Q2 2025 Adaptive Biotechnologies Corp Earnings Call

Good day, and thank you for standing by. Welcome to the Adaptive Biotechnologies second quarter 2025 financial results conference call.

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I would now like to hand the conference over to your first speaker today, Karina Kezia, Vice President of Investor Relations and FP&A. Please go ahead.

Thank you, Shannon and good afternoon everyone. I would like to welcome you to Adaptive play technology. Second quarter 2025 earnings conference call.

Earlier today, we should have a press release reporting adaptive Financial results. For the second quarter of 25, the press release is available at www.adaptive.com. 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 or corporate website. During the call today management will make projections and other forward-looking statements within the mini

Federal Security laws regarding future events and the future financial performance of the company, these statements reflect management perspective of the business as of today, actual results May differ materially from today, forward-looking statements, depending on a number of factors, which are set forth in our public filings with the SEC and listed in this presentation,

In addition, non-GAAP financial measures will be discussed during the call. A reconciliation from non-GAAP to GAAP metrics can be found in our earnings release.

Joining the call today are Chad Robins, our Co-Founder, and Cisco, our Chief Financial Officer. Additional members from management will be available for Q&A. With that, I'll turn the call over to Chad. Chad.

Thanks Karina. Good afternoon, and thank you for joining us on our second quarter earnings call.

Our second quarter results, demonstrates, strong execution.

Without performance on both the top and bottom line.

In addition to delivering ahead of expectations.

We're also tracking ahead of schedule on key milestones for the years shown on slide 3.

Our MRD business achieved profitability this quarter, delivering approximately $2 million in positive adjusted EBITDA, which we anticipate to increase going forward.

Mrd Revenue grew 42% year-over-year driven by significant increases in clinical volume.

We successfully integrated clono seek into flat irons ankle EMR expanding access in the community.

We've begun processing. Clonc tests on the Nova seek x, a major step in scaling operations and improving margins.

Nccn guidelines for multiple Myoma were updated to strengthen support for ID testing at diagnosis reducing barriers to mrd testing, and helping drive volume. And we launched the first phase of our collaboration with neogenomics

15 percentage points year-over-year to 64% and cash burn. For the quarter was approximately 11 million representing, a 36% improvement over the same period last year, ending with a solid cash position of 222 million.

Given these strong results, we are again raising our full-year guidance to reflect a higher MRD, revenue range, and a lower annual cash burn.

Kyle will share more details on this shortly.

Let's now dive into the MRD business on Slide 5.

Clonic Revenue grew 57% year-over-year in the second quarter driven by strong demand across all reimbursed indications.

We delivered over 25,300 tests of 37% versus prior year and up to 10% sequentially and increase of about 2,200 tests versus q1.

Multiplied them Remains the largest contributor of accounting for 41% of us colonoscopy volume. Followed by all at 33%, CLL at 10% dlbcl at 8% and MCL at 5%.

We continue to see positive momentum across several key. Growth indicators.

Blood-based testing represents 44% of mrd tests of 40% from a year ago.

In most of Myoma blood-based contribution Rose to 23% compared to 21% last quarter.

Community-based testing grew 16% quarter-over-quarter reflecting, our expanding footprint outside of Academic Center.

NHL volume grows to 14% of total up from 11% last year, led by continued growth and dlbcl and MCL

Ordering healthcare providers grew 35% over 3,700, reflecting strong provider adoption. Over 18,000 unique patients were tested in Q2, up 40% year-over-year and 10% sequentially.

On the reimbursement, front, ASP for clonus. He continued its upward Trend reaching above 12 1,290 per test.

A 17% increase year-over-year.

To date. We've closed or renegotiated 8, key agreements with major national and Regional pairs with additional agreements. Anticipated to close in the back half of this year.

We remain confident in achieving an average ASP of $1,300 per test for fiscal year 2025, with solid growth for the directory well into the future.

Now, let's take a look at the progress of EMR integration that slide 6.

Integrating Clonac into EMR systems across academic and community settings remains a key driver of volume growth.

In the academic setting. We began at the integration about 18 months ago and we're now live at 40 sites, including 13 added since our last call

Epic accounts that have been live for over a year are growing on average about 2 times faster than non-integrated accounts among our top 10 accounts. These accounts are now Epic integrated, and we're seeing acceleration in those accounts following integration.

In the community setting this quarter. We achieved a major Milestone with the integration of clono seek into flat iron across, 113 Community account groups.

Many of which include multiple practice locations.

This marks a significant advancement in our strategy to scale in the community oncology space.

Also provides ankle EMR users with a more streamlined customer experience. Enabling simplified ID, mrd ordering, and the option for serial testing directly through the EMR.

Looking ahead, we plan to continue expanding EMR Integrations over the coming years.

