Q3 2023 Adaptive Biotechnologies Corp Earnings Call
Thank you for standing by at this time I would like to welcome everyone to today's adaptive Biotechnologies 2023 third quarter earnings call. All lines have been placed on mute to prevent any background noise. Just know after the speaker remarks, there will be a question and answer session and if you'd like to ask a question during that time.
Simply press Star one.
On your telephone keypad once again that is star one on your telephone keypad and if you'd like to withdraw your question simply press Star one again.
Okay.
I'd now like to turn the call over to Korean <unk> head of Investor Relations Carina. Please go ahead.
Thank you, Greg and good afternoon, everyone I would like to welcome you to adaptive Biotechnologies third quarter 2023 earnings conference call.
Earlier today, we issued a press release reporting adopt the financial results for the third quarter of 2023.
Press release is available at Www adopted biotech dot com.
We are conducting a live webcast of this call will be referencing a slide presentation that has been posted to the investors section of our corporate website.
During the call management will make projections 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 perspective of the business today.
Actual results may differ materially from todays forward looking statements depending on a number of factors, which are set forth in our public filings with the SEC on 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 John Robbins, our Seo income founder I'm, Tycho Peterson, our Chief Financial Officer additional members from management will be available for Q&A with that I will turn the call over to Chad Robins Chad.
Thanks Karina good.
Afternoon, everybody and thank you for joining us on our third quarter 2023 earnings call.
This quarter marks a pivotal moment and adapters evolution.
As we have previously shared we have two compelling businesses in MRV and immune medicine.
They are at different stages of maturity with different investment requirements operating models and distinct value drivers.
To maximize the full potential of each business, we have hired Goldman Sachs to assist with the review of strategic alternatives.
We will provide clarity on the path forward by early next year.
Why are we making this decision now.
<unk> D as a pure play diagnostic business with strong moats supporting closely to established position as the gold standard in heme Marty.
It's continued momentum and success will require a focused commercial execution to drive increased penetration in current and new indications as well as further investment and operational scale to solidify its path to profitability.
In contrast immune medicine is now fully focused on drug discovery supported by a major achievement this quarter, but did this with the discovery of novel target and multiple sclerosis.
These data validate our target discovery approach in autoimmunity with the ability to unlock additional novel targets in multiple autoimmune indications.
Combination of our drug discovery platform with Genentech in oncology and the discovery of this first novel autoimmune target.
US a clear path to successfully build a broad and differentiated therapeutics business.
We are confident in the value these businesses can deliver to patients and shareholders and expect that this ongoing strategic review will yield the best path forward to maximize their respective potential.
In light of this process and the evolution of our immune medicine business into a dedicated drug discovery model with line of sight to long term value creation. We are updating total company revenue guidance for the year to exclude revenue from the immune medicine business. However, as you will hear from Tycho we were.
We'll provide you with MLD guidance for the remainder of 2023.
Importantly, we continued to drive operational efficiencies throughout the organization.
We completed the lab moved this quarter, which is essential for future margin improvement and we maintain a healthy cash position with about $371 million in cash on the balance sheet.
Let's now take a closer look at our <unk> business, starting with clinical testing on slide four.
<unk> clinical testing continues to generate record high volumes quarter over quarter. This quarter volume grew 10% sequentially and 56% versus prior year to over 15000 tests delivered.
Growth came from all marketed indications with multiple myeloma as the largest contributor in the main growth driver.
Ordering accounts and ordering health care providers grew 30% and 33% versus prior year respectively.
Business in the community segment grew 25% quarter over quarter contributing 21% of currency volume in Q3 versus 13% a year ago.
Blood based testing increased in all indications and grew 14% sequentially contributing 36% of all MLD tests.
Included among the many presentations highlighting <unk> data at Ash. This year will be new evidence demonstrating the prognostic value of blood based <unk> testing in myeloma.
Speaking of data in Q3, we saw two important new currency datasets published one in mantle cell lymphoma, where currencies deep sensitivity of $10. Six was shown to have prognostic power and one in ph positive.
We're close to seek was favorably compared to the current PCR based monitoring standard.
Last quarter, we saw downward pressure on our asps.
River, driven by well understood factors actions, we have taken to address these pressures are already beginning to contribute to positive ASP trends as we saw consistent month over month increases in Q3, and 3% overall ASP growth versus Q2. These <unk>.
