Q1 2025 Adaptive Biotechnologies Corp Earnings Call

Okay.

Yeah.

Operator: Good day, and thank you for standing by.

Good day, and thank you for standing by.

Operator: Welcome to the Adaptive Biotechnology First quarter 2025, or in this conference call. At this time, all participants are in list only mode. After the speaker's presentation, there will be a question and answer session. To ask a question during this session, you need to press star 11 on your telephone. You will then hear an automated message advising your hand is raised. To withdraw your question, please press star 11 again.

Welcome to the adaptive biotechnologies.

First quarter 2025 earnings conference call at this time, all participants are in listen only mode. After the speaker's presentation. There will be a question answer session to ask a question. During this session you need to press star one one of your telephone you.

Speaker Change: You would be in here an automated message advising your handy is raised to withdraw your question. Please press star. One again, please be advised that today's conference is being recorded I would now like to hand, the conference over to your first speaker today Karina Casebier.

Operator: Please be advised that today's conference is being recorded.

Karina Calzadilla: I would now like to hand the conference over to your first speaker today, Karina Calzadilla. Head of Investor Relations, please go ahead. Thank you, Antoine, and good afternoon, everyone.

Karina Casebier: Head of Investor Relations. Please go ahead.

Karina Casebier: Thank you Anthony and good afternoon, everyone I would like to welcome all.

Karina Calzadilla: I would like to welcome you to Adaptive Fire Technology's First Quarter 2025 Earnings Conference.

Karina Casebier: I'd like to welcome you to adaptive Biotechnologies first quarter 2025 earnings conference call.

Karina Calzadilla: Earlier today, we issued a press release reporting adaptive financial results for the first quarter of 2020. The press release is available at www.adaptivebiotech.gov.

Karina Casebier: Earlier today, we issued a press release reporting adopted financial results for the first quarter of 2025. The press release is available at Www Dot adopted biotech dotcom.

Karina Calzadilla: We are conducting a live webcast of this call and we'll be referencing to a slide presentation that has been posted to the investor 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's forward-looking statements, depending on a number of factors which are set forth in our public filings with the SEC and listed in this presentation.

Karina Casebier: We are conducting a live webcast of this call and it'll be referencing to slide presentation that has been posted to the investor section in our corporate website.

Karina Casebier: 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.

Karina Casebier: These statements reflect management's current perspective of the business as of today.

Karina Casebier: Our 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 unlisted in this presentation.

Karina Calzadilla: 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.

Karina Casebier: 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.

Karina Calzadilla: Joining the call today are Chad Robins, our COO and co-founder, and Kyle Piskel, our Chief Financial Officer. Additional members from management will be available for Q&A.

Cloud Physical: Joining the call today are Chad Robbins, our CEO cofounder and cloud physical our Chief Financial Officer.

Karina Casebier: Additional members from management will be available for Q&A.

Chad Robins: With that, I'll turn the call over to Chad. Thanks Karina. Good afternoon and thank you for joining us on our first quarter earnings call. As highlighted on slide three, we are off to an excellent start this year, demonstrating strong execution across both top and bottom line results. in MRD, revenue increased 34% from a year ago. Significant growth was observed in clinical volumes, ASP, and pharma sequence. This quarter, we also received our first Medicare recurrence monitoring coverage in MCL, a key part of our strategy to grow the lifetime value of each ClonoSeq Medicare patient. in Immune Medicine, we're making progress on our preclinical antibody program in autoimmunity.

Karina Casebier: With that I'll turn the call over to Chad Chad.

Chad Robbins: Thanks Karina.

Karina Casebier: Good afternoon, and thank you for joining us on our first quarter earnings call.

Karina Casebier: As highlighted on slide three we're off to an excellent start this year demonstrating strong execution across both top and bottom line results.

Karina Casebier: D.

Karina Casebier: Revenue increased 34% from a year ago significant growth was observed in clinical volumes ASP and farmers sequencing.

Karina Casebier: This quarter. We also received our first Medicare recurrence monitoring coverage and mcl.

Karina Casebier: Key part of our strategy to grow the lifetime value of each class seek Medicare patients.

Karina Casebier: An immune medicine, we're making progress on our preclinical antibody program in autoimmunity.

Chad Robins: Sequencing growth margin improved by 17 percentage points year over year to 62%. At the same time, operating expenses decreased by 9%, underscoring our disciplined cost management while driving strong, sustainable growth. As a result, cash burned for the quarter was $23 million, a 38% improvement compared to the same period last year.

Karina Casebier: Sequencing gross margin improved by 17 percentage points year over year to 62%.

Karina Casebier: At the same time operating expenses decreased by 9%.

Karina Casebier: Underscoring our disciplined cost management, while driving strong sustainable growth.

Karina Casebier: As a result.

Karina Casebier: Cash burn for the quarter was 23, million% to 38% improvement compared to the same period last year.

Chad Robins: Given the strength of our performance and sustained momentum, we are raising our full-year guidance to reflect, one, a higher MRD revenue range, two, lower operating expense range, and three, a lower annual cash burn.

Karina Casebier: Given the strength of our performance and sustained momentum we are raising our full year guidance to reflect one a higher MLD revenue range to lower operating expense range and three a lower annual cash burn.

Chad Robins: Kyle will provide more details during his remarks. Of note, our four-year outlook has minimal exposure to tariffs, trading policy updates, and NIH funding pressure. Importantly, I want to highlight our solid cash position of $233 million.

Karina Casebier: Kyle will provide more details during his remarks.

Karina Casebier: Of note our full year outlook has minimal exposure to tariffs trading policy updates and NIH funding pressures.

Karina Casebier: Importantly, I want to highlight our solid cash position of $233 million. We believe our cash on hand provides ample runway to achieve our strategic objectives without the need to raise additional capital in the current market environment.

Chad Robins: We believe our cash on hand provides ample runway to achieve our strategic objectives without the need to raise additional capital in the current market environment.

Chad Robins: Let's now take a closer look at the MRD business on slide 5. Clonacy clinical revenue in the first quarter grew 55% first prior year. Test Delivered reached a new record high of over 23,000 in the quarter, representing a 36% increase versus prior year and a 10% increase sequentially. Growth was once again observed in all reimbursed indications. Multimiloma continues to be the largest contributor of U.S. clonaseq volume at 42%. followed by ALL at 33%, TLL at 10%, DLBCL at 7%, and MCL at 5%.

Let's now take a closer look at the <unk> business on slide five.

Karina Casebier: Conversely, clinical revenue in the first quarter grew 55% versus prior year.

Tests delivered reached a new record high of over 23000 in the quarter, representing a 36% increase versus prior year and a 10% increase sequentially.

Karina Casebier: Growth was once again observed in all reimbursed indications.

Karina Casebier: Myeloma continues to be the largest contributor of U S currency volume at 42%.

Karina Casebier: Followed by ALLL at 33% CLO at 10% <unk> at 7% and Mcl at 5%.

Chad Robins: Looking at other key growth metrics in the quarter, it's encouraging to see the positive trends that align with the successful execution of our strategy. Blood-based testing contributed 44% of MRD tests in the U.S. versus 39% a year ago. This increase was primarily driven by strong growth in DLBCL and MCL. Tests in the community grew 42% versus prior year and 14% sequentially. NHL contribution jumped to 12% from 10% a year ago, driven by continued rampant MCL and a launch of our enhanced assay and DLVCL. The number of ordering healthcare providers grew 31% from the prior year and is now over 3400.

Karina Casebier: Looking at other key growth metrics in the quarter, it's encouraging to see the positive trends that are aligned with the successful execution of our strategy blood based testing contributed 44% of MRV tests in the U S versus 39% a year ago. This increase was primarily driven by strong growth in <unk> and <unk>.

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Karina Casebier: And our community grew 42% versus prior year and 14% sequentially.

Karina Casebier: NHL contribution jumped to 12% from 10% a year ago, driven by continued ramp in NCL and the launch of our enhanced assay and <unk>.

Karina Casebier: The number of ordering health care providers grew 31% from the prior year and is now over 3400.

Chad Robins: And our pace of EMR integrations is accelerating. We now have 27 live integrations, including 5 of our top 10 accounts. We expect to add at least 5 more accounts in the next month. We are seeing a notable lift in individual account growth rates post-integration, and growth in integrated accounts is outpacing growth in non-integrated accounts.

Karina Casebier: And our pace of EMR integrations is accelerating we now have 27 live integrations, including five of our top 10 accounts, we expect to add at least five more accounts in the next month we.

Karina Casebier: We are seeing a notable lift in individual account growth rates post integration and growth in integrated accounts is outpacing growth in non integrated accounts.

Chad Robins: In addition, we're making solid progress on our initiatives to increase ClonaSeq ASP. In Q1, ASP was north of $1220 per test, representing a 14% year-over-year increase.

Karina Casebier: In addition, we're making solid progress on our initiatives to increase quantity asps.

Karina Casebier: Q1, ASP was north of $12 20 per test, representing a 14% year over year increase.

Chad Robins: Importantly, we closed and or renegotiated six key agreements with major national payers, including Aetna, Humana, Anthem, Horizon, and two of the Blue Cross Blue Shield programs. Alongside these payer wins, we've expanded our reimbursement operations team and continue to optimize revenue cycle management. Given this progress, we are confident in achieving an average ASP of $1,300 per test for fiscal year 2025, setting us up for continued future ASP growth.