Further accelerating adoption, simplifying workflows, reducing order discrepancies, and strengthening our competitive modes.

Looking at mrd Pharma on slide 7.

Our mrd farmer business had another strong quarter with Revenue up. 20% year-over-year with steady growth in sequencing revenue and 5.5 million in milestones

We ended the quarter with approximately 175 active, Global clinical trials, and a 218 million, backlog up 21% from the prior year.

This backlog is a strong leading indicator of future revenue.

Or secondary endpoint in 90 of these studies, many of which may trigger milestone payments upon regulatory approval.

On the regulatory front momentum continues recently. The European medicine agency, chmp issued a positive opinion supporting the use of mrd testing as an early endpoint for conditional approval and multiple Myoma.

This decision is Al aligned with the odac recommendation and further cements. The already strong case for Farmer companies to make mrd, a central element of their Myoma drug development strategy.

As we continue to monitor developments at the FDA, we're optimistic about the growing Global support for mrd to accelerate. New treatments, not just in multi Myoma, but across all lymphoid malignancies

Turning to slide 8, I'd like to take a moment to highlight some ClonoSEQ MRD data presented this quarter at various conferences.

Starting with the midus study in multi Myoma.

This 791 patient study is the first prospective randomized, mrd directed phase 3, trial to assess the ability of colonoscopy to guide Myoma transplant decisions.

The study evaluated, the use of consolidation therapy with versus without transplant in patients, who achieve mrd? Negativity by clono seek at the end of induction?

Data shows that patients achieve similar mrd outcomes. Regardless of, whether they received a transplant supporting the idea that trans may not be needed for mrd negative patients.

In CLL promising, interim data from phonetic, stop and ongoing. Phase 2 studies demonstrated, the potential to reduce duration of frenetic, class based therapy in patients, who achieve an mrd negative response.

And in dlbcl several studies presented at the icml conference in Lugano showed how cloak and ctdna can effectively assess response and complement Imaging across different lines and classes of therapy.

Q2 also marked an important milestone for the enhanced version of our clono seek ctdna essay and dlbcl as the FDA. Granted to investigational device. Exemptions for use in investigators sponsored trials to assess, escalation of therapy for patients. Who remain mrd positive at the end of Frontline treatment?

It's exciting to see the expansion of data and studies supporting the interventional use of ColonSeeker, MRD, and lymphoid malignancies to inform clinical decision-making. We look forward to more key data readouts at the ASH conference later this year.

In summary, our mrd, business is firing on all cylinders. As shown on slide 9. We're only halfway through the year and most of our key full years. Strategic goals have been achieved, including reaching mrd profitability. This quarter ahead of our second half Target.

Now, let's turn to immune medicine on. Slide 11.

Our immune medicine business is on track to meet 3 main goals.

The first goal is to develop a digital TCR antigen prediction model.

as we scale the size and quality of our data generation,

we aim to replace our validated TCR, Discovery cellular assays with this digital TCR antigen prediction model which will significantly reduce both cost and time. We're starting to digitally model the ability to accurately select the best tcrs and our cell therapy application with janete. We're also making good progress in applying our large training data. Sets, this includes improving the accuracy of our TCR antigen binding predictions and deploying our AI machine learning models to enable additional partnering on.

Opportunities with attractive future monetization potential.

The second goal is to build a robust, preclinical data package for our lead. Tell depletion program in autoimmunity. We are conducting functional and bio physical characterization of our top, antibiotic candidates in our lead clinical indication. We also solidified, our patient selection strategy in this indication. This will allow us to select. Only those patients who we can confirm have the specific disease-causing autoreactive, T cell receptors in who are at a higher likelihood to respond to our T-cell, depletion therapy.

25 cash burn target of $25 to $30 million by scaling, revenue generation from farmer partnering, and continuing to thoughtfully gate R&D investments through year-end.

now I'm going to pass it over to Kyle to walk through our financial results and our updated full-year guidance Kyle

Thanks, Chad starting on slide 12 with results for the second quarter.

Total revenue was 58.99, Million representing 36% growth from the same period last year. 85% of the revenue came from the mrd business, and 15% from mean medicine.

MD Revenue grew 42% versus prior year to 49.9 million with clinical and Pharma contributions of 65 and 35% respectively.

Clono seek test volume, including International increased 37% to 25,321 tests delivered versus last year.

ASP and the US grew about 17% to 129.90 the continued Improvement. In ASP is mainly driven by our Contracting initiatives. Improving our pricing and revenue cycle management activities, including aged collections.

Mrd, farmer Revenue, grew 20% versus prior year. Inclusive of 5.5 milestone.

The meat medicine revenue was $8.9 million, up 13% from a year ago.