Positive trends I'm happy to say, our continued continuing into the fourth quarter.
Our plan to further optimize ASP is focused on coverage expansion growth in contracted lives improvement in payer mix and operational enhancements to improve collections. Specifically, we have invested in resources dedicated to claims management transition the majority of our commercial payers the <unk>.
New unique closing CPT code and closed additional payer contracts and policy gaps. We are confident these and other planned initiatives will accelerate ASP growth for the next several years.
In addition, epic integration continues to progress we launched our first site UC Davis health this quarter and we have four more sites that we anticipate launching by the end of 2023. We also have a vetted list of interested accounts and anticipate 20 to 25 sites integrated by the end of 2024.
Revenue declined 4% in the quarter versus prior year due to broader macro economic factors no I'm actually looking at slide five on MLD pharma revenue declined 4% in the quarter versus prior year due to broader economic macroeconomic factors impacting the biopharma industry.
Many of our peers, we are seeing pressure from some studies pausing or slowing down while companies re prioritize portfolios in specific assets.
This has resulted in lower sample volume across our portfolio prospective trials. Despite these transitory headwinds the overall health of the business is strong with over $190 million in backlog anticipated by year end.
We launched an updated version of our Cte DNA assay for use by our pharma partners and research and clinical trials for <unk>, we plan to leverage the updated assay and our upcoming <unk> FDA submission and deploy it for clinical testing and studies and other heme malignancies.
We also continued to add meaningful partnership to our portfolio. This week, we announced a new translational agreement with Beijing to measure MLD across its pipeline in summary, the setup for MRV as solid execution to drive top line revenue growth, while improving cost efficiencies is essential to drive this.
<unk> towards profitability by 2025.
Turning to immune medicine on slide six.
As mentioned earlier, we achieved a key milestone in the discovery of a novel drug able target in multiple sclerosis. This target was discovered based on our unique ability to accurately identify a specific set of <unk> that are found only in MF patients.
This EMS target sheds light on potentially new T cell biology that may be the trigger to this devastating disease. It also validates our novel target discovery approach, which uses our established drug discovery platform.
This discovery was accelerated by our ability to accurately identify T cell signatures of disease, which is enabled by combining our improved machine learning AI model.
Models that we've built with our partner, Microsoft and our existing TCR characterization capabilities. We're applying this exact same approach to discover novel targets and additional autoimmune disorders that we've strategically prioritize.
Regarding our cancer cell therapy partnership with Genentech this quarter or early product development team has successfully built out our personalized process work flow and south San Francisco under regulated conditions with the key building blocks now in place. We're starting end to end testing that defines the foundation for <unk>.
Future clinical readiness of our fully personalized process.
In summary, we continue to make great progress in our target and drug discovery programs in cancer and autoimmune 80.
Our immune medicine business remains laser focused to execute on additional key R&D and future clinical proof points that drive meaningful value inflections for our partnered and wholly owned drug discovery pipeline.
With that I'll now pass it over to Tycho.
Thanks, Chad.
Turning to our financials on slide seven.
Total revenue in the third quarter was $37 $9 million with 65% from MLD and 35% from immune medicine, representing a 21% decline from the same period last year.
The MLD business overall has been strong driven by high volume growth of policy.
The total revenue decline in <unk> was primarily driven by a 61% reduction in genetic amortization and.
And a 14% decrease in <unk> pharma and immune medicine pharma services due to the Biopharma headwinds that we previously discussed.
Partially offset by strong policy clinical performance.
<unk> revenue grew 24% from a year ago to $24 7 million.
<unk> clinical was the main driver with test volume, including international increasing 56% to 15072 tests delivered from 9649 tests in the same period last year.
<unk> declined 4% and no milestones were recognized in the quarter.
Immune medicine revenue was $13 3 million down 52% from a year ago with lower genetic amortization driving 85% of the decline.
Immune medicine pharma services, which saw a 29% decline versus the prior year also experienced downward pressure from biopharma.
Moving down the P&L on slide eight.
Total gross margin for the quarter was 49%.
The decline in gross margin versus the prior year was largely attributable to lower amortization of the genentech upfront, which is 100% margin contribution and incremental one time costs from the lab move.