Karina Casebier: <unk>, we closed <unk> renegotiated six key agreements with major national payers, including Aetna Humana anthem horizon, and two of the Blue Cross Blue Shield programs.

Karina Casebier: Alongside these payer wins, we have expanded our reimbursement operations team and continue to optimize revenue cycle management.

Given this progress we are confident in achieving an average ASP of <unk> hundred dollars per test for fiscal year 2025, setting us up for continued future ASP growth.

Chad Robins: Looking at MRD Pharma on slide six. Our MRD Pharma business had a strong start to the year with sequencing revenue growth of 11% versus prior year. This quarter, we also recognized 4.5 million in regulatory milestones. We continue to see significant momentum following the ODAC recommendation in multiple myeloma last year. As you can see from the chart, over 60% of our portfolio today is in multiple myeloma, including 22 new studies, which closed in the last 12 months. The majority of these studies are using MRD as a primary or secondary endpoint. They tend to be larger phase 2 and 3 studies, often with large milestones attached.

Karina Casebier: Looking at <unk> pharma on slide six.

Karina Casebier: <unk> pharma business had a strong start to the year with sequencing revenue grew growth of 11% versus prior year. This quarter. We also recognized $4 $5 million in regulatory milestones. We continue to see significant momentum following the <unk> recommendation and multi myeloma last year.

Karina Casebier: As you can see from the chart over 60% of our portfolio today is in multi myeloma, including 22, New studies, which closed in the last 12 months. The majority of these studies are using <unk> as a primary or secondary endpoint.

Karina Casebier: Tend to be larger phase II, and III studies, often with large milestones attached.

Chad Robins: We're also seeing a halo effect from this decision in other disease states, like CLL, where treatment advances are necessitating more sensitive MRD assessment in clinical trials. Additionally, we see growth opportunities for the pharma business and DLBCL, as multiple companies are preparing to advance MRD-directed therapy.

Karina Casebier: We're also seeing a halo effect from this decision in other disease states like CLO, where treatment advances are necessitating more sensitive MRV assessment in clinical trials.

Karina Casebier: Additionally, we see growth opportunities for the pharma business and deal Bcl as multiple companies are preparing to advance <unk> directed therapy.

Chad Robins: To wrap up on MRD, we achieved strong results for the quarter in both our clinical and pharma businesses. As shown on slide seven, the stage is set to achieve our full year strategic goals. We are on track to end the year with over 45% of clonal seq testing done in blood. We are on track with EMR integrations, including OncoEMR launch with Flatiron in the second half. We are on track to begin phase one testing with NeoGenomics in an initial set of accounts in the second half of the year. We're on track to go live with Novaseq-X in the second half of this year.

Karina Casebier: To wrap up on MLD, we achieved strong results for the quarter in both our clinical and pharma businesses as shown on slide seven.

Karina Casebier: Stage is set to achieve our full year strategic goals. We are on track to end the year with over 45% of currency testing done in blood blood.

Karina Casebier: We are on track with EMR integrations, including <unk> launch with Florida and in the second half we are on track to begin phase one testing with Neogenomics and an initial set of accounts in the second half of the year. We're on track to go live with <unk> in the second half of this year.

Chad Robins: And we continue to have key data readouts spanning multiple indications.

Karina Casebier: And we continue to have key data readouts spanning multiple indications.

Chad Robins: Importantly, we are on track to be adjusted EBITDA positive in the second half of the Now, let's turn to immune medicine on slide 9. Our immune medicine business focuses on two differentiated immune-based therapeutic strategies. One is in cancer with our partners Genentech. The second is in autoimmunity based on our highly targeted precision immunology approach.

Karina Casebier: Importantly, we are on track to be adjusted EBITDA positive in the second half of this year.

Karina Casebier: Now, let's turn to immune medicine on slide nine.

Karina Casebier: Our immune medicine business focus on two differentiated immune based therapeutic strategies.

Karina Casebier: One is in cancer with our partner Genentech. The second is an autoimmune disease based on our highly targeted precision immunology approach.

Chad Robins: Our focus this year is on three main goals. First, it's to generate the size and quality of data to successfully develop a digital TCR antigen prediction model that supports our cancer cell therapy program, which in. As we successfully scale our data, we're also making good progress in training and improving the performance of our AI and ML models. We're aiming to replace our TCR discovery cellular assays with a digital model that can rapidly and accurately predict TCR antigen binding. This has the potential to meaningfully reduce both time and cost of selecting the best TCRs to include in a cancer cell therapy, among other future potential high-value therapeutic applications.

Karina Casebier: Our focus this year is on three main goals first generate the size and quality of data to successfully develop a digital TCR antigen prediction model that supports our cancer cell therapy program with Genentech.

Karina Casebier: As we successfully scale our data we're also making good progress in training and improving the performance of our AI and ml models.

Karina Casebier: We're aiming to replace our TCR discovery cellular assays with a digital model that can rapidly and accurately predict TCR antigen binding.

Karina Casebier: This has the potential to meaningfully reduce both time and cost of selecting the best Tcr's to include in a cancer cell therapy, among other future potential high value therapeutic applications are.

Chad Robins: Our second goal is to build a robust preclinical data package for a lead T cell depletion program in autoimmunity. We're in the process of testing and characterizing a subset of promising antibody candidates in our lead indication. The third goal, as we execute on these two focused therapeutic strategies, we are managing to a target immune medicine cash burn between $25 and $30 million. We continue to strategically gate our IM R&D investments and grow our pharma business revenue to partially fund this strategy.

Our second goal is to build a robust preclinical data package for our lead T cell depletion program and auto immunity. We're in the process of testing and characterizing a subset of promising antibody candidates in our lead indication.

Karina Casebier: The third goal as we execute on these two focus therapeutic strategy, we are managing to a target immune medicine cash burn between 25 and $30 million.

Karina Casebier: We continue to strategically gate, our iam R&D investments and grow our pharma business revenue to partially fund this spend now.

Kyle Piskel: Now I'm going to pass it over to Kyle to walk through the financial results and our updated full-year guidance. Thanks, Chad. Starting on slide 10 with results for the first. Total revenue was $52.4 million, representing 25% growth from the same period last year. 83% of revenue came from MRD and 17% from the immune medicine. MRD revenue grew 34% versus prior year to $43.7 million, with clinical and pharma contributions of 65% and 35% respectively. Clonal Seq test volume, including international, increased 36% to 23,117 tests delivered versus last year, and ASP in the U.S. grew approximately 14%.

Karina Casebier: Now I'm going to pass it over to Kyle to walk through the financial results and our updated full year guidance Kyle.

Kyle: Thanks, Chad.

Kyle: On slide 10 with results for the first quarter.

Kyle: Total revenue was $52 4 million, representing 25% growth from the same period last year, 83% of revenue came from <unk> and 17% from the immune medicine.

Kyle: <unk> revenue grew 34% versus prior year to $43 $7 million with clinical and pharma contributions of 65% and 35% respectively.

Kyle: Test volume, including international increased 36% to 23117 tests delivered versus last year and Asps in the U S grew approximately 14%.

Kyle Piskel: MRD pharma revenue grew 7% versus prior year to $15.2 million, inclusive of $4.5 million in Immune Medicine Revenue was $8.7 million, down 6% from a year ago, driven by an anticipated 23% decrease in Genentech amortization, partially offset by a 12% increase in IM, pharma, and academic Moving down the P&L, sequencing gross margin, which excludes milestones and Genentech amortization was 62% for the This represents a significant improvement of 17 percentage points versus prior year as we leverage lower overhead costs and stable direct labor supporting increased volumes while improving pricing across both our clinical and pharma revenues.

Kyle: <unk> pharma revenue grew 7% versus prior year to $15 2 million inclusive of $4 5 million in milestones.

Kyle: EMEA Medicine revenue was $8 7 million down 6% from a year ago, driven by an anticipated 23% decrease in genentech amortization, partially offset by a 12% increase in pharma and academic services.

Kyle: Moving down the P&L sequencing gross margin, which excludes milestones and genentech amortization was 62% for the quarter.

Kyle: This represents a significant improvement of 17 percentage points versus prior year, as we leveraged lower overhead cost and stable direct labor supporting increased volumes, while improving pricing across both our clinical and pharma revenues.

Kyle Piskel: Total operating spend for the quarter, inclusive of cost of revenue, was $82 million, representing a 9% decrease from last year. This decrease was mainly driven by lower R&D spend from both MRD and immune medicine. As you can see from the segment reporting table at the bottom of the slide, MRD-adjusted EBITDA is now at a loss of $4.1 million versus a loss of $17.3 million. This improvement of 76% is driven by both higher revenue and lower opportunity. I mean, medicine adjusted EBITDA loss was also improved 21% versus Q1 of last year due to reductions in Total company adjusted EBITDA was a loss of $12.7 million in the first quarter compared to $28.2 million in the prior quarter.

Kyle: Total operating spend for the quarter inclusive of cost of revenue was $82 million, representing a 9% decrease from last year. This decrease was mainly driven by lower R&D spend from both <unk> and immune medicine businesses.

Kyle: As you can see from the segment reporting table at the bottom of this slide <unk>. Adjusted EBITDA is now at a loss of $4 1 million versus a loss of $17 3 million a year ago.

Kyle: This improvement of 76% is driven by both higher revenue and lower operating expense.