Moving down the piano, sequencing gross, gross margin, which excludes milestones and Janete amortization at 64% for the quarter. This represents an improvement of 14 percentage points versus the prior year, as we continue to leverage lower labor and overhead costs with increasing volume and higher pricing of both our clinical and pharma revenues.

Total operating expenses for the quarter. Inclusive of cost of Revenue, was 83.9 Million. Representing a 1% increase from last year. Excluding the Q2 2024 asset impairment costs.

This increase was mainly driven by higher sales and marketing, spend attributed to EMR efforts and higher people costs partially offset by lower cost of Revenue than R&D spend.

As you can see from the segment reporting table at the bottom of the slide, the mrd business achieved positive adjusted ibida of 1.9 million, a massive Improvement versus a deficit of 11.3 million a year ago.

This is a significant milestone for the business and we continue to expect positive, mrd, adjusted ibida going forward.

I mean medicine adjusted even a loss also improved 14% versus Q2 of last year.

Total company adjusted. Ibido was a loss of $7.2 million in the second quarter compared to a $21.4 million loss in the prior year.

Interest expense from a royalty financing agreement with Orban was $2.9 million, which was slightly higher than interest income. The net loss for the quarter was $25.6 million.

Now, let's turn to our full year 2025 updated. Guidance on slide 13.

We are again, raising our full year, mrd Revenue guidance, to a range of 190 to 200 million up from our previous range of 180 to 190 million.

This increase is driven by stronger than expected. Clinical volume performance in the second quarter and higher mrd Milestone Revenue, anticipated for the year.

Given the strong clono seek test volumes in the quarter in the momentum, we are seeing we now expect approximately 35% growth in fiscal year 2025 volumes versus 2024 and we anticipate sequential growth in both the third and fourth quarters.

We also expect revenue from mrd, Milestones to be between 14 and 15 million up from our previous guidance of 8 to 9 months.

This MRD updated MRD revenue guide represents significant growth of 31% to 33%, and 37% versus fiscal year 2024, and 32% to 39% for the MRD-based business, which excludes MRD milestones at the midpoint.

We are reiterating our full year total company operating expenses, including cost of Revenue to be between 335 and 345 million.

We continue to expect approximately 69% of this to be driven by the mrd business, and 23% from the main medicine with the remainder attributed to unallocated corporate costs.

Lastly, we are lowering our full-year total company cash burn guidance to a range of $45 million to $55 million, down from the prior range of $50 million to $60 million. This improvement is primarily driven by the higher-than-expected MRD. We now expect approximately $18 million of this year's cash burn to come from the MRD business, and still anticipate burn from immune medicine to be between $25 million and $30 million, with the remainder attributed to unallocated corporate costs.

Strong financial performance in the first half of the year has set up the MRD business to achieve recurring, adjusted EBITDA profitability and a clear pathway to cash break-even. Even in the near term, across the business, we will remain focused on disciplined execution to drive continued sustainable growth. While managing our investments appropriately with that, I'll hand it back over to Chad.

Thanks Kyle.

Our second quarter results are a clear test Testament to our disciplined execution and strategic Focus across every part of the business.

Achieving positive adjusted Ava and our mrd business marks. A major Milestone 1, that reflects the strength of our model and the commitment of our team.

We're confident in delivering on our raised, for your guidance and remain focused on execution with the discipline urgency and precision needed to deliver on our on our goals and create long-term value for our patients, our partners, and our shareholders.

With that. I'd like to now turn the call back over to the operator and open it up for questions.

Thank you.

At this time, we will conduct the question and answer session. As a reminder, to ask a question, you will need to press star 1, 1 on your telephone and wait for your name to be announced.

To withdraw your question, please press *1 1 again.

Our first question comes from Dan Brennan from TD Securities. Your line is open.

Terrific. Thank you. Uh, thanks for the questions and um, nice quarter obviously. Um, maybe the first 1 just on the volume side, really strong volume.

Chad you called out a lot of the vignettes about the success and the impact of epic.

I just wonder if you could speak a little bit on flat iron obviously you just did the roll out. Now, it's pretty massive kind of. Are there any early kind of things to note on what you're seeing so far? And can you just remind us how you're thinking about?

The volume growth guide that you've given for the back half of the year and how we might think about the benefits.

Of the uh, new accounts on flat iron and kind of how those might flow through in terms of volume trend.

Sure Dan, uh thanks for the question. I'm going to have Susan kind of jump in with some details on it but

Sure. Hi Dan. So as you know, we went live nationally with Uncle EMR on July 1st. So we are in very early days of the integration and remember that many of the enco EMR accounts are accounts that we have little or no existing business. So, this integration does represent a significant opportunity to expand in the community prior to the integration. These accounts made up about 6% of our total volume about 20% of our community volume. We're very pleased with the initial results. We are seeing all be. It is very early. Both in terms of the volume and the workflow and we're receiving resoundingly positive feedback from our customers.