Versus the second quarter. The decline was mainly driven by no milestones compared to the Genentech milestone we realized last quarter. In addition to product mix tied to reduced pharma services and incremental costs from completion of the lap move.
We continue to focus on optimizing operations to further enhance margins. This includes the implementation of the new Lindsay ecosystem by mid 2024, which will allow us to reduce overhead and increase the productivity of direct labor in the lab.
In addition, after completing a technical feasibility review will be switching from <unk> sequencer is next year.
We expect completion by late 2024 bring significant savings in material costs in 2025.
Importantly, other opex, excluding cost of revenue declined 11% versus the prior year and 12% versus the prior quarter as we continue to be laser focused on driving operating leverage and efficiencies across the organization.
Interest expense from our royalty financing agreement with orbit Med was $3 7 million, which was offset by interest and other income of $4 3 million.
Net loss for the quarter was $50 3 million compared to $45 $3 million last year.
We ended the quarter with approximately $371 million in cash equivalents and marketable securities.
Now turning to updated guidance on slide nine.
As Chad mentioned given the ongoing strategic review, we are updating total company revenue guidance for 2023 to exclude immune medicine revenue.
Going forward immune medicine will remember a more traditional drug discovery biotech model and we want to ensure that we do not trade off short term revenues for long term value and accordingly, we will not be providing revenue guidance for that business going forward.
For MLD, we continue to expect <unk> test volumes to grow over 50% for the full year versus 2022.
Asps in the fourth quarter are expected to grow mid single digits sequentially.
We expect pharma services to continue experiencing downward pressure from biopharma industry spending in the fourth quarter and MLD milestones are expected to be in the low single digits.
Putting it together, we expect total <unk> revenue for 2023 to be in the range of $100 million to $105 million.
As we continue to drive operating efficiencies, our total company full year opex target, including cost of revenue is expected to be around $375 million a decrease of approximately 3% from last year.
Cash burn for the third quarter was $46 million and higher than anticipated due to lower pharma service revenues, but we expect the <unk> burn to be more normalized at around $35 million.
Q3 had important achievements in both businesses and we remain focused on driving execution, while managing our spending prudently as we closed the year and complete the strategic review.
I'll now turn the call back over to Jen. Thanks, Tycho I am confident in the potential value of MLD and immune medicine, and we look forward to arriving at an optimal outcome that maximizes each business to best serve our patients and our shareholders with that I'd like to turn the call back over to the operator and open up.
For questions.
Okay.
Thank you.
At this time I would like to remind everyone again in order to ask a question Press Star then the number one on your telephone keypad. Once again star one on your telephone keypad, and we'll pause just a moment to compile the Q&A roster.
And our first question today comes from the line of Mark Massaro with BTG Mark. Please go ahead.
Hey, guys. Thank you for the time and the questions.
The first one is just I guess why now.
I think theres been some discussion about synergies or lack thereof of the two businesses just curious why.
We're conducting the formal strategic review at this time and maybe just any comments you have about.
The two businesses.
<unk>.
Should we read into this that there are just not parallel synergies between the two.
Yes, thanks Mark.
We have been talking for the Alaska 18 months about having two distinct business opportunities and we are evaluating all options with our partners at Goldman Sachs to maximize the valuable business.
Really it's the fact that we have two distinct businesses and there are different stages of maturity.
They have different value drivers and they also have different and investment requirements. I mean, if you look at the <unk> business.
<unk>, it's a commercial stage diagnostic business, it's the gold standard in MLD, but that business is it's all about execution on the top line, we got to drive volumes increase Isps and on the cost side, it's about bringing down the cost of goods sold and achieving scale to get to profitability by 2025, but I am it's a very different.
Our business is very different business model much more akin to traditional biotech business, our therapeutics business the business takes more time.
It's really valued as an add on.
Our.
Hi, I have very high potential but revenue at present isn't the drivers about generating data edge about developing assets and going through clinical trials.
Really about showing additional proof points that our milestone and catalyst driven it's been become increasingly clear.
Each business is it's really a natural point to look at a separation as NRG has now kind of achieved that scale and at the same time, we've had really what we consider a really nice breakthrough discovery.
And our platform and that we think is going to apply to multiple other autoimmune disorders. So now is the time and we're ready to go.
Okay, great. So obviously I understand they require a different capital needs and investment.
But as for why you're choosing to withdraw the.