Kyle: Madison adjusted EBIT loss was also improved 21% versus Q1 of last year due to reductions in operating expenses.

Kyle: Total company adjusted EBITDA was a loss of $12 7 million in the first quarter compared to $28 2 million in the prior year.

Kyle Piskel: Interest expense from our royalty financing agreement with OrbitMed was $2.9 million, which was slightly higher than interest.

Kyle: Interest expense from our royalty financing agreement with <unk> was $2 $9 million, which was slightly higher than interest income.

Kyle Piskel: Net loss for the quarter was $29,000.

Kyle: Net loss for the quarter was $29 8 million.

Kyle Piskel: Now let's turn to our full year 2025 updated guidance. We are raising our full-year MRD Revenue Guidance to a range of $180 to $190. Up from our previous range of 175 to 185. This increase is driven by stronger than expected clinical volume performance in the first quarter and higher MRD milestone payments anticipated. Given the strong ClonaSeq test volumes in the quarter and the momentum we are seeing, we now expect approximately 30% growth in 2025 volumes versus 2020. And we anticipate sequential growth in the remainder of the We also expect revenue from MRD milestones to be between $8 and $9 million, up from our previous guidance of $6 to $7 million.

Kyle: Now, let's turn to our full year 2025 updated guidance on slide 11.

Kyle: We are raising our full year <unk> revenue guidance to a range of $180 million to $190 million up from our previous range of $175 to $185 million.

Kyle: This increase is driven by stronger than expected clinical volume performance in the first quarter and higher MRP milestone payments anticipated for the year.

Kyle: Given the strong closing test volumes in the quarter and the momentum we are seeing we now expect approximately 30% growth in 2025 volumes versus 2024.

Kyle: And we anticipate sequential growth in the remainder of the quarters.

Kyle: We also expect revenue from MRV milestones to be between eight and $9 million up from our previous guidance of 6% to $7 million.

Kyle Piskel: With respect to revenue trends throughout the year, we now expect MRD revenue to be approximately 45-55 weighted between the first and second half.

Kyle: With respect to revenue trends throughout the year, we now expect <unk> revenue to be approximately 45 55 weighted between the first and second half respectively.

Kyle Piskel: We are also lowering our full year total company operating Including cost of revenue to a range of $335 million to $340 million. Down from the previous range of $340 million to $300 We continue to expect approximately 69% of the spend to be driven by the MRD business and 23% by the immune medicine. with the remainder attributed to unallocated corporate.

Kyle: We are also lowering our full year total company operating expense guidance, including cost of revenue to a range of 335 million to $345 million down from the previous range of $340 million to $350 million.

Kyle: We continue to expect approximately 69% of the spend to be driven by the <unk> business and 23% by the immune medicine business with the remainder attributed to unallocated corporate costs.

Kyle Piskel: Lastly, we are also lowering our full year total company cash burn guidance to a range of $50 million. Down from the prior range of 60 million to This improvement is primarily driven by higher than expected MRD revenue and reduced unallocated corporate We now expect approximately 24% of this year's cash burn to come from the MRT business. Still anticipate burn from the immune medicine business to be between $25 and $30 million, with the remainder attributed to unallocated corporate costs.

Kyle: Lastly, we are also lowering our full year total company cash burn guidance to a range of $50 million to $60 million down from the prior range of $60 million to $70 million.

Kyle: This improvement is primarily driven by higher higher than expected <unk> revenue and reduced unallocated corporate burn.

Kyle: We now expect approximately 24% of this year's cash burn to come from the <unk> business.

Speaker Change: Chesapeake burned from the immune medicine business to be between 25% and $30 million put the remainder attributed to unallocated corporate costs.

Kyle Piskel: We remain focused on disciplined execution to drive sustainable growth while managing our resources responsibly, and I look forward to providing you with further financial updates throughout the year.

Speaker Change: We remain focused on disciplined execution to drive sustainable growth, while managing our resources responsibly and I look forward to providing you with further financial updates throughout the year with that I'll hand, it back over to Chad.

Chad Robins: With that, I'll hand it back over to Thanks, Kyle. Our strong first quarter results underscore the focus, agility, and execution of our team. We're operating from a position of strength and have high confidence in our ability to deliver on our raised full-year guidance.

Chad Robbins: Thanks Kyle.

Chad Robbins: Our strong first quarter results underscore the focus agility and execution of our team we're operating from a position of strength and have high confidence in our ability to deliver on our raised full year guidance as we look ahead.

Chad Robins: As we look ahead, we remain committed to delivering on our promises and creating lasting value for both patients and our shareholders.

Chad Robbins: We remain committed to delivering on our promises and creating lasting value for both patients and our shareholders I'd.

Operator: I'd like now to turn the call back over to the operator and open it up for questions. Thank you. At this time, we'll conduct a question and answer session. As a reminder, to ask a question, you will need to press star 11 on your telephone and wait for your name to be announced. To withdraw your question, please press star 11 again. Please stand by while I compile the Q&A roster.

Chad Robbins: I'd like now to turn the call back over to the operator and open it up for questions.

Chad Robbins: Thank you.

Speaker Change: We will conduct a question and answer session. As a reminder to ask a question you will need to press star one on your telephone and wait for your name to be announced to withdraw your question. Please press star one again.

Chad Robbins: Please standby, while we compile the Q&A roster.

Meg Sykes: Our first question comes from Meg Sykes from Goldman Sachs.

Speaker Change: Our first question comes from Mac Sykes from Goldman Sachs. Please go ahead.

Chad Robins: Please go ahead. Hey, thanks for taking our questions. You got Will on for Matt here. Congrats on the quarter and appreciate the color on the 30% volume growth with sequential improvement over the course of the year. Just want to dig a little deeper there. Are there any specific indications you're seeing growth in and how are you seeing contribution from each of the indications trending over the course of this year? Yeah, thanks, Waylon.

Matt: Hey, Thanks for taking our questions you've got will on for Matt here.

Matt: Congrats on the quarter and I appreciate the color on the 30% volume growth with sequential improvement over the course of the year just wanted to dig a little deeper there are there any specific indications youre seeing growth and how are you seeing contribution from each of the indications trending over the course of this year.

Susan Bobulsky: I'm going to hand that over to Susan. Thanks for the question. Well, yeah, we're seeing sequential growth across all indications. We have a particularly strong quarter for our lymphoma indications, DLBCL and mantle cell lymphoma. You'll recall that we've launched the mantle cell indication just in Q4, so we're seeing a nice conversion of the promotional effort over the last two quarters. And then in DLBCL, we launched an enhanced version of our assay and also saw the availability of our assay in New York State under CLEP approval become live in Q1. So, a number of factors that contributed there.

Susan: Yes, Thanks, Willie and al I'm going to hand, it over to Susan.

Susan: Thanks for the question Yeah, we're seeing sequential growth across all indications, we had a particularly strong quarter for lymphoma indication DLD CLO and mantle cell lymphoma, you'll recall that we launched the mantle cell indication just in Q4, so we're seeing a nice.

Speaker Change: Conversion of the promotional effort over the last two quarters and then <unk>, we launched an enhanced version of our assay and also saw.

Speaker Change: The availability of our assay in New York State under Clep approval become live in Q1, so number of factors that contributed there in terms of contribution across the indications over the last.

Susan Bobulsky: In terms of contribution across the indications, over the last, let's say, year, quarter by quarter, the contribution has remained relatively stable. Where we're seeing the uptick in DLBCL and MTL, which now contribute a total of 12%, as Chad noted, versus 10% a year ago, mostly taking from other indications. And we've made, as you know, a concerted effort to move our business further toward our Medicare covered indications. So that's actually a great shift that we've been able to make. That's super helpful.

Speaker Change: Let's say here quarter by quarter. The contribution has remained relatively stable.

Chad Robbins: We're seeing that uptick in <unk>, NPL, which now contributed a total of 12% as Chad noted versus 10% a year ago, mostly taking from other indications and we've made as you know a concerted effort to move our business further toward our Medicare covered indications so thats actually a great shift in that we've been in.

Speaker Change: Obviously.

Susan Bobulsky: And then just as a follow up, you touched on the EMR integration on the call. I know, last quarter, we talked about like 30% plus improvements in the smaller customers and waiting for updates on some of the larger ones.

Speaker Change: That's super helpful. And then just as a follow up you touched on the EMR integration on the call.

Speaker Change: Last quarter, we talked about like 30% plus improvements in the smaller customers waiting for updates on some of the larger ones.

Susan Bobulsky: Are we ready to give updates on the larger ones or quantify the uptick you're seeing there? I do have a few more updates that I can share. So we've started to analyze the data across both accounts that have been live for at least one year, and then also now have five of our top 10 largest accounts integrated, several of which just went live in Q1, but I can share some data. So first, let's start with accounts that have been live for at least a year. These are generally smaller accounts, but there are a couple of larger ones in there as well.

Speaker Change: Are we ready to give updates on the larger ones or quantify the.

Speaker Change: Uptick youre seeing there.

Speaker Change: Thank you have a few more updates that I can share. So we can start in Q.

Speaker Change: Analyze the data across both accounts that have been live for at least one year and then also now have five of our top 10 largest accounts.

Speaker Change: Graded several of which just went live in Q1, but I can share some data.

Speaker Change: First I'll start with the accounts that have been live for at least a year. These are generally smaller accounts that there are a couple of larger ones in there as well six of those seven accounts exceeded 75% year over year growth over the past year since going live.

