.
The business then.
We don't have a firm timeline.
To give you guys an update every quarter.
A lot of our business in the pharma space comes from multiple myeloma.
We're in pretty much every trial in multiple myeloma. So not only there is some re prioritization of the portfolio going in multiple myeloma, but a lot of these trials are competing for the same patient.
Patient pool and as a result, it has been.
Some delays in enrollment I believe.
Keep a close eye on it and as and when we hear updates we'll update you.
Great well best of luck, maybe if I could just squeeze in one more on margin and gross margin came in at 63% during the quarter, our nation's improvement sequentially versus <unk>. So could you just walk us through the components of the increase there and then how should we think about gross margins evolving for the rest of the year and even into <unk>.
24, I'll remind us really what are those margin drivers. Thank you.
I think we lost the room that has Tycho chat.
Sharon.
So can we come back to that question.
Harlan I think.
In trouble for entering the financial questions.
Let's let's wait for Tycho to come back on and we will return to that question.
Yes Harlan.
Are you back on.
Okay.
Yes.
Yes, whereby com I'm going to call it.
Granted you hear the question around gross margin.
Yes, we did triglyceride here.
Yes, so as it.
The gross margin.
Again, we're moving our our lab into the headquarters right now we're in the midst of that so that will lead to lower cost of revenue on the back and but that did weigh on it a little bit importantly, I would just once again flag, 8% sequential improvement in sequencing margins and the fact that you know we do have a number of additional steps for evaluating including a potential shifted nervously.
Perfect. Thanks for all the color.
Yep.
Thank you. Please hold for next question.
Our next question comes from Dan Brannan of T D Cohen.
Thanks for thanks for your questions guys and Karina you talked about <unk> could you just give <unk>.
Get a little more color there.
What was your expectation you mentioned a couple of the headwinds accidents.
You're taking to get the <unk> in the right direction.
Walk us through a little bit the impact this quarter and what we should expect going forward.
Yeah sure.
The corner <unk> impacted by three different factors one is growing indications that remain auto policy. So looking at D. L. P. C L and M. C. L. As an example, the second was testing for Medicaid patients increased.
12% of our product Max and then third.
Prior authorization hurdles with certain pairs and I should just say that we haven't asked the acceleration plan in place. It's focused on a couple of different items. The first is closing the remaining pair contracts and policy gaffes and the second is increasing our resources for claim management and prior authorizations to improve our <unk>.
Collections, so as we tackle some of the AFC leakage, we do expect to reverse the trend in the second half versus the first half of this year and we are committed to an acceleration onward and are confident in reaching the 1600 dollar ASB price point by 2027 without <unk>.
Solid increase your year over year to get there.
Got it no. Thanks, Sir Thanks for that and then maybe just one back to Rachel's question on Biopharma. So just kind of brought I know you don't give a lot of trouble.
Subcomponent details about guidance, but like where are we in the evolution of some of the biopharma kind of hopefully more temporary pressures on spending and maybe availability of patients like how how do we think about the trajectory like Q3 <unk>.
Gross pick up on your both I mean, I'm already side and then the music R&D side or do you think you know the type of growth persist for the rest of the year.
Yeah. So you know we did talk about it being you know a back end loaded year more skewed towards the fourth quarter. You know keep in mind last year, we had about 55 per cent of revenues in total and the and then in fourth quarter it'll be a bit higher this year. There's a couple of other moving dynamics I'll answer your final question in a minute, but we are expecting <unk>.
<unk> in the third quarter at a higher rate than we saw in the first half and then keep in mind, we had a big quarter of Jeanette Tech amortization enemy in medicine in Q3 last year. It was $20 million. So there's a little bit of a tough comp issue and then we've got both you know growth and farmers services and new drug discovery deals that are you know in discussion that are expected to come in by the fourth.
<unk> you know as it relates to farmers services, specifically you know we've got a very diversified portfolio were involved in 120 active trials 60 companies. It's a mix of Smith cap and large farmer different stages of development. So I'm not sure. If you heard my common earlier, because I know the line cut in and out but we are you know committing to the 21st.