We are also serving that a majority of the ordering hcps. At these accounts are opting to use, the serial monitoring feature. That Chad alluded to, in his earlier remarks. And that's a new feature of our ordering process is currently unique to Uncle EMR and we do expect that it will support more consistent, ordering the clinically appropriate time points in the community. Now, we did build the flat iron launch into our guide as a growth driver, both for Q3 and Q4, but I do think there's potential for upside. Um, we'll continue to gain insight into exactly what the pace and degree of acceleration that we can expect from this is um as we as we gain a little bit more experience,

Terrific. Yeah, there'd be a lot to unpack on that. Maybe we, which we can do later. Maybe just on the pricing side.

That's the second follow-up there. Um, in terms of uh you know, pricing came in nice success there. I know you mentioned um I guess Contracting and things could you could you unpack a little bit about what you saw on clonic pricing? I know you reiterated the full year guy, seems like you have a lot of momentum there. I'm just wandering across different payer types. Where are you? Seeing the biggest traction and kind of, what are you assuming for the back half of the year, which, you know, arguably could be conservative

Yeah, thanks for the question, Dan. This is Kyle. Um, on the pricing approvement I I mean I think we're gaining kind of the the growth from the Contracting efforts. We implemented in the back half of last year and we're starting to see that pull through across a number of the Blue Cross pairs. Um you know, Medicare just a percentage of mixes mixing to the newer price point and so we're seeing those effects but as we look forward to the the second half of the year, a number of our larger Contracting implementations with the larger National payers, come into play. So you know, I think we're well set up into the the second half of the year to continue to see some uh Improvement. We did have some initial wins that's a little early to say if it's going to kind of continue at this rate with California and Medicaid as well in the second quarter. So so that's giving us some momentum, um, heading into the back half of the year.

Traction in the quarter. How do we think about? As we look ahead in your balancing investments in the business versus really seeing some of this Eva margin potential flow through, how might we think about kind of where you can end the year and what that means, as we look ahead to 26 on the mrd side,

Thank you.

Oh Kyle, you started on uh just in terms of numbers and then I'll provide call it color commentary. Yeah. Um, you know, a great milestone for the business to achieve, uh, positive adjusted. I but I think, in terms of, you know, back half of the year, we are set up with the right trajectory to continue to repeat adjusted, even a profitability. And in terms of the, you know, magnitude of that, you know, some of that will vary depending on the timing of the Milestones, Etc. But, you know, we're thinking about this is the business is set up to kind of continuously produce positive adjusted. Evida and, you know,

What we're seeing that for the longer term here?

Yeah. Um, and and Dan, I would say this like for the mrd business we're seeing as as as as evidenced by. You know, the last several quarters, you know, a really nice acceleration. Um, but there's still, we're still in the very early Innings, um, and there's a kind of a long growth trajectory. I've had ahead of us and you know, blood-based testing in the community setting, you know, additional data generation. So we'll continue to, you know, make investments, uh, in in the mrd business. Uh, and then kind of in the medium term obviously, you know, there's there's International markets to explore additional Capital allocations towards uh, and, you know, potentially

The additional um ticket tests and and kind of blood-based measures to support the mrd business. So um you know, as we look forward um you know we'll we'll kind of balance out our Capital allocation and kind of Investments uh going forward to for for for our growth trajectory

Great. Okay. Thank you very much.

Thank you.

Our next question comes from Andrew Brackman from William Blair. Your line is open.

Great. Uh, hi everyone. Good afternoon. Thanks for taking the question. Um, Chad maybe around your commentary around. Expanding the footprint, into the community Channel, you know, flat irons. Obviously, a major level there, but you maybe just sort of talk about some of the other drivers there, which should help you drive growth here, not just in the second half, but but even longer term, be that expanding and it can indications or blood of the sample type. Thanks,

Yeah. Um, you know, 1 of the things that we highlighted in in our preferable March was the neoen collaboration, uh, and and we're excited about that because, you know, they're in, you know, 60% of the accounts um, that they're in, we're not in at all yet. Uh, so that's that's a really nice um, opportunity for us to increase our penetration and kind of Susan, you want to come on some other efforts that we're doing in the community? Um, in terms of, uh, you know, putting it together, Pathways Etc.

Happy to yeah. Andrea a couple of other things that are consistent in our strategy. 1 is a continued focus on the large National strategic accounts. These oncology practice networks that control a large proportion of the cancer patients in the community settings. So those we have a separate, uh, sales team that focuses specifically on top-down strategy, engaging with the sea Suite, Etc, to ensure that we have uh, unified direction from their leadership and policies that we can advance that can be consistent across the entire network. The other key thing is, engaging academic thought leaders to help us drive Community adoption, they have the credibility with those providers. They have the referral networks that they can use to leverage um uh their influence, and therefore we've increasingly in the, in the light of the recent nccn, guideline updates with multiple myeloma, we've been leveraging, our thought, leaders and partnering with them to deliver education to the community on things.