Susan Bobulsky: Six of those seven accounts exceeded 75% year-over-year growth over the past year since going live. And in total, the volume in that group of accounts went more than doubled over the past year. Among the newer sites that went live, let's say went live in the past quarter, which included three of our largest accounts, we saw an average quarter-over-quarter growth of 27%, and that exceeded the 18% we saw in those same sites a quarter immediately preceding integration. So we are seeing, continuing to see an acceleration, and I think particularly in those large accounts, those growth rates are quite, I'm quite pleased with that.

Speaker Change: In total the volume in that group of accounts.

Speaker Change: More than doubled over the past year.

Speaker Change: Among the newer sites that went live let's say went live in the past quarter.

Speaker Change: Which included three of our largest accounts, we saw an average quarter over quarter growth of 27% and that exceeded the 18%. We saw in those same site a quarter immediately preceding integration. So we are seeing continuing to see an acceleration and I think particularly in those large accounts those growth rates are.

Speaker Change: I'm quite pleased with them.

Susan Bobulsky: Really impressive results there.

Susan Bobulsky: Thank you for the color. You bet. Thank you.

Speaker Change: Really impressive results there. Thank you for the color.

Speaker Change: You bet.

Speaker Change: Thank you.

Mark Massaro: Our next question comes from Mark Massaro from BTIG. Please go ahead. Hey, guys. Thank you for taking the questions. I wanted to start with the strong performance on the core Clonaseq volume number. It looks like it was up, I think, 2000 tests sequentially. Other labs in the space have talked about weather. I think we're seeing impacts of roughly 100 to 150 bps across other reference labs.

Mark Massaro: Our next question comes from Mark Massaro from BTG. Please go ahead.

Mark Massaro: Hey, guys. Thank you for taking the questions I wanted to start with the strong performance on the core Corona seek volume number it looks like it was up I think 2000 tests sequentially. Other labs in the space have talked about weather I think were seeing impacts of roughly 100 to one.

Speaker Change: <unk> hundred 50 bps across other reference labs, so I am just curious.

Chad Robins: So I'm just curious, how did you drive the growth? Where did it come from? I know you talked about a larger contribution from Clonaseq blood, but maybe could you spell out if you had a weather impact in Q1?

Speaker Change: How did you drive the growth where did it come from I know you talked about larger contribution from blood.

Speaker Change: Blood.

Speaker Change: But maybe could you spell out if you had a weather impact in Q1.

Chad Robins: Sure, I can take that.

Chad Robins: Thanks, Mark. We did not see any notable weather impacts this particular quarter. The big growth drivers, one that I noted was non-Hodgkin's lymphoma indications with DLBCL and MCL. We did see an increase in the total contribution of blood, but a lot of that was driven by DLBCL and MCL, which are both blood, entirely blood-based indications. Additionally, the acceleration of our EMR integrations, you know, we added seven accounts since the end of last year, and several of those, three of those were among our top 10. So, the acceleration we're seeing in utilization in those accounts certainly contributed, and I am optimistic that as we continue to increase the pace of EMR integrations, we'll continue to see good contribution from those sites.

Mark Massaro: Sure I can take that thanks, Mark we do not see any notable weather impact this particular quarter.

Speaker Change: The big growth drivers one that I noted was non Hodgkin's lymphoma indications with <unk> and Mcl, we did see an increase in the total contribution of glad a lot of that was driven by D. L. Bcl Mcl, which are both blood entirely blood based indication. Additionally, the acceleration of our EMR integration we added.

Speaker Change: Seven accounts since the end of last year.

Speaker Change: And several of those three of those were among our top 10.

Speaker Change: So the acceleration we're seeing in utilization in those accounts certainly contribute in I am optimistic that as we continue to increase the pace of EMR integrations will continue to see good contribution from those sites.

Chad Robins: Yeah, and I'll just kind of add to that, Mark, and as we kind of talked about, it's not any one thing. It's a combination of these strategic factors that I kind of checked off through my prepared remarks. It's, you know, all those things that Susan mentioned that together are coming together, and kind of we're executing on the strategy of blood-based testing, increase in community accounts, EMR integrations, etc., and obviously with the launch of the new indications, you know, on top of that, you know, they're starting to be a really nice uptake from the clinical community.

Speaker Change: Yeah, and I'll, just kind of add to that market as we talked about it it's not any one thing it's a combination of the strategic factors that I got.

Speaker Change: <unk> got a check off through my prepared remarks.

Speaker Change: All of those things that Susan mentioned that together are coming together and kind of we're executing on the strategy of blood based testing increasing community counts EMR integrations etsy.

Speaker Change: Et cetera, and obviously with the launch of the new indications on top of that.

Speaker Change: Theyre starting to be.

Speaker Change: Really nice uptake.

Chad Robins: Sounds good. So you, yeah, yeah, that makes perfect sense.

Speaker Change: From the clinical community.

Speaker Change: Sounds good.

Speaker Change: Yes, yes that makes perfect sense.

Chad Robins: Oh, sorry, Chad. No, I'm just saying, you know, you know, we had started off and said we 25% plus growth with the emphasis on the plus. And now I think we're quite confident in our 30% growth kind of modified range. Okay, yep, perfect.

Speaker Change: Sorry, Chad.

Speaker Change: No I was just saying we had started off and said with 25% plus growth with the emphasis on the plus and now I think we're quite confident in our 30% growth kind of modified range.

Mark Massaro: I wanted to ask about the $4.5 million milestone payment in Q1. You are now a little over halfway towards your revised goal. So I'm just curious, is there any change to the funnel? You know, my impression is that maybe the funnel is growing following the big catalyst you had last year with the ODAC.

Speaker Change: Okay, perfect I wanted to ask about the $4 $5 million milestone payment in Q1.

Speaker Change: You are now a little over halfway towards your revised goal.

Speaker Change: So I'm just curious is there any change to the funnel my impression is that maybe the funnel is growing following the big catalyst you had last year with the <unk> I just wanted to get a sense for how you're thinking about the timing of recognizing these throughout the year.

Kyle Piskel: I just wanted to get a sense for how you think about the timing of recognizing these throughout the year.

Kyle Piskel: Thanks, Mark.

Kyle Piskel: This is Kyle. You know, as it relates to the funnel, I think what's happening is more and more milestones are becoming available to us. Certainly, we're adding more and realizing more from an offsetting factor, but we are having more come earlier. And, you know, the realization we experienced in Q1 with a couple milestones coming through, I think just provides us more and confidence in our 2025 outlook and with, you know, potential room for upside even further from that. But, you know, we want to kind of be prudent with all the stuff that's going on with the FDA and You know, hold the guide a little cautious from that perspective, but all that being said, you know, I think we're seeing more and more trials read out and all these things are a positive.

Kyle: Thanks, Mark this is Kyle.

Kyle: As it relates to the funnel I think what's happening is more and more milestones are becoming available to us.

Kyle: Certainly, we're adding more and realizing more from an offsetting factor, but but we are having more come earlier and.

Kyle: The realization that we experienced in Q1 with a couple of milestones coming through I think just provides us more clarity and confidence in our 2025 outlook.

Kyle: What potential room for upside even further from that but we wanted to be prudent with all the stuff that's gone on with the FDA and just.

Kyle: Hold the guide a little cautious from that perspective, but all that being said.

Kyle: I think we're seeing more and more trials read out and all of these things are positive for our business.

Kyle Piskel: Okay, great.

Mark Massaro: And last one for me, Chad, you rattled off a number of large health plans. So it's nice to see that positive momentum building there.

Okay, Great and last one for me.

Speaker Change: Chad you rattled off a number of large health plan. So it's nice to see that.

Speaker Change: Positive momentum building there can you give us a sense for.

Chad Robins: Can you give us a sense for, you know, to what extent are you contracting or being disciplined with the higher Medicare rate that you have, perhaps as a baseline? And I'm just curious how that pricing and contracting discussions are going as it relates to pricing. Yeah, no, it's a great question, Mark. We inject a significant amount of discipline in our pricing, meaning we will not accept a contracted rate unless it's at or very close to the Medicare rate. Okay, great.

To what extent are you contracting.

Speaker Change: Are being disciplined with the higher Medicare rate that you have perhaps as a baseline I'm just curious how that pricing and contracting discussions are going as it relates to pricing.

Speaker Change: Yes, no. It's a great question, Mark we inject a significant amount of discipline in our pricing, meaning we will not accept.

Speaker Change: A.

Speaker Change: Our contracted rate unless it's at or.

Speaker Change: Very close to the Medicare rate.

Speaker Change: We have we keep all right.

Chad Robins: Thanks, guys. You bet. Thank you.

Speaker Change: Okay, great. Thanks, guys.

Speaker Change: You bet.

Speaker Change: Yeah.

Speaker Change: Thank you.

David Westenberg: Our next question comes from David Westenberg from Piper Sandler. Please go ahead. Hi, thanks for taking my question. So I wanted to ask, on your so many different multiple myeloma trials, I'm guessing that a lot of times with drugs, you might be seeing tighter testing intervals. Is there kind of a way to show better outcomes through tighter testing intervals? And I'm just like maybe thinking about that as multiple myeloma and all the clinical trials you're in, but you know, maybe some of the other indications as well could benefit from tighter intervals. Yeah, it's an interesting question, David.