The immune medicine business from your guidance I guess can you maybe peel the onion back a little bit for that reason.
Yes, a lot of it is because if you look at if you look at kind of MLD, which has got a very known trajectory. What we don't want to do is really different story, an immune medicine, where we don't want to trade off or mortgage kind of the short term for long term value creation there.
Our number of deals, which we could do that we want to make sure that we're doing in the right context to really maximize the potential cut off for the long term value of that business and there's some sense like being forced to do deals under kind of a certain time pressures and constraints would I think give away value.
New debt.
Well, what a nurture our shareholders.
Okay, Great and last one for me I might have missed it but can you just walk through the split between MRV revenue from clinical versus pharma, obviously, you talked about the pharma, having some headwinds but.
<unk> certainly maintained your volume guide for 50% for the year, but maybe just any additional clarity on how youre thinking about the clinical versus pharma breakout.
Hey, John.
Yes, yes, so I mean just for.
Youre asking on the breakout in the third quarter, what we're expecting for the fourth quarter.
Just to clarify would be great, but I'll take either.
Yes.
The clinical business.
If you kind of look so we didn't we didn't have any milestones there right. If you kind of look at U S policy.
I know it's about it's about 60 40 split overall is kind of the right the right math for this quarter between clinical and pharma.
Yes, we mentioned final wind down a little bit down a little bit sequentially.
In the second quarter <unk>.
Volumes had a nice sequential step up.
And then the fourth quarter.
Similar kind of 60 40 split.
That's really helpful. Thanks, guys.
Sure. Thanks Mark.
And your next question comes from the line of Dan Brennan with TD Cohen.
Dan. Please go ahead.
Great. Thanks, Thanks for the questions maybe the first one just on the strategic review.
It looks like Theres, a lot of options on the table.
Is the idea that the immune medicine business Youll look to sell that could that business come out as a standalone business and trade publicly.
Or is there a potential at both businesses get sold I'm just trying to think through obviously you know the press release discusses.
Strategic options things are on the table just what are what are the what are the permeation.
That are being considered.
Yes, Thanks, Dan.
Valuing all options are all on the table that we think can maximize value.
Obviously, we can't comment on.
Any M&A at this time, all we can say I mean, if you look at <unk>, it's a differentiated business with it.
Clear category, leading position with real strategic value.
So that provides us a range of viable options to pursue.
Same thing on the immune medicine business.
We think we've got some very differentiated.
Targets and are moving forward and those those could be standalone businesses and do very very well.
Standalone publicly traded companies, but again all options are on the table right now.
Are there things without immune medicine on the MRI you said that you guys would do differently in terms of.
You want to get the profitability of the balance sheet in good shape.
No.
But in terms of maybe you'd want to be more aggressive maybe you'd want to get more scale and maybe you want to add another businesses I don't want to think about <unk> on its own.
Operating like no other.
Strategically how does how does that business look on its own.
Yes, it's John that's a really great question and actually if you kind of Peel back the onion, a little bit to use your term.
One of the main reasons, we're doing this.
Really.
We have dedicated focus to.
On each one of the businesses so.
What we've what we've found kind of over the last 18 months or so has been kind of a competition for kind of resources.
Software is a good a good example of the coverages of our resources competition kind of for mind share et cetera. So there are ways that we could potentially accelerate on.
On the topline in MLD and at the same time I think there are additional ways that we can have going to operating leverage in the model.
And that is certainly something we would look to achieve.
Bye Bye bye looking at these as a standalone business.
Maybe I'll sneak one more and just in terms of you discussed pricing and the benefits. There could you just give us a sense of where pricing could head here with all the initiatives that youre, making on the <unk> side.
Thanks Jud.
I can just touch on the third quarter, and then maybe I'll hand, it over but we ended up just north of $1000 September was the highest month.
I can say based on trends in October we're confident in our fourth quarter is going to see this mid single digit increase that we mentioned in the prepared comments. So the initiatives that we've implemented are working.
But Susan do you want to maybe touch on myeloma, we certainly see the opportunity for continued ASP increases and frankly acceleration in the growth of Asps in 2024 and beyond.
ASP planned that Chad alluded to.
<unk> is focused again on coverage expansion growth in contracted line shift in our payer mix and operational enhancements to improve collections.