Like why it's important to to perform an ID test at the time of diagnosis. So in combination with our EMR strategy and our collaboration with Neo, those are some of the key things that are consistent in our community strategy and you mentioned blood that will always be a part of the conversation and a key, uh, adoption driver for Community clinics.

Great. Thanks. And then as a follow-up here, Chad just wanted to follow up on some of the comments you made to Dan's last question around sort of additional investments here. You know, colonoscopy clearly has a long growth rate ahead of it. But as you sort of think about adding to the menu here, you know, some other labs are trying to become more of a one-stop shop. What are some of the key characteristics that you might consider as you’re thinking about bringing on additional tests? Thanks.

So the broad-based test does that kind of a broad base from an mrd perspective and then secondarily, you know, I look at, you know, what is the kind of infrastructure? We've built to be able to, to both validate support, uh, uh, you know, a Diagnostics kind of more broadly. Um, and again, as you know, we've been putting together kind of, for example, this TCR antigen prediction model, um, you know, it could could have some kind of future applications with in the diagnostic channels, again early on. But these are the things that we continue to explore.

Great. Thanks guys.

Thank you.

Our next question comes from David Westenberger from Piper Sandler. Please go ahead.

Hey, um, thanks for taking the question. I actually wanted to talk on for, uh, Dan's question on on profitability. And and again, congrats on the profitability in the mrd business. Um, but you also implied, um, uh, cash flow positive on a go forward basis, given the factors in, in terms of, like, fluctuations in Milestone payments and, and, and, and whatnot. Um, I I, it's

Can can uh do you have visibility on what the what the Milestone payments look like maybe this quarter and next and you know, if you don't get me in the next couple, quarters is, is there a uh, um, you know, a chance for you to go below? And essentially what I'm laying out with this question is the ability for you to you know, not be held to a certain number if there is indeed Milestones, not mine or not mine.

Done.

Yeah. Uh, thanks David. This is Kyle, uh, you know, as it relates to the back half of the year, I mean we implied in our guide that there's about, you know, 4 to 5 million to go in the back half of the year as we have 10 million altogether. So you know again. Yes. Could those be lumpy in a quarter by quarter basis? Certainly, I think as I think about cash flow positivity and and where the business trajectory is headed. I'm trying to think about that, you know, on on an annualized basis, just given quarter to quarter, we can have variability in spend and investment, Etc. But you know, I think what we're set up to do is to continue to deliver that with the, the trajectory of the clinical business, and the volume growth, we're seeing their strong performance in the form of business as well. So, you know, I think, you know, we're not exactly there yet, but with the Novac coming online, that's directed to the business setup to kind of deliver that, you know, as a the near-term.

Appreciate that. And then I just want to talk about the clono seek volumes. I mean we're we're really seeing kind of an acceleration 37% year-over-year growth. You're already at higher base and you got 10% sequentially. So, uh, you know, obviously, uh, things are growing really well there, can you talk about? I mean, can you rank orders? Some of the factors in terms of, um, what, what's been driving? The volume increases. I mean, I'm guessing a lot of this has been the Integrations. But, you know, maybe if there's anything we're missing in terms of, you know, new indications, for instance, dlbcl or or anything like that. And if you can give us kind of a flavor, for how these Integrations, go and how to kind of how you see volume.

Trickling out over the next, you know, quarters or or so, I think you mentioned, you had double the amount of volume in uh or doubling the amount of volume growth in Epic, integrated versus non- epic or maybe it was flat iron, you know, does that expect it? Do you expect to, you know, see a tail there for a number of years and, uh, sorry to make this really long. But can you clarify the, the, uh, the ordering, um, the, the, the integration where you have multiple orders? Um, you know, with, with specific timing. And I just want to basically clarify on that, do you ever get timing or do you ever get more than 4 test ordering ordered on that and

Hopefully, that was clear. That was a lot.

Thank you.

Thank you. Uh, let me see. Yeah, let me see if I can take those uh at least the first couple of 1 by 1. So um, in terms of the volume growth, you know, as you noted we've seen a number of, um, we've had an we've anticipated that there could be upside and we've seen that upside realized in Q2. Um and I think we'll

We'll have it, we'll take advantage of the email Integrations on an ongoing basis. I think some of the other things in Q2 that were important were first of all continued uh, strong growth in mental cell lymphoma which we recently launched as, you know, as well as in cell lymphoma, which is 1 of our newer indications and 1 for which, uh, the data continues to build and the sort of clinical use case continues to be, I think made more clear. Um, we also had the Tailwind

1 thing. Um, and that will continue to be the story going forward. Um, with regard to Integrations.