Speaker Change: Our next question comes from David Whiston Bird from Piper Sandler. Please go ahead.

Speaker Change: Hi, Thanks for taking my question. So I wanted to ask on your in so many different multiple myeloma trial.

Speaker Change: I'm guessing that a lot of times with drugs he might be see tighter tighter testing intervals is there a kind of a way to show better outcome.

Speaker Change: Through tighter testing intervals and I'm, just like maybe thinking about that is multiple myeloma and all the clinical trials youre in but maybe some of the other indications as well could benefit from from tighter intervals.

Chad Robins: I mean, I think what you mean by tighter, of course, is more frequent testing, if I'm correct. Yes. And so, you know, there's, there's clearly a balance here, but in general, because of course, it increases the cost of study, but in general, we are seeing a greater interest in increased frequency of testing. In some indications, in particular, the kinetics of disease can be indicative of, you know, of the patient's performance over time. And so additionally, because the FDA has in myeloma, they've specified a certain range within which a primary endpoint can be defined. It's generally sort of within the 9 to 15 months of the start of therapy.

Speaker Change: Yes interesting question, David I mean, I think what you mean by tighter of course is more frequent testing if im correct, yes, and so.

Speaker Change: There is clearly a balance here, but in general because of course the increases the cost of the study but in general we are seeing greater interest in increased frequency of testing in some indications in particular.

Speaker Change: <unk> of disease can be indicative.

Speaker Change: Of the patient's performance over time and so.

Speaker Change: Additionally, because the FDA has myeloma they specify a certain range within which our primary endpoint can be defined.

Speaker Change: It's generally serve within nine to 15 months of the start therapy and so for.

Chad Robins: And so those for that, in those studies, we do see people utilizing multiple, multiple time points to be able to give themselves some optionality. And additionally, I think over time, we'll see that in the leukemias in which are increasingly blood based indications. The frequency of testing is certainly a conversation topic in many of these trials. Got it. No, very helpful.

So that in those studies, we do see people utilizing multiple.

Speaker Change: Full time points to be able to give themselves. Some optionality and additionally, I think over time, we'll see that in the leukemia, <unk>, which are increasingly blurred.

Speaker Change: Blood based indications the frequency of testing is certainly a conversation topic on many of these trials.

Chad Robins: And then I just wanted to ask about technology or addressing market adjacencies. Don't get me wrong. I mean, you just recently got into DLBCL, and that's a very large market. So you definitely have a large market as itself. But is there any technology or any kind of technology in terms of getting to greater sensitivity? I mean, I think 10 to the minus eight, it's probably really difficult to do, but maybe you can improve the confidence interval. Yeah, I mean, I think the way I can answer that is to say that we're absolutely, at all times, looking at ways that we can continue to enhance our technology, you know, improving the sensitivity.

Speaker Change: Got it no. That's very helpful. And then just wanted to ask about.

Speaker Change: <unk> technology or addressing market Adjacencies don't get me wrong. I mean, you just recently got into <unk> <unk> and that's a very large market. So you definitely have a large market that is itself, but is there any any technology or any kind of ways to address other maybe.

Speaker Change: Blood malignancies.

Speaker Change: And then or maybe an improvement in terms of the technology in terms of getting to greater sensitivity I mean, I think 10 to the minus eight probably.

Speaker Change: Really difficult to do but maybe you could you improve can improve like the confidence interval.

Speaker Change: Where are the.

Speaker Change: Yeah.

Speaker Change: Yes, I mean, I think the way I can answer that is to say that we're absolutely at all times looking at ways that we can continue to enhance our technology.

Chad Robins: To some extent, the sensitivity of the assay is simply limited by the amount of input material, right? We're also balancing that with what's practical in the clinic or practical for a clinical trial. And so, we are actively looking at a number of strategies that could allow us to continue to extend the sensitivity in practical settings, as well as ways that we might enhance the technology or even new technological approaches we could bring to solve some of the problems that continue to exist in the space. For example, the very strong desire in the clinic for an entirely blood-based approach to MRD monitoring in multiple myeloma, which is something we can support, but that there may still be ways to improve upon.

Speaker Change: Proving the sensitivity.

Speaker Change: To some extent the sensitivity of the assay is simply limited by the amount of input material right. We're also balancing that with what practical in the clinic or practical for a clinical trial and so we are actively looking at a number of strategies that can allow us to continue to extend the sensitivity in that in and practical settings.

As well as ways that we might.

Speaker Change: Enhance the technology or even new technological approaches we could bring.

Speaker Change: I saw some of the problems that continue to exist in this space for example.

Speaker Change: Very strong desire in the clinic for up and entirely blood based approach to monitoring.

Speaker Change: <unk> monitoring in multiple myeloma, which is something we can support but that there may still be ways to improve upon.

Chad Robins: Got it.

Chad Robins: No, thank you very much for taking the questions and congrats. Thank you.

Speaker Change: Got it. Thank you very much for taking the questions and congrats on the quarter.

Speaker Change: Thanks, David.

Tejas Savant: Our next question comes from Tejas Savant. From Morgan Stanley, please go ahead. Hello, this is Yuko on the call for Tejas. Thank you for taking my questions.

Speaker Change: Thank you.

Speaker Change: Our next question comes from Tejas Savant.

Speaker Change: From Morgan Stanley. Please go ahead.

Speaker Change: Hello. This is Hugo on the call for Tito. Thank you for taking my questions.

Yuko Oku: Just regarding the EPIC integration, in addition to the volume list from the EMR integrated accounts, are you also realizing associated cost savings, productivity gains as a result? If so, what could it mean in the context of your goal to have 50% of your ordering volume coming from EMR integrations by year end? And is that factored into your updated OPEX guide as well?

Just regarding the epic integration now theres, some sort of volume lift for me EMR integrated accounts are you realizing associated cost savings productivity gains as a result, if so what could it mean in the context of your goal to have 50% of our El ordering volume coming from EMR integrations by year end and is that factored into your updated opt.

Yuko Oku: Yeah, thanks for the question, Yuko. So it's an interesting one, because of course, most of the volume that we have going through integration has really only been going through integration for the past one to two quarters at most. But I think that where you're headed is fair. The idea that there are potentially operational efficiencies to be gained in the medium to long term as more and more of our volume goes through these integrations. I can tell you, just as an anecdote, that the largest account, our number one largest account integrated in October, and they have told us that in under their measurement, they have achieved a 90% decrease in callbacks from our staff to address order discrepancies since integration.

Speaker Change: X guide as well.

Speaker Change: Yes, thanks for the question.

Speaker Change: And it's an interesting one because of course most of the volume that we have going through integration has really only been going through integration for the past one to two quarters at most.

Speaker Change: But I think that where you're headed is is it fair. The idea that there are potentially operational efficiencies to be gained.

Speaker Change: In the medium to long term as more and more of our volume go through these integrations I can tell you just as an anecdote that the largest account.

Speaker Change: Number one largest account integrated in October.

Speaker Change: They have told us that in under their measurement. They haven't achieved a 90% decrease in call backs from our staff to address order discrepancy since integration.

Yuko Oku: So you can imagine that's also not just saving them time, which is fantastic, also saving us time on that particular account. If we can achieve even half that improvement in callbacks at other accounts over at a scale, you can imagine that can help us either redirect our staff time, or save staff time entirely.

Speaker Change: So you can imagine that's also not just saving them time, which is fantastic also saving uptime on that particular account.

Speaker Change: We can achieve even half of that improvement in call back that other accounts over at a scale you can imagine that can help us either redirect our staff time.

Yuko Oku: But I don't we have not incorporated any operational savings into our guide in 2025. At this time, and we'll be continuing to monitor that there are a number of ways, by the way, beyond just reducing callbacks on orders, that we can leverage EMR to reduce total operational time, but those gains will be probably achieved over the next couple of years. And one other area of potential upside is looking at revenue cycle management and being able to leverage our EMR integrations to kind of reduce your time for time. at it.

Speaker Change: Or save staff time entirely but I don't we have not incorporated any operational savings into our guide in 2025.

Speaker Change: At this time and we'll be continuing to monitor that there are a number of ways by the way beyond just reducing call back on orders.

Speaker Change: We can leverage EMR to reduce total operational time, but those teams will be probably achieved over the next couple of years.

Speaker Change: And one other area of potential upside is looking at revenue cycle management, and being able to leverage our EMR integrations to kind of reduce time time to cash.

Yuko Oku: That's super helpful.

Yuko Oku: And a second unrelated question.

Speaker Change: Got it that's super helpful.

Yuko Oku: With a number of headlines around cost cutting at PhRMA, is it possible to see more back-end loaded or milestone-based agreements with PhRMA versus pay-as-you-go type of contracts? Have you seen any shifts in types of MRD agreements with PhRMA over the last six months or so? Actually, I've mentioned this at a couple of investor conferences.

Speaker Change: Second unrelated question.

Speaker Change: With a number of headlines on cost cutting at pharma.

Speaker Change: It is possible to see more backend loaded or milestone based agreements with pharma versus pay as you go type of contract have you seen any shifts in types of MRV agreements with pharma over the last six months or so.

Yuko Oku: We're actually trying to, over time, when contracts come up for renewal, do the opposite of that, which is to move more to a recurring revenue model business, to kind of front load, I'll say, the fee-for-service or sequencing component of that, and move away from some of the kind of lumpier, hard-to-predict, time-perspective kind of milestones. So, it really depends on the focus of pharma companies and the indications that they're doing, but no, we have not seen that and don't anticipate being impacted by it. Got it. Thank you so much. You bet. Thank you.