Sent cake or for that business over the next five years. So we're very confident in the long term outlook.
It's also coming off a tough cop that business you know had significant growth last year. So you know we are acknowledging that we do see some reprioritization of of pipelines, but overall, given a diversified portfolio or comfortable that that farmers services business can continue to grow nor.
North of 20 per cent over the next five years.
Awesome alright, thanks, Tyco, Thank you I'll get back to me too.
Thank you.
Next question.
Our next question comes from David Westenburg Piper Sander.
Hi, Thank you for taking the question. So I just wanted to dive in a little bit more on in terms of the a S. P. Here because you know you you didn't have pretty good momentum going in that business.
<unk> me a little bit off guard here can you talk about how those uncovered indications tend to grow you know faster I mean was there a lot of marketing was there just kind of an underpenetration and and maybe your overpay are more penetrated and and and kind of a higher gross indications.
Well first let's take David let's take the <unk> <unk> grew 28% quarter over quarter, albeit from some lower base. So it is increases in new indication, but it's it's a variety of different fat.
Doctors, one is an industry related factor that Medicare advantage from private payers, you'll has been a challenge for the industry in collections and we've got a very targeted plan to work on collecting you at the Medicare rates for Medicare advantage plans is another area, but you know it's kind of as you grow indications in new.
Medications that are covered yet you have your child that that tends to be.
Wallet drag on Asp's, it's also bodes well for the future as we close those policy and pair gaps. So your net net we we've got a very targeted asby acceleration plan in place we expect to reverse that it's actually already starting to reverse you know in the third quarter expected to reverse it not only second half of the year.
But going forward to be able to achieve that.
Top line 1600 by 2027th.
Perfect. Okay, and then is there any headwind from maybe getting cast ran outside of the first four covered indication in Medicare are you seeing Medicare patients order that cannot be a potential headwind in the future.
And then just to clarify believe most of your private pay our coverage. It. It's just based on a test by tastes basis. It's not the same way is that that Medicare and so I'm just squeeze one more and yeah. I you do see me, implying like you know on a sequential we we should be returning to sequential proven in N. A S. P. As as you know we we see you know.
Maybe quarter on quarter of sequential for men are here on your schedule proven I mean that that is tracking you know and when when we see I don't know maybe next year Q1 ish.
[laughter] I'm kind of rambling there sounds nuts [laughter].
It's like Rodney Dangerfield and back to school, but I think I think I've got a pickup truck and you're David talk to a couple of things one is <unk>.
B R.
Test by test basis for private pairs. The answer is yes as confirm it it's not on an episode of care basis like it is on Medicare. The third question was.
Guards two HD acceleration, we do have a targeted plan for ASB acceleration and we do expect S P as to accelerate.
In the second half of of this year and then the third if you look at kind of our different indications.
I will just say that you're most of my Loma continues to be the biggest growth driver it is under.
Coverage policy, but we are expanding indications for C. L. L. <unk> lymphoma in other indications with private repairs as well. So if you combine all those factors that's what's gonna lead to uhm ask the acceleration along with again I can't reiterate enough that we're putting additional resources.
Into the work flow and collections.
And getting prior authorizations where necessary.
Sorry, I'm squeezing in a third she answered pretty quick [laughter] just just.
Biotech funding are you seeing that in immune medicine or M. R D or both and and hopefully get just answer that quickly sorry, sorry, everybody for that third question.
We're seeing that a little bit of both is good budget Reprioritization. However, you both have strong pipelines in place.
And market leading position so we but we do see some impact for different reasons in the case, but.
Prioritization in in the <unk> pharma business. Some of it also has to do with most of my Walmart competition for patients in clinical trials as well.
Okay.
Thank you.
Move on to our next question please hold.
Our next question comes from Mark <unk>, a P T I G.