We did see a significant increase in the pace of Integrations through ethics that we were able to deliver in Q2 13. A quarter was the most we've done, and we've doubled the number that we've completed, uh, in the last 6 months. So we went from 20 to 40 and 6 months. Um, it's certainly on the account side. Uh, there are many dependencies that we have on our accounts to complete those Integrations. So it's difficult to predict the pace going forward, but we do feel confident that we're on track for our goal of, about 50% of our volume going through. Um, and integration either epic or otherwise by the end of the year. Um, I do think that eventually Integrations will slow down, but we are not there yet. We have more ahead of us than we have behind us, um, and much more opportunity to optimize the Integrations that are already in place so that we can see even better differentiation of the growth in those accounts versus the non-integrated accounts.

And then lastly, I think you asked about the episode title. I don’t know if you want to take that one, or if you’d like me to.

Yeah, uh, David and Susan, feel free to chime in, you know, from an ordering perspective. The, you know, a clinicians are still ordering test by test. Um, effectively they can, you know, in certain Integrations, you know, Place reminders for future orders. But really, we're just paid a bundle for Medicare, and that's specific to the Medicare coverage and the Medicare line of business. So, um, you know, if we get

Eligible test for medicare. That is paid once um, for the affective forecasts. But but let me I

You were asking specifically about serial testing. And um, and as it relates to the logistics of our Integrations, 1 of the unique features um, that we've done for the first time in the flat iron Eco, uh, Aiko EMR system. Um, there's the actual default is you can order because, um, a number of number of tests so it's like kind of 369 tests. Um, as a, as a as a sorry, on a recurring basis, of 3 months, 6 months, 9 months, every 12 months or every time a patient comes in, or you can or you can say, you know, I want to order a test by test basis and I I I want I'm not going to give you statistics. I'll just say it's kind of early but we've seen a a, a very nice uptake in clinicians that have clicked on a button to order on a Cadence of, uh, ah, ah, of a kind of a monthly 369 or 12 month Cadence. And so, that's what we're talking about in terms of kind of the excitement around, kind of repeat.

The ordering and the functionality that we can build into these AMR systems.

I got a long question there, so, sorry about that. Um, congrats again. Thank you.

Thanks David.

Thank you.

Our next question comes from Mark, msaro from btig. Go ahead.

Hey guys. Uh, congrats on a strong quarter. Um, I have a few questions on the EMR Integrations. There looks like everything's going well. Um, so you've got 40 on Epic 13. We're in cue 2. So looks like you had 207 heading into Q2. Would you define those 27 prior to this quarter as the mature integrated sites? And the reason I ask is I'm trying to get a feel for how long it takes you to get to a degree of maturity such that you're seeing call it 2x, uh, you know, growing twice twice as fast within within, uh, mature epic integration. And then I, I also wanted to ask about flat iron, I recognize that that was a lot of sights, all at once, over a hundred sites.

Effectively was that just pushing a button overnight and then, uh, do you have a sense for or do you have enough data that the flat iron could see similar pull through to the mature? Epic sites?

I think I can take those questions mark. So first on Epic, um so we're defining mature sites as those that have been live for at least a year. Um, so not all of those 27, in fact. Um, you know, it's it's more like 6 at this point. Um, and we are looking at those specifically because we wanted to understand if the early impact that we're seeing immediately post integration, which is generally pretty significant can be sustained. So, in fact, if I were to talk about the impact in the 3 months, post integration, there's usually a larger impact.

Still because we've been doing this for about 18 months and we have a smaller group that we started with um, that have been live for, at least a year, including a number of smaller accounts. Frankly there are, they're mostly smaller accounts in that, in that initial group, we'll have to continue to learn more as we as we gain more data. But, you know, 6 months from now, we'll have a much larger group. We'll have about 20 that have been alive for a year.

Okay, that's really helpful. Um, so my second question is on the

Oh sorry, go ahead. Oh, I'm sorry. Did you want me to go ahead on the flat iron 1? Sorry, I didn't of course, yeah, keep going. Yeah, thanks.

Sorry you're you're correct, but flat iron. Uh, was essentially pushing a button um on July 1st. All of those 113 account groups went live. We actually did a small pilot with 4 of them prior, but all of the rest went live on July 1st. Um, and it's, I think too early to say whether we can anticipate similar, um, patterns, but I will point back to what Chad was talking about the serial testing option, um, which is, uh, easier to use in, in, in flat irons ankle Amar than it is uh, to use a similar feature like standing orders in in Epic. At least it's easier for us to have visibility into it and it's easier to schedule the patient. And so we do anticipate that we'll have a a better ability to follow through on cereal orders, um, and and help support clinicians in delivering appropriate, testing frequency, um, with

Flat iron. So I do see some upside there, but it's, it's very early to, to speculate beyond that.