Speaker Change: Actually I've mentioned this on.

Speaker Change: A couple of Investor conferences, where we're actually trying to overtime.

Speaker Change: When contracts come up for renewal do do the opposite of that which is.

Speaker Change: To move more to a recurring revenue model business.

Speaker Change: Took a frontloaded kind of I'll say the fee for service or sequencing component of that and move away from some of the kind of lumpier hard to predict from a time perspective, there are milestones so.

Speaker Change: The it really depends.

Speaker Change: On the focus of pharma companies and the indications that they are doing but we have we have not we have not seen that and don't anticipate being impacted by it.

Speaker Change: Got it thank you so much.

Speaker Change: You bet.

Rachel Vinsdahl: Our next question comes from Rachel Vinsdahl from P.J. Morgan. Please go ahead.

Speaker Change: Thank you.

Speaker Change: Our next question comes from Rachel Vince Dahl from P. J Morgan. Please go ahead.

Sebastian Sandler: Hey, this is Sebastian Sandler on for Rachel. Thanks for taking the question. I'd like to turn back to the strong sequential growth and clonacy volume scene. I think it was one of the best step ups in terms of absolute tests since 4Q23, looking at the slides, around 2000. So just looking ahead to the rest of the year, I'm wondering if the around 2000 test step up is appropriate. And then I'm curious if there's any further upside to the acceleration based on the number of drivers you laid out in the fall. Sure. Thanks for the question, Sebastian.

Speaker Change: Hey, this is Sebastian sandler onto Rachel Thanks for taking the question I would like to turn back to the strong sequential growth in quantity volumes.

Speaker Change: I think it was one of the best step ups in terms of absolute tests.

Speaker Change: <unk> 23, looking at the slides the ground 2000, and so just looking ahead to the rest of the year I'm wondering if the surround 2000 test step up as is appropriate.

Speaker Change: And then I'm curious if there's any further upside to the acceleration based on the number of drivers you laid out in the call.

Chad Robins: I mean, I am very pleased to see the volume growth in Q1. The step-up only strengthens my confidence in our potential for the remainder of the year. As you know, when we started the year, we talked about, you know, there being an upside, and I think some of that materialized in Q1. And with this updated guidance, we still see room for upside, and we do still anticipate sequential growth quarter over quarter, although I won't speculate on whether the magnitude of the step-up will look the same every single quarter. I think the reason for us being prudent on that is simply that we have a number of strategic initiatives that we are pursuing this year and that will go live in the second half.

Speaker Change: Sure. Thanks for the questions <unk> I mean, I am very pleased to see the volume growth in Q1 step up only strengthens my confidence in our potential for the remainder of the year.

Speaker Change: As you know when we started the year, we talked about there being an upside and I think some of that materialized in Q1 and with this updated guidance, we still see room for upside and we do still anticipate sequential growth quarter over quarter, although I won't speculate on whether the.

Speaker Change: The magnitude of the step up will look the same every single quarter I think the reason for us being prudent on that is simply that we have a number of strategic initiatives that we are pursuing this year and that will go live in the second half.

Chad Robins: And these are just things that we haven't done before. So we're kind of erring on the side of under-promise and over-deliver right now versus speculating too much about how much upside, how fast that upside can be realized. EMR is a big driver, particularly in the second half, but, you know, we have to see how the Flatiron launch goes. Those are in accounts that are new or emerging for us. So we're going to wait and see how quickly we can leverage that to help us with adoption in those community accounts. The EPIC integrations, we have a long slate of those plans, but it's not fully in our control when they get done since we need to rely on account-side IT resources.

Speaker Change: And these are just things that we haven't done before so were kind of erring on the side.

Speaker Change: Under promise and over deliver right now versus speculating too much about how much upside how fast that upside can be realized EMR is a big driver, particularly in the second half but.

Speaker Change: We have to see how the flat iron launch go as those are in accounts that are new or emerging for us. So we're going to wait and see how quickly we can leverage that to help us with our adoption of community counts. The epic integrations, we have a long slate of of those plans, but it's not fully in our control when they get done since we need to rely on <unk>.

Chad Robins: So we'll be eager to provide further updates, and we feel very confident. We don't see any material headwinds at this point, but it's still early in the year. Understood. Thank you for the color.

Speaker Change: Outside it resources.

Speaker Change: No.

Speaker Change: It will be eager to provide further updates and we feel very confident we don't see any material headwinds at this point, but it's still early in the year.

Chad Robins: And then turning to the community setting called out 40% plus growth there. So I'm curious if this was driven mostly by adding new accounts or deeper penetration into existing accounts. And then just curious on the outlook and the community setting for the rest of the year. Thank you. Yeah, you know, both. We still, we have a number of community accounts where we now have some significant volume. We have now an account in our top 10 that is a community account, which by the way, was one of the ones that just went live recently with an integration, in fact, our first ever non-EPIC point-to-point integration.

Speaker Change: Understood. Thank you for the color and then turning to the community setting you called out I think 40% plus growth. There. So curious if this was driven mostly by adding new accounts or deeper penetration into existing accounts.

Speaker Change: And then just curious on the outlook in the community setting for the rest of the year. Thank.

Speaker Change: Thank you.

Speaker Change: Yes, both.

Speaker Change: We still we have a number of community accounts, where we now have some significant volume we have now an account and our top 10 that is a community account, which by the way was one of the ones that just went live recently with an integration in fact, our first ever non epic point to point integration.

Chad Robins: Although that hasn't had time to drive volume yet, it just happened in April. You know, I am bullish about the opportunity there. And so we do have accounts where we have significant penetration and where, you know, it's really about continuing to drive that depth. We also have accounts that are not, have not ordered or are just getting started. And so both contributed in Q1 to the continued growth. I'm really pleased with the work that our community-focused field team is doing. And I'm excited about the potential of not only our Flatiron integration to help us lift the community business in the later part of the year, but also the work we're doing with NeoGenomics, which albeit we will only launch in a selected group of Phase 1 accounts in the second half of this year, but in 2026 and beyond, that'll be an important driver for our community footprint and our community growth pace.

Speaker Change: Although that Hasnt had time to drive volume yet it just happened in April.

Speaker Change: I am bullish about the opportunity there.

Speaker Change: And so we do have accounts, where we have significant penetration and where it's really about continuing to drive that debt. We also have accounts that are not have not ordered or are just getting started.

Speaker Change: And so both contributed in Q1 to the continued growth.

Speaker Change: Really pleased with the work that our community focus field team is doing.

Speaker Change: And I'm excited about the potential of not only our flatiron integration to help us lift the community business in the later part of the year, but also the work we're doing with Neogenomics, which, albeit we will only launch in a selected group of phase one accounts in the second half of this year, but in 2026 and beyond that will be an important driver for our community.

Speaker Change: Print and our community add growth pace.

Chad Robins: Great, thank you so much. Thank you.

Speaker Change: Great. Thank you so much.

Speaker Change: Yes.

Tom Stevens: Our next question comes from Tom Stevens from TV Cow and please go ahead. Hey guys, thanks for taking my question and congratulations on a really strong operating quarter. My first one is just on the contribution of MantelCell into this year and also more broadly, just the level of new patient ads, that is, the number of new Clonaseq IDs in this quarter versus 4Q. I was hoping you could comment on A, the number of MCLs you expect in guidance this year, and B, the number of new patient ads, as it were. Yeah, I think what I can say, Tom, is that in Q1, we were very pleased with the growth.

Speaker Change: Thank you.

Speaker Change: Our next question comes from Tom Stephens from TD Cowen. Please go ahead.

Tom Stephens: Hey, guys. Thanks for taking my question and congratulations on a really strong operating quarter.

Tom Stephens: My first one is just on the contribution of kind of mantle cell into this year and also more broadly just the level of new patient adds that is the number of new client seek Ids in this quarter versus <unk> I was hoping you could comment on the number of Npls do you expect in guidance this year.

Tom Stephens: And B the number of new patient adds as it were.

Tom Stephens: Yeah, I think what I can say Tom is that in Q1.

Chad Robins: We saw 28% quarter-over-quarter growth, and the contribution of MCL was 5%, which is up from about 3.5% a year ago. That indication, as you know, is a smaller indication, but I think one with a significant unmet need that is well suited to the value proposition of Clonaseq, and certainly we're encouraged by the recurrence monitoring coverage that we achieved earlier in Q1, which, while it won't change our promotional strategy, we've been promoting the importance of serial monitoring of patients off therapy since launch. It certainly strengthens our resolve to make sure we drive testing in that space, because we can now get paid for a larger number of these tests, which I think are clinically very, very valuable to patients.

Tom Stephens: We were very pleased with the growth, we saw 28% quarter over quarter growth and the contribution of mcl with 5%, which is up from about three 5% a year ago.

Tom Stephens: That indication as you know is a smaller indication, but I think one with a significant unmet need that is well suited.

Tom Stephens: The value proposition of Kronos seek and certainly we're encouraged by their recurrence monitoring coverage that we have.

Tom Stephens: <unk> earlier in Q1.

Tom Stephens: Which while it won't change our promotional strategy, we've been promoting the importance of serial monitoring of patients off therapy since launch.