Hey, guys. Thanks for taking the questions. It's tough to follow Rodney Dangerfield on a call, but yeah and I wanted to say it was good working with you and best of luck going forward and Susan I look forward to working with you some more.
You know I've got some investor <unk>, yeah, great. So we got some investor questions a little bit a little more on the a S. P side. So you know take all I heard you maintain the Corona seek volume guidance for 50% plus which is great to see I think you guys had previously talked about wanting to grow.
Seek asp's up in the mid single digit range. Although today you guys called out some of the you know three pressures that you called out. So I'm just curious if if that mid single digit growth in a S. P's is still on target or do you think that might drift into 2024 and she kind of.
Make progress on some of those initiatives you called out.
Yeah, I mean, we're definitely expecting an improvement in the back half of the year versus the first half you know we had we had noise in both the first and second quarter here, you know and in particular around Medicare advantage Medicaid over all by the way is 12 per cent of our Tech <unk> you know there and then chat talked about growth and indications out of.
Policy, but yeah, I'd I'd say stay tuned I mean, I I I don't know that we've necessarily Wanna update we're gonna update on the third quarter and in terms of how we're thinking about asp's for for the full year, but we do expect the back half certainly to be better than the first half again, we've taken a lot of steps over the last few months to tackle the a S. P leakage, it's an industry wide problem by the way I mean pardon.
Our competitors are doing a lot of the with a lot of this noise too.
Yeah, and we I know.
And we are still expecting to get to $1600. You know over time, so whether it takes a quarter or two to kind of work through the rest of this noise TBD, but you know we're very comfortable in the longterm outlet for Asp's overall.
Yep and add Carroty extra that list as well of labs dealing with these pressures okay. So I guess.
Can you guys call out what the milestone payment was in the corner I think it's somewhere in the four to 7 million range is that the right ballpark.
So.
I N D acceptance right that was 7.8, you know we it's a 10 million dollar milestone, but uhm, we amortize the rest of it.
And yeah, there was nothing for empty.
Yeah, Okay, perfect and then just last one just to kind of clarify obviously I I don't think there's any change too.
Reimbursement rate for Cano C. Nothing like that I I think this was largely just a function of higher Medicaid mix. Some prior art mix of D. L. B B C. L. I guess one of one of the things I think investors would love clarity on US you know how quickly do you think you guys.
Can make.
Make progress on the prior outside and then you know do you think Medicaid is transitory or do you think that will remain around 12 per cent of mix and then like where are you guys again on T. L. D. C. L. Commercial pair I know, it's super early but you know are you guys, making any progress there or or do you think it's going to be more of a you know further out.
Yeah, So just to address the <unk>.
In terms of Medicaid you were looking at converting some of the high order accounts that have made a high volume of Medicaid patients to roster billing accounts to close some of that gap with respect you kept prior authorizations, we've already started implementing and putting that kind of work flow.
In place to get prioritization. So this isn't a you know oh several.
[noise] several quarters out this is happening now and then third in terms of Medicare advantage and private payers covering at the Medicare rates, we've already started to make progress on that front as well. Your last question were spent with respect to coverage in D. L. D C L and frankly other indications.
<unk> you know, we've we've done a good job on C. L. L. We're not about 200 million lives.
<unk> under contract G. L. D. C. L. We have additional data readouts coming in Ash, which we think should be a catalyst for private pair contracts into 2020th 2024. The current rate is we have about 75 million covered lives under and we look to increase that significantly in 2024.
Awesome, that's really helpful. Thanks, guys.
Sure Mark.
Please hold my next question.
Our next question comes from Sir Richard of Goldman Sachs.
Hey, everyone. Good evening and thanks for taking our question. This is Elizabeth <unk> Uhm wanted to ask about the impact of the ethnic integration on M. R. Detailing forward through the end of this year and into Knacks than what you would expect in terms of the cadence of [noise] across impact from that.
Does it seems like it could be a significant driver and then just on the <unk>.
<unk> collaboration when we could expect an update on the personalized products. Thank you.