Okay, thanks so much for that. And then my, my last question uh I wanted to better understand the Neo collaboration, so it looks like you launched Phase 1, um, Chad or maybe someone else on the team. Can you expand on what phase 1 consists of and then uh, what, what would Phase 2 B? And, and then, um, I I recognize this is a, a, a commercial partnership. So, my understanding is that there's going to be Neo reps going out selling clono seek to to many of their customers. Uh, just give us a sense for, you know, what type of lift we might be able to see and is I imagine this is more of a 2026 impact. But uh, should we expect any impact in the second half of 26? All right, excuse me, second half of 25.

Sure. So Phase 1 uh is our pilot effort with a very small handful of small accounts. Again with the intent of ensuring that we've worked through all the operational processes, the collaboration and handoffs between the 2 companies with accounts that are willing to do the process in a fairly manual manner. Um, so it's it's really intended for us to learn and, and gather insights both from the customer and from our own processes, um, as opposed to generate any material impact on volumes and I would extend that uh, expectation through the remainder of 20.

25. We do have the plan to bring on additional accounts, uh, during the course of the second half of this year, um, but I don't anticipate material impacts to to our volumes beyond what we've already guided, um, 2026 and 2027 is where we will see that material lift when we, uh, when we launched nationally in in the early part of next year,

And just 1 clarification. Mark if, when you going to mention that, um, Neil reps are going out and selling clothes seek tests, um, and I want to just be clear on how that works. They're going out and selling a compass, uh, panel that will include as a part of a battery of ID test on it. I at at diagnosis that will include the ID colonoscopy test as part of the compass work up and then then sex. So effectively they're selling the compass, work up with mrd kind of baked in as it and then secondly as part of kind of their recurrence monitoring or their monitoring across the patient life cycle, they have a an offering called chart and they'll be selling a effectively clone of Sikh embedded into the chart offering as the clonal seek mrd test.

Great. Thanks so much, guys.

Sure.

Thank you.

Our next question comes from Rachel, van Staal from JP Morgan. Please go ahead.

Hi. This is Sebastian. Sandler on for Rachel, thank you for taking the question. So I wanted to touch on the nccn update for multiple myeloma, which recommended the Baseline. Colonal ID, testing to enable mrd testing later on. You called out the 10% sequential growth in unique patients.

Impact from the guideline update. So, I'm just wondering if you've seen any changes in ordering patterns, especially around that funnel, ID testing, uh, and how that's been trending since the update, um, and then just how should we think about these unique IDs create translating into mrd testing, later on, thank you.

Thanks for the questions about s.

What I would say to start is that the nccn guidelines update certainly uh in Tailwind for us and something that we've been actively leveraging, uh, particularly in the community setting in both our direct education of hcps as well as uh the KL driven, uh, education that I mentioned earlier. Um, it's helping us to deliver a message that we were already delivering, which is the importance of ensuring that each and every patient with multiple myeloma, has the opportunity to be tracked by clono seek and that opportunity is secured if you test at the time of diagnosis, or if at least you, make sure that you collect an appropriate sample for subsequent NGS, mrd testing. So, um, while certainly it is, I think a support to all of our goals. Um, we are not anti or we are not projecting any specific increase in volumes as a result of that. By itself. I think again it will, uh, contribute to the efforts that we already have ongoing. Um, and I'm very optimistic that in the community setting, um,

It will be um, compelling incredible as a reason for this to happen. We can anecdotally tell many stories of accounts that are currently evaluating. And I think seriously considering, um upfront ID testing protocols in the community that are already accounts that are doing that today. Um, it is not the majority of our ID testing. Um, and so, you know, we've seen fairly consistently about 30% of our test volume, come from IDs, uh, over the last several years, and I don't anticipate that dramatically changing but um, the balance of indications where we have more mature indications, uh um like all or many patients are ID and new indications as well as myeloma where ID is becoming more of a there's more support for it. I I think that um we'll continue to see a strong contribution of ID testing over time.

Got it. Thanks. Uh, and then just 1 on the backlog. It seemed like that. It's growing nicely closing at around 2118 million, after ending 2024 a little over 200. Uh, it also looks like the primary endpoints stepped up to 17 from 10 end, uh, 4 cute last year. So just how should we think about the burn, their translating to sequencing revenues? And is there any meaningful difference in the burn rate between these primary versus secondary endpoints? Um, and then lastly, have you seen any recent change in Pharma customer behavior in that segment, just given some of the headlines around tariffs and Ms?

Fan and do you anticipate any headwinds there going forward? I think some of your peers have called out a bit of bumpiness there. So just wondering if you're seeing any or building any into the guide, thanks.