Tom Stephens: <unk> strengthens our resolve to make sure we drive we drive testing in that space because we can now get paid for a larger number of these tests, which I think are clinically.

Chad Robins: In terms of MCL growth over time, we haven't commented specifically on the contribution of any one indication, but I do think that it's possible to have a higher single-digit contribution over the course of the next year or so. That is an indication, again, that we believe we can penetrate quickly because of the treatment paradigm there being so conducive to the use of MRD.

Tom Stephens: Very valuable to patient.

Tom Stephens: In terms of <unk>.

Tom Stephens: <unk> growth over time.

Tom Stephens: We haven't commented specifically on the contribution of any one indication, but I do think that it's possible to have.

Tom Stephens: Single digit contribution over the course of the next year or so.

Tom Stephens: That is an indication again that we believe we can penetrate quickly because of the treatment paradigm there being so conducive to the use of them already.

Chad Robins: I'm just on ClonaSeqID. I'm not sure I got that in your response. Right, sorry. So more generally, the contribution of ClonaSeqID. I mean, we are starting to see an increased contribution of repeat patients. This is beyond MCL. Of course, I'm talking about the business overall. At this point, I think about a third, maybe a little less, 30% of our tests are ID tests. And then another 20% are first MRDs, and about half of the tests are repeat MRDs. That's kind of how the business breaks out right now.

Tom Stephens: Hi.

Tom Stephens: And just on currency I'm not sure.

Tom Stephens: I got that in your response right sorry, so more generally the contribution of <unk> I mean, we are starting to see an increased contribution of repeat patients.

Tom Stephens: This is beyond Mcl of course, I'm talking about the business overall.

Tom Stephens: At this point I think about a third maybe a little less 30% of our tests are tests.

Tom Stephens: And then another 20% are first embodies and about half of the tests are repeat <unk>.

Chad Robins: Cool.

Tom Stevens: And then just one more follow-up on just kind of how you're thinking about gross margins for the year. 62% sequencing is obviously very impressive. You know, I know you have lots of spinning plates with EMR initiatives into the back half, but just wondering what the kind of fee-for-service contribution to ASPs were in the quarter and just to make sure that the NovoSeq X transition is still on track for Q3 and maybe why not raise the cash burn, or excuse me, reduce the cash burn guidance more than the B in Q1. Yeah, thanks for the question, Tom.

Speaker Change: And how the business breaks out right now.

Speaker Change: Cool and then just one more follow up on just kind of how you think about gross margins for the year, 62% sequencing is obviously very impressive.

Speaker Change: I know you have lots of spinning plates with IMO.

Speaker Change: AML initiatives into the back half, but I'm just wondering what the what the kind of fee per service contribution to asps as well in the quarter.

Speaker Change: And just to make sure that the embassy X transition is still on track for Q3, and maybe why not raise the cash burn.

Speaker Change: Excuse me reduced the cash burn guidance more than the beat in Q1.

Chad Robins: As it relates to, you know, progress on gross margin, first quarter was great. We're seeing, you know, improving, our cost structure is improving the lab and the volume is certainly helping that. You know, NovaSeq is still on track for the second half of the year. And, you know, we would reiterate the five to eight percentage point improvement from that in the first 12 months post-launch. So, you know, everything's kind of coming along with gross margins, so I don't have any concerns there and expect to see it continue to grow. Especially as we get more and more pricing favorability from both our clinical and Yeah, and if you recall, Tom, we talked about 70% plus gross margins at scale, and, you know, we're a little bit ahead of the pace based on, you know, strong, really strong quarter.

Tom Stephens: Yes, thanks for the question Tom.

Tom Stephens: It relates to progress on gross margin.

Tom Stephens: First quarter with great we're seeing improving.

Tom Stephens: Our cost structure are improving in the lab and the volume is certainly helping that.

Tom Stephens: <unk> is still on track for the second half of the year and we would reiterate the 5% to eight percentage point improvement.

Tom Stephens: From that in the first 12 months post post launch.

Tom Stephens: So everything is kind of coming along with gross margin. So I don't have any concerns there.

Tom Stephens: I expect to see it continue to grow.

Tom Stephens: Especially as we get more and more pricing favorability from both our clinical and pharma businesses, Yes, and if you recall, we talked about 70% plus.

Tom Stephens: Most margins at scale and.

Tom Stephens: No.

Tom Stephens: A little bit ahead of kind of the pace based on.

Kyle Piskel: Oh, and on your question about cash burn, you know, I think, yes, opportunity there to beat the number we put in our guide, but, you know, again, we're just... Early, you know, the exact timing of NOVA-Seq launch, you know, all those types of things, but certainly an opportunity for some additional ups.

Tom Stephens: Strong really strong quarter.

Tom Stephens: And on your question about cash burn.

Tom Stephens: I think yes opportunity there.

Tom Stephens: To beat the number we put in our guide but.

Tom Stephens: Again, we're just it's.

Tom Stephens: It's early.

Tom Stephens: Zach timing of Novo seek launch.

Tom Stephens: Are those types of things, but certainly an opportunity for some additional upside in reducing our burn further given the strong performance in Q1.

Kyle Piskel: Right, so no, just like, is there like, incremental reinvestment in the sales force or anything like that we should be aware of? Nothing currently planned. We did make some investments in our revenue cycle management, our reimbursement operations team, and we believe those are paying off accretively. You know, no, no.

Tom Stephens: Right so no.

Tom Stephens: Incremental investment in the sales force or anything like that we should be aware of.

Tom Stephens: No nothing currently planned we did make some investments in our revenue cycle management, our reimbursement operations team and we believe those are paying off accretively so but.

Kyle Piskel: Awesome.

Kyle Piskel: Thank you guys. Great stuff. Thank you.

Tom Stephens: No major expansions from there.

Speaker Change: Awesome. Thank you guys.

Sung Nam: Our next question comes from Sung Jee Nam from Scotiabank. Please go ahead.

Tom Stephens: Okay.

Tom Stephens: Yeah.

Tom Stephens: Thank you.

Speaker Change: Our next question comes from sung <unk> Nam from Scotia Bank. Please go ahead.

Corey Rosenbaum: Hey, this is Corey Rosenbaum. I'm for Sung Ji. Thanks for taking my questions and congrats on the quarter. So first on DLBCL, do you expect the upgraded assay with the sevenfold increase in sensitivity to meaningfully change the trajectory of adoption in the indication? And could you talk about the potential use case expansions with the significant improvement in sensitivity? Sure, thanks for the question, Corey. So first off, I think that, you know, the primary opportunity to leverage the enhanced assay to drive adoption, I think, is in the pharma setting, where, as you know, we've faced somewhat increased competition in recent years.

Cory rosenbaum: Hey, this is Cory rosenbaum on for some Jade thanks for taking my questions and congrats on the quarter.

Speaker Change: So first one on <unk> do.

Speaker Change: Do you expect the upgraded assay with the sevenfold increase in sensitivity to meaningfully change the trajectory of adoption and the indication and could you talk about the potential use case expansion with the significant improvement in sensitivity.

Speaker Change: Sure. Thanks for the question Corey So first off I think that the.

Speaker Change: The primary opportunity to leverage the enhanced assay to drive adoption I think is in the pharma setting where they know it.

Chad Robins: And I think there is a strong desire to have a very sensitive assay, particularly in the frontline end of therapy setting, where a number of companies are going after study designs in which patients essentially receive additional treatment of varying classes, based on the fact that they are MRD positive, even though they've achieved conventional complete response by PET-CT. So that, detecting that disease at those levels, where imaging isn't revealing anything there, requires that particular degree of sensitivity compared to other use cases. And so in the pharma setting, that's where the enhanced assay has really been an important part of our messaging and our data generation.

Speaker Change: It faced somewhat increased competition in recent years and I think there is a strong desire to have a very sensitive assay picking on the frontline and of therapy, setting where a number of companies are going after study designs in which patients essentially receive.

Speaker Change: Additional treatment of varying classes.

Speaker Change: Based on the fact that there <unk> a positive even though they've achieved conventional complete response by pet C T.

Speaker Change: So that detecting that disease, if those levels were at imaging isn't revealing anything there requires that particular degree of sensitivity compared to other use cases and so in the pharma setting that's where the enhanced Athena has really been on an important part of our messaging and our data generation.

Chad Robins: Now, of course, in the clinic, this is important broadly as well. And we are increasing our focus on that end-of-therapy use case as a, frankly, a synergy with what's going on in clinical trials. We anticipate that over time, these clinical trials will read out, they'll be successful, there'll be opportunities for patients to be treated with additional therapy when they don't achieve MRD negativity by the end of a standard round of, let's say, RCHOP. And even now, there are opportunities for patients to enroll in clinical trials. And so it's to patient's benefit for us to be able to provide the most sensitive assay possible in the clinical setting as well.

Speaker Change: Of course in the clinic this is important broadly as well.

Speaker Change: And we are increasing our focus on that and the therapy use case.

Speaker Change: As a frankly.

Speaker Change: Synergy with what's going on in clinical trial, we anticipate that over time. These clinical trials will read out there'll be successful there'll be opportunities for patients to be treated with additional therapy. When they don't achieve them already negativity by the end of the standard round of let's say R. Chop.

Speaker Change: And even now there are opportunities for patients to enroll in clinical trials and so it's two patients benefit for us to be able to provide the most sensitive assay possible in the clinical setting as well.