Undertaking already a number of initiatives with aligned to those categories and we have quite a few more planned for launch in January and beyond and through that we expect to see an acceleration of the growth rate on ASP in 2024 and beyond that we're not providing specific guidance, but we can certainly see potential for.
Sure.
Continued improvements.
Alright.
Maybe a final one and sorry, I'm Marty for 'twenty for any early look I mean pharma is so uncertain.
Called out others have called it out, but maybe we're hopefully near a bottom here just any any early way to think about 24 on the M&A side of the business. Thank you.
Yes, we're not providing specific guidance yet for 2004 or do I can tell you though from from.
From the clinical business standpoint, we continue to see not only the ASP growth.
Tycho and Susan just alluded to but our volumes continue to grow and we do expect another great year in terms of volume growth in 2024.
So might be worth mentioning we also had a significant backlog and emerging pharma $190 million, so that bodes well for the future health of the business.
Great. Thank you.
Thanks, Dan and our next question comes from the line of Rachel that install with Jpmorgan. Rachel. Please go ahead.
Hey, this is no on for Rachel and thanks for taking my question.
Yes.
Just reframe some of the topics you've touched on here a little bit more specifically.
Now understand you're refocusing here on the <unk> business can you give us a sense of the levers you can possibly pull to continue protecting and strengthening the balance sheet.
The quarter had some decent bright spots for example, excluding some one time costs in the lab move completion gross margins in <unk> were 55% versus that 49%.
And then also you've noted here at conferences that the switch from the <unk> project.
It is ongoing it can be a meaningful cost favor. So could you give us any sort of quantitative sense as to how much. Some of these cost saving that get mechanisms could protect your margins and manage our cash burn.
Heading into next year, assuming we're just looking at the <unk> business and then if you want to look at any updated thoughts and remind us of how that would mean med deal could play into that.
Additional thoughts thank you.
Sure Hey, Noah good to hear from you. So couple thoughts on margin this quarter.
Milestones are a big factor.
Come in 100%, we didn't have any milestones this quarter, so that did weigh a little bit on on margins, we had lower genetic amortization.
So it impacted us, but importantly, we finalized the lab move and that it did have some one time cost in the quarter. If you exclude the lab move costs gross margins work in a closer 2% to 55%.
So just looking at it a little bit sequentially. The genentech milestone we saw in the second quarter was $7 5 million again, no milestone in the third quarter. There were some product mix impact pharma services is higher margin.
And as we discussed on the call that slower than expected.
Going going forward, we're fairly comfortable that that business at scale is a 70 plus percent margin business and we've got a number of initiatives. We've got a limbs overhaul, we talked about there'll be labor and workforce efficiencies on the back of that you mentioned the switch to notice seek that really will benefit us in 2025.
We'll kind of implemented in the latter part of 2024, but I would really think about that contributing in 2025, but.
Like other CLIA lab businesses 70, plus percent at scale is easily doable for our business overall.
Other thing is we as we move labs from one building to another we continue to look at the real estate portfolio.
And we're looking at ways to kind of offload one of our buildings as well which will provide additional.
Additional leverage.
Okay.
Marty.
Okay.
Just had one follow up on <unk>, specifically, we think that business can be profitable in 2025. So.
That was my next question. So I was just thinking like if we're looking at just the core NRG business.
Yes.
Ed.
Would you like to sort of talk about hitting.
Hitting potential growth rates of like a 2022 and 2027 revenue CAGR of 20% to 30% EBITDA margin breakeven in 2025 are cash flow breakeven in 2026, and just the core <unk> business and then I have one last one.
Yes, I mean again I think we think <unk> can be profitable in 2025, we've kind of given you a number of the components around how we're thinking about asps increase.
Increasing and then volume growth over 50% this year.
It should be sustainable law of larger numbers, obviously start to factor in as you get further out but we're very comfortable that this will continue to be.
Hi in the double digits in terms of volume growth overall.
Awesome, Okay, and then related to that like law of large numbers thing.
Can you talk about if you thought about any of the closest core MRV adjacencies that maybe you could move into or pull forward. Some of the investment in those to be in the near term as part of your overall Tam story maybe.
Maybe not officially areas that you are definitively going into but maybe some areas you've considered as potential portfolio adjacencies that could be easy growth drivers as we sort of think about refreshing the long term growth story here.