Sure. Thanks.

Go ahead. Go ahead. All right.

As it relates to the backlog. I mean, in terms of the the burn profile, I mean I I think of it as we're continuously replenishing, our black backlog with new bookings and and that's what's highlighted by the improving backlog, relative to exit value of of of 2024, you know, I think the time frame of which that backlog converts into revenue is really unchanged. Maybe a little bit of a pull forward um you know, but but obviously with with the Dynamics at the FDA and um you know, our farmer Partners Investments, you know, it's still contingent upon when their trials are reading out how many patients are enrolling. And when you know, we can enable some of that mrd testing but you know, broadly don't think the profile has changed dramatically and we're going to continue to grow bookings. Um you know, and and we're confident in the pipeline we have around the form of business.

Yeah, and can is, is it relates to more General and um, question about our mrd Pharma business going forward. Um, and kind of impacts of kind of tariffs. Nah, and the FDA. Um, you know, first we'll start with kind of the tariffs and the FDA. There's very excuse me, tariffs in the NIH. So there's very little impact. Um, as we're, uh, as we as we look through, kind of the portfolios, we're really not subject.

on acceleration of, um,

the mrd therapies based on, uh, mrd. Um, so, you know, um, you know, the odac recommendation last year, along with the CMH, chmp, positive opinion on mrd using mrd as an early endpoint I. It just continued and further validation of mrd as a predictor of response. So, you know, overall we're very kind of bullish on the mrd farmer opportunity.

Great. Thank you.

Thank you.

Our next question comes from Yuko Oku from Morgan Stanley. Please go ahead.

Hello. Thank you for taking my questions, um, on chin, uh, chmp opinion and supporting the use of mrd as an early endpoint and multiple myeloma, clinical trials. How important was that milestone for your Pharma customers and order? The further incentivize incorporation of mrd as an endpoint?

And then also second part to that uh and given the halo effect, that odac recommendation had on Physicians and the US does. This also bring o u opportunity into greater Focus for you.

I'll start out, uh, go thank you for the question on chmp. So, you know, I think that we saw this as further confirmation of what Farah sort of had already come to believe based on the odac, uh, vote and recommendation a year. A little over a year ago. Um, the chmp decision was anticipated and in fact, among our farmer Partners who are currently executing or planning Global clinical trials, uh, they had expected that they would be able to leverage, uh, primary endpoint status for mrd in those settings. So this was an important affirmation of that that expectation. Um, and I think further supports the, the sort of global acceptance of mrd as a key, uh, endpoint in clinical trials for Myoma as well as frankly, other key malignancies. We're seeing growing support and growing utilization of mrd as a primary endpoint in, uh, in other in other, uh, disease States. And there are coalitions that have formed of Pharma companies, and

And and investigators that are actively pursuing, um, endpoint status for mrd, and we have signed a number of primary endpoint studies in diseases other than myeloma. So, um, feel that that's again, very supportive of what was already considerable momentum. That was building post Doc. And then as it affects uh as it relates to the, you know, the halo effect, you described that odac had on https here in the US, you know?

I think the oeis impact could be similar. I I will say that regardless of that, we had already been a chat, alluded to starting to think about International expansion and how that might look, there is a significant opportunity outside the US particularly in Europe, um, that we can, you know, consider pursuing. And I, uh, I believe that chmp opinion and the, uh, European kol's alignment with that opinion, uh, does support the opportunity. Uh, outside. The US is something that may may be worthwhile to prioritize and not just in future.

Great. Thank you. Um, and then the Midas trial was also an important milestone for you that demonstrated a utility of colonoscopy again, aiding, uh, physician decision to transplant in. Mm, could you share some of the feedback from the Physicians post data readout? And whether you're already seeing some volume in Flex as a result,

Sure feedback in general has been quite positive. This is the first time that a study that looked at this question was respectively designed randomized. Uh, and, and therefore, I think the results are more compelling than perhaps some earlier studies, that sort of answered this question in an indirect way. Um, it's also a very large study and was put forward by a very well regarded and highly credible group of thought leaders, um, from France. So, uh, we we've been very eager to bring it into conversation. I think, interestingly in the community,

Setting it re, it really resonates, um, particularly in combination with the ncn guideline update.

Where we can say it is important to ident ID your patient at the time of diagnosis. So that

Um something that is relatively new but now very common in a lot of study designs. And so uh some clinicians are interested to continue to see some of the longer term follow-up on this study. But overall very very um,

Very open a lot of openness to this. A lot of discussion that it opens up and the dialogue with the patient is I think the thing that people are most excited about to to have something they can share with the patient uh who is hesitant about transplant, which is an increasing proportion of patients.

Thank you.

Thank you.

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