Chad Robins: Great, thank you for that insight. And I appreciate the pharma commentary throughout the call. But can you discuss the current split between later stage clinical trials versus earlier stage trials for the active trials underway with the MRD pharma partner? The majority of our studies are in later stage trials for multiple myeloma, which is, as you know, sort of 60 plus percent of our business in the most well-developed indication. In some of our earlier stage indications, for example, in lymphomas, where we have a smaller portion of our business, the mix tends more towards earlier phase studies.

Speaker Change: Great. Thank you for that insight and I appreciate the pharma commentary throughout the call.

Speaker Change: But can you discuss the current split.

Speaker Change: Between later stage clinical trials versus earlier stage trials for the active trials underway with the Emera D pharma partners.

Speaker Change: Yes.

Speaker Change: Oh, sorry the.

Speaker Change: The majority of our studies are in later stage study in later stage trials for multiple myeloma, which is as you know sort of 60% 60% of our business in the most well developed indication.

Speaker Change: In some of our earlier stage indications for example in lymphoma, where we have a smaller portion of our business.

Chad Robins: But in general, the use of MRD is really evolving toward registrational uses, whether primary endpoint or secondary endpoint status, and increasingly toward the utilization of MRD as a means to direct therapy, stratify patients, and so that by nature is helping the business evolve toward a later phase, you know, more heavily weighted mix. Appreciate it. Thank you.

Speaker Change: The mix turns more towards earlier phase studies, but in general the use of MRV is really evolving toward Registrational uses whether primary endpoint secondary endpoint status and increasingly toward the utilization of <unk>.

Speaker Change: Mardi as a means to direct therapy stratify patients and so that by nature is helping the business evolve toward a later phase more heavily weighted.

Speaker Change: Thanks.

Speaker Change: I appreciate it thank you.

Operator: As a reminder, to ask a question, you will need to press star one one on your telephone and wait for your name to be announced.

Speaker Change: Thank you.

Speaker Change: As a reminder to ask a question you would need to press star one one of your telephone and wait for your name to be announced.

Andrew Brackmann: Our next question comes from Andrew Brackmann from William Blair. Please go ahead. Hey, everyone.

Okay.

Speaker Change: Our next question comes from Andrew <unk> from William Blair. Please go ahead.

Maggie Boeye: This is Maggie Boeye on for Andrew. Thanks for taking our questions. Maybe just to start, it's nice to see the reduction in the OPEX guide for the full year. On the MRD side, can you talk about any areas in particular you're seeing leverage from? And then just what other areas do you think that you could see leverage from building out from here? And then just looking further out over the next few years, where do you plan to prioritize your investment spend? Thank you. Yeah, thanks for the question. As it relates to leverage, I think we're seeing a ton of leverage across the business, first and foremost in the lab.

Maggie Buoy: Hey, everyone Maggie buoy on for Andrew Thanks for taking our question.

Maggie Buoy: Maybe just to start it's nice to see the reduction and the Opex guide for the full year on.

Maggie Buoy: On the NRT side can you talk about any areas in particular, you're seeing leverage from.

Maggie Buoy: And then just what other areas do you think that you could see leverage from.

Maggie Buoy: And building out from here and then just looking further out over the next few years, where do you plan to prioritize your investment spend thank you.

Maggie Buoy: Yeah. Thanks for the question as it relates to leverage I think we're seeing a ton of leverage across the business first and foremost in the lab.

Kyle Piskel: You know, again, increasing volume, some of the asset consolidation initiatives we put in place in last year, and we're seeing the fruits of that labor payoff. Secondarily, you know, we're seeing a ton of leverage through our volumes increasing in our field force as well, so that that's, you know, all of those things are driving improvement. And while we're making investments in our reimbursement operations, you know, at least early days from those investments seem to be paying off and gaining leverage, but we'll continue to kind of monitor that. So I think all those things, you know, are pointing to, you know, a healthy profile.

Maggie Buoy: Again, the increase in volume some of the assay consolidation initiatives, we put in place last year, and we're seeing the fruits of that labor pay off.

Maggie Buoy: Secondarily, we're seeing a ton of leverage through our volumes increasing in our field force as well so all of those things are driving improvement.

Maggie Buoy: And while we're making investments in our reimbursement operations at least early days from those investments seem to be seem to be paying off and gaining leverage but we'll continue to kind of monitor that.

Maggie Buoy: So I think all of those things are pointing to a healthy profile for this business longer term.

Chad Robins: In terms of prioritizing our investments, you know, I think some of this has been discussed previously in terms of what we do with our assay going forward. But, you know, we'll provide more color into that, you know, as. I can just add perhaps that, you know, a couple of things that we've talked about throughout this call will potentially be areas where we'll be able to, where we'll want to continue to invest and may ramp up investment over time. Revenue cycle management is the one that Kyle alluded to, EMR integration and related sort of technology investments that can help us increase the stickiness of our business, increase our access to data that will support our ability to operate effectively.

Maggie Buoy: In terms of prioritizing our investments I think some of this has been discussed previously in terms of what we do with our assay going forward, but.

Maggie Buoy: We'll provide more color on to that.

Maggie Buoy: As things progress.

Maggie Buoy: Sure Great.

Maggie Buoy: Oh sure I can just add perhaps that a couple of things that we've talked about throughout this call. We will potentially be areas. We will be able to you want to continue to invest in may ramp up investment overtime revenue cycle management is the one that Kyle alluded to EMR integration and related sort of technology investments that.

Maggie Buoy: Can help us.

Maggie Buoy: Increase the stickiness of our business increase our access to data that will support.

Chad Robins: There are some potential investments we're evaluating there. Data generation will remain a priority for the foreseeable future in addition to some earlier stage R&D investments that we'll be, we're assessing.

Maggie Buoy: Our ability to operate effectively there are some potential investments we're evaluating their data generation will remain a priority for the foreseeable future.

Addition to some earlier stage R&D investments that will be we're assessing.

Chad Robins: And then lastly, you might wonder, I didn't mention commercial field force. We don't have any near term plans. We've looked at the investment we've made and I think we're very comfortable with, you know, covering 90% of the relevant patient population. We have reasonably sized balanced territories and reasonable numbers of HCP and account targets per rep. So, we're pretty happy there, but we will evaluate whether there are additional or new deployment strategies that we might want to implement over time in response to the evolution of the market dynamics. Got it. Thank you. That was super helpful.

Maggie Buoy: And then lastly, you might wonder I Didnt mentioned commercial field force.

Maggie Buoy: We don't have any near term plans, we looked at the investment we've made and I think we're very comfortable with covering 90% of the relevant patient population.

Maggie Buoy: We have reasonably sized balanced territories.

Maggie Buoy: Reasonable numbers of HCP and account targets per rep. So we're pretty happy there, but we will evaluate whether there are additional or new deployment strategies that we might want to implement over time in response to the evolution of the market dynamics.

Chad Robins: And then maybe just one on the NeoGenomics partnership. Can you just update us on the progress you're making there and talk about what work is being done to ensure readiness for the early pilot launch in the second half of this year? And then just how you're thinking about how that will inform your full launch down the line.

Speaker Change: Got it. Thank you that was super helpful. And then maybe just one on the Neogenomics partnership can you just update us on the progress Youre, making there and talk about what work is being done to ensure readiness for the early pilot launch in the second half of this year.

Chad Robins: Thank you. Sure, I'm really pleased with how that partnership has been progressing and very grateful to be working with great partners on the NEO side. The work we've been doing up till this point was to select the phase 1 accounts that we wanted to target based on a variety of criteria that will allow us to gain insight to ensure that we optimize the broader national launch at the beginning of next year. We've been finalizing the TRS design, test requisition form design. We've been designing or creating the field direction and designing a company and training. We've been determining how samples will actually flow between the companies, how orders and reimbursement data will flow between the companies, and we've been firming up how we will manage handoffs between various members of our cross-functional teams that face our customers.

Speaker Change: And then just how you're thinking about how that will inform your full launch down the line. Thank you.

Speaker Change: Sure I am really pleased with how that partnership has been progressing and very grateful to be working with our great partners.

Speaker Change: <unk> side and the work we've been doing up until this point was to select the phase one accounts that we wanted to target based on a variety of criteria that will allow us to gain insight to ensure that we optimize the broader national launch at the beginning of next year.

Speaker Change: Been finalizing the Trs design test requisition form design, we've been designing.

Speaker Change: Creating the field direction in designing accompanying training.

Speaker Change: When determining how samples will actually flow between the companies how orders and reimbursement data will flow between the companies.

Speaker Change: And we've been firming up how we will.

Chad Robins: So all that work will inform the second half phase 1 launch and will directly benefit the longer term national launch.

Speaker Change: Manage handoffs between various members of our cross functional teams that face our customers. So all of that work will inform the second half phase one launch and will directly benefit the longer term national launch.

Chad Robins: Great. Thanks so much. Thank you.

Operator: I am showing no further questions at this time. Thank you for your participation in today's conference. This does conclude the program. You may now disconnect.

Speaker Change: Great. Thanks, so much.

Speaker Change: Yeah.

Speaker Change: Thank you I am showing no further questions at this time.

Speaker Change: You for your participation in today's conference. This does conclude the program you may now disconnect.

Speaker Change: Okay.

Speaker Change: Yeah.

Speaker Change: Okay.

Speaker Change: [music].