Sure Susan you want to take that sure we have looked at a number of adjacencies.
First and foremost and most obvious ones are other lymphoid malignancies in which we have not commercialize the assay. So additional non hodgkin's lymphoma indications in particular.
And we do have plans in place <unk> commercialization, including at securing reimbursement from Medicare and private payers over the next couple of years.
Additionally, there are adjacencies in the myeloid.
Malignancies, and perhaps in other tumors and at this time, we are exploring opportunities in the myeloid space very early stages to understand the feasibility of particular technologies and the opportunity and then in the solid tumor space. We have done some review, but have no plans at this time.
Awesome. Thank you so much I really appreciate you taking the questions.
Thanks Noah.
And our next question comes from the line of Tejas Savant <unk>. Please go ahead.
Good evening guys Edmund on for <unk>. Thank you for taking my questions I just wanted to touch upon the epic EMR integration with some of your pilot sites now live I know you guys have talked about volume contributions really inflicting in 2024, but what have you seen so far in terms of volume inflection at these sites.
Sure. Thanks for the question Edwin we only have one site live asset today and not quite two months of experience with that but what I can say is that we have seen growth in that account in that short time at both in HCP users as well as in volumes and Additionally that site a positive feedback.
Has led them to expand the scope of the integration.
Previously limited to the outpatient setting now expanding to inpatient and including the potential to play standing orders, which are new features added since the initial go live we have far more site scheduled to go live by the end of this year. So we'll be able to start getting more robust, albeit still anecdotal evidence to.
Support understanding of how epic may contribute to growth in 2024 and beyond and again, we expect to have as many as 25 sites live by the end of 2004 at which point I think we'll be well positioned to comment on likely growth opportunities, but we do expect lift from epic other companies has implemented after caffeine.
Lift and we'll be eager to comment further when we have a little more evidence.
Got it that's Super helpful. And then just wanted to clarify I think you guys have just commented that you anticipate about $190 million in backlog by year end for the Charles side of the business.
Are your expectations between.
On mix between pharma and smooth in the backlog and between retrospective and prospective tropics.
Did you say between.
Mark ups.
Yes.
Got it.
Well I can't comment the majority of new studies that we book when you asked about perspective.
<unk> and Laura it's already our prospective study.
And we expect that to continue to be the case.
<unk>.
Yes, we don't have we don't have a mixed but I will also say kind of the majority of our client profile is kind of large cap pharma and not smedes in small cap, although we certainly do have kind of a.
Say kind of call it 15% to 20% that you would traditionally classifiers Smiths, but.
The majority of our large pharma.
Got it and then with the Ash conference just around the corner in December.
Are there some key publications presentations of data points that we should be watching out for.
Okay.
Yes, Indeed app in particular, we are excited about from data that is going to be presented.
Investigators from University of Chicago on the use of our assay in blood.
In this particular study kind of sequencing that early time points. During first line therapy in multiple myeloma to assess response in both blood and bone marrow and compare that assessment too.
Commonly used serum biochemical markers that are part of traditional myeloma response assessment criteria in the study it will show that kind of seeking blood is strongly prognostic of outcome and provides greater insight than traditional blood based markers and the authors have suggested in the abstract which is now available publicly and that the insights.
<unk> gained from this work could be useful in the future if validated to inform treatment intensification and multi positive myeloma patients. So we expect to leverage that data to advance the adoption of our blood based testing in myeloma.
Using it to help guide use of interim blood based testing as a complement tomorrow and by showcasing the favorable prognostic comparison. When you measure early response with Kronos seeking blood versus June biomarkers in blood.
Got it thank you for the time today.
Thanks Edwin.
And let's see here one more reminder, if you'd like to ask a question again star one on your telephone keypad and our next question comes from the line of Salve in Richter with Goldman Sachs. Please go ahead.
Hi, This is <unk> on for Sylvia and thanks, so much for taking our question. So we just have one on the immune medicine business.
He noted that a novel target has been identified and MFS. So what are the next steps for this program and what is the path to monetization here and then can you just discuss a forward growth outlook for this business more broadly thank you.
Yes, Sharon I will turn it over to you to Angela.
Yes, hi, thanks for the question.
Yeah, we're excited as we mentioned.