Yeah sure. Thanks, Elizabeth first yeah, we're thrilled that we're starting the first epic integrations. This month with with a couple of different customers. The first successful epic launches I think demonstrate.
[laughter], what is incredibly hard work to integrate.
Into the ethics site and so we're ready to go we have received substantial interest from additional sides that are eager to gain access to Columbus testing and integrate with their name our system rollout is really dated by the availability of the I T will resources at each different center. So it is.
Kind of really a hand to hand combat with each site, but the reality is there is a ton of interest and will will be kept rolling them on a month by month quarter by quarter until we have you know what we what we deem is full penetration as much as possible within epic just a couple of numbers here.
For you I think as of June there were 161.
In the U S that had adopted ethics or network, which is there a precision medicine add on that is required for clone a Sikh immigration and it also required for you know all the other diagnostic test with a partner with epic.
My exact et cetera, it'll take us a few years to get through that number of integration in the meantime, the list of sites that kind of adopt or will also continue to grow so expect it you know.
We expect that this will grow over time and we also have talked about really the contributions in terms of volume being really coming in 2024, Although we will see some impact in the back half of this year, which we talked about to achieve our over 50 per cent volume growth.
Got it that's helpful. And then just on the timelines for an update on the personalized product.
Sure can you check that one.
Absolutely Hi, Elizabeth Thanks for the question. So of course on the heels of the first I N D. F. D. A clearance uhm. This of course validates our ability to identify clinical grade therapeutic detailed receptors that is for the first product and obviously the capabilities Bill.
To that end is what we're also elaborate gangs slowly personalized in terms of timelines, we're not in a position to disclose specific time lines, but certainly in terms of an update we're continuing to develop the prototype a hand in hand with Janine tech across really multiple paramo.
There's a number one is the number of patients to whom we can identify specific tcr's to each patient's unique mutations and then really having an understanding to ultimately standardized via the ability to understand the total number of kaesava sectors. We can identify from each patient and that is.
Allows us to establish really are more reproducible reliable expectations for the end to end process that we're putting in place.
Similar to tongue him across the board on that I I will say that in terms of update skin and tech earlier. This year started this sharing some of the data including.
The proof of concept study design for one line lung cancer patient.
That we also presented earlier this year in a conflict in New York and that was a great example of one patient we're into and the process has worked until well obviously look forward to sharing more information as more data reserve with a partner.
Thank you.
Please help our next question.
Our next question comes from <unk> a M S.
Hello. This is here on the call for <unk>. Thank you for taking our questions.
Recognition of IMD acceptance milestone from Janet attacked us corner could you speak to the next event that could trigger a milestone and would you recognize.
Similar amount a milestone approximately 7.8 million upon I N D acceptance of additional candidates the advances the clinic or should we expect a milestone for that.
[noise] acceptance of the first candidate to be bigger than the additional candidates that followed.
We think that.
The question, we haven't disclosed the quantum of Andy milestones, but of course, they staff and the the more progress across development of again in Canada as a typical any types of licensing deals the higher the economic so we're excited certainly by a dispersed declare.
And as <unk> mentioned, we do have other T. T r's that are being advanced as well as ultimately are fully personalised product program.
Alright, Thank you for that and then regarding evolving landscape and move towards these a M. R. D status as a regulatory endpoint in clinical trials could you provide an update on where that stands today and how you see the more recent conversion in Oakland.
To fall approval influence W.
Yeah, you'll go so.
We continue to put pressure along with our partners on on the agency for the use of I'm already has an endpoint, particularly moving.
Moving from surrogates to secondary to primary endpoint, Yeah. We do believe that we are making progress.
The date the data that continues to be generated points in the direction that they should be converted to an end point and clinical trials. Soon it's it's really hard to speak with be proscriptive about giving a tie.
Timeframe as to when the F. D. A is going to act on it but your metrics or pointing in the right direction.
The second question again.
Oh.
Wondering if if the recent.