We've been focusing on identifying novel targets in autoimmunity and multiple sclerosis is that firstly program, where we've identified that novel target, we're actively confirming and continuing to validate both in vitro and in vivo MF disease model.
And ultimately building out a preclinical package.
Joining me on the target.
So that the Nols and now that we've unlocked.
Moving out.
Approach and that's of course in parallel our pipeline includes other autoimmune disorders.
And our goal overall is of course to eventually.
Be able to bring therapies against these targets into the clinic, either on our own or with a partner.
Thanks, so much.
Thanks Lydia.
And our next question comes from the line of David Westenburg with Piper Sandler David. Please go ahead.
Hi, Thank you for taking the question so just.
I just had a question on the immune medicine business in terms of inbound interest or conversations that you've had with <unk>.
What could be considered strategic partners, but maybe it could be customers right now like how they.
Alright desired any kind of like exclusivity on certain kinds of work you've done for them or any other kind of.
Inbound where strategic conversations you've had I know that some of that sensitive.
Any kind of color that would be great.
Yes.
Hey, David.
The only thing I could say at this time.
And the discussions we've had under confidentiality kind of showing the work we've done on the Ams target. There is a tremendous amount of excitement to look at ways that we may partner.
And as we said going under a strategic review and part of the rationale for not doing kind of a short term deal as we're assessing kind of what the kind of optimal partnership is if we if we go down that route versus going to developing the asset further ourself.
So.
Just more broadly on the immune business.
Exclusive of any non exclusivity really can't not at Liberty to comment on specific deal structures at this time.
Got you and sorry, if I missed it.
In and out of Wi Fi connection and phone connection.
Was there any kind of data with this there'll be had with Dms.
Is there any kind of parameters, we should look like in terms of.
Don't even know what they would be quantitatively like sensitivity specificity I'm a diagnostic guy so.
You tend to think of things that way, but.
Anything we should look for.
In the data that says this is going to be really really exciting.
Help us frame that thank you.
Sharon if you can kind of take take that that'd be great.
Yeah, absolutely so.
As you can imagine we have a lot of data.
It gives us confidence about the targets, we have identified and are continuing to generate that data to further validate.
Including in the preclinical setting our plan is to publish on these new finding.
Importantly, because of its novel discovery.
And have submitted this quarter a couple of core patent applications.
That protects our findings in Alaska, but also more broadly.
Differentiated target discovery approach in auto immunity.
And in addition, this includes also data on potential new T cell biology, we've uncovered.
That inform.
How if you will are wrapped up immune system attacks normal healthy cells and in the case of the last possibly triggers the disease. So.
Lot of that data.
Connie.
We're excited and we'll share when appropriate.
Thank you for taking my questions.
Thanks, David Thanks, Derek.
And our final question today comes from the line of Derik de Bruin with Bank of America. Derek. Please go ahead.
Afternoon. This is John on for Derrick lots.
A lot's been covered but.
Yes.
Wanted to ask on the macro great.
Great to hear on the bookings, but in terms of the pharma continuing pharma pressure I was wondering if you think there would be some sort of a budget flush in four Q and.
What's your expectation there do you.
You see that turning around in the next couple of quarters or do.
Do you, perhaps see that turning around in May.
Maybe like in the second half of 'twenty four.
Yes. Thanks for the question Jon So typically in Q4, you're right that we do experience higher volumes and revenue at pharma companies flush out their budgets, but that said given the industry softening. We've been observing of late we don't anticipate as big of a lift this year in Q4.
That said importantly, we still do have a very significant backlog and healthy bookings and we haven't seen a lot of studies being canceled.
So our backlog has grown and we believe that most of the re prioritization is being completed so we do expect the higher backlog that we felt 20% higher than last year will fuel revenue growth in 2024 and beyond.
Got you I appreciate it and then just.
Just wanted to ask you <unk>.
Talked about the moving pieces of the ASP, but the long term target of $600. In 2027 is that does that still stand.
Yes.
We could we're confirming our long term targets are making.
Great great strides to get there.
Awesome. Thank you.
Great. Thank you.
Operator are there any other questions.
I apologize.
Geez It would help if I would talk on muted no there aren't.
No further questions did you have any closing remarks folks.
Hello, Thank you for joining the call.
Thank you and ladies and gentlemen that concludes today's call. Thank you all for joining and you may now disconnect have a great day everyone.
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