Recent approval for approval insider had an excellent <unk> a few years ago, if that influences severe on on the primary endpoint Sir have you seen any more traction following that.
Yeah. So.
Glen and N a O L.
It does vary by indication you were you were you primarily.
Primarily focused on most of my <unk> I forgot to ask the biggest catalyst if you look at where.
Milestones are I think that you know clear.
Clearly clearly it's helpful to have kind of a full approval said you've got margie in their club and their trials across the indications there's a C O L. Sorry, with Janette Genentech as well that includes M. R. D. So yeah, a lot of a lot of different pressures from multiple directions in multiple.
Patients are pointing towards the incorporation of.
M R D as an endpoint by the agency.
Great. Thank you.
And then I'll just add you go you know you've heard US talk in the past we've got line of sight to about $400 million an eligible milestones. We're starting line of sight to about $170 million of that but if F. D. A does move forward indoor Saturday is a primary endpoint that's kind of upside relative to what we've previously talked about in terms of the path to profitability. So that's not baked in the guidance.
At this point.
Household color. Thank you.
Okay.
You. Please hold for our next question.
Our next question comes from Dan Leonard of credit.
Oh, hi, good afternoon.
You talked about epic.
Hi, I'm wondering if you could update us on your efforts to integrate quantum seek with community.
Yeah. So we.
Obviously application via EMR of choice in the community. We are evaluating the earmark systems to figure out just parochial or we're gonna get the biggest bang for our Buck as we looked you essentially make the test easier to order an integrated into the system. So it's certainly on the radar in in undervaluation.
Understood.
And then my follow up can you speak to your expectation for more drug discovery deals in the fourth quarter and how confident you are given the macro factors and reprioritization that your flag.
Yeah sure Yeah, I'll I'll I'll start with that and then and then maybe pass it off the team for additional color. Your first and it should be noted that the deals that we have for drug discovery in the fourth quarter are based on the existing data that we've already developed and the platforms that we've developed in T C.
Discovery, an antibody discovery and the discussions are well under way there in progress they'd been advancing otherwise they wouldn't be incorporated into our into our annual numbers here and then secondly, we have a series of essentially.
Essentially target discovery initiatives underway that are are really exciting and I think will lead to future development deals.
Well, we can either choose to partner on those programs or develop you know those those targets in house, combining with our platform capabilities.
Did you want anything on that okay.
Okay great.
Perfect. Thank you.
Thank you.
Please hold my next question.
Our next question comes from David Brown, a bank of America.
Hey, Thanks for putting me in Uhm, just you know <unk>.
Impressive that you're gonna do 50% volume growth this year and clung to seek right now looking at the visible alpha consensus the streets looking for about 40% growth.
In 2024 year over year growth is that a reasonable number to think I'm, just giving some of the ERP integrations and things are going on is that are you comfortable with the growing at that level.
We haven't put out guidance yet for 2024, however, I can say we are committed to significant double digit growth of we think there's a strong projector and clung to speak volumes that will continue well into the future. So you know I was.
If I had to cut it's not unreasonable, but we'll get back to you with more specifics as we as we come out with our guidance.
Got it and can you talk a little about just upcoming milestones or catalyst for your auto immune.
Program, how should we sort of thinking about that since auto immunity being a lot more interesting than a I.
Some of the other stuff.
Absolutely Hi, Sharon so in our focus and R&D, an auto immunity as we've indicated our goal. This year is to discover at least one novel target and one indication, including our focus specifically in multiple sclerosis, and IBD and so.
We're making great progress and are quite excited some of the ramifications here is that you know we're looking at target that are implicated in a large patient population.
And then the data we're generating to accelerate target identification is absolutely leveraging some of our existing machine learning and AI capabilities, including of course with our partner, Microsoft So where I'm extremely bullish around novel target discovery and really the discovery engine.
We're we're building the foundations up around M S and other auto immune indications to come.
Thank you.
Thank you.
I'm showing no further questions at this time. This concludes today's conference call. Thank you for participating.
Disconnect.
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