Adaptive Biotechnologies at Goldman Sachs Conference: Strong Q1 Performance and Strategic Growth

On Wednesday, 11 June 2025, Adaptive Biotechnologies (NASDAQ:ADPT) presented at the Goldman Sachs 46th Annual Global Healthcare Conference, showcasing its record-breaking first-quarter performance and strategic plans for future growth. CEO Chad Robbins highlighted significant advancements in Minimal Residual Disease (MRD) testing and operational efficiencies, while addressing potential challenges and opportunities in the healthcare sector.

Key Takeaways

• Adaptive Biotechnologies reported its best quarter ever for MRD testing, with strong clinical volumes and average selling prices.
• The company is expanding its market presence through partnerships, including a strategic collaboration with NeoGenomics.
• Operational improvements, such as transitioning to NovaSeq X instruments, are expected to enhance margins by 5-8% over the next year.
• Adaptive is actively transitioning pharma contracts to a fee-for-service model to mitigate milestone delays.
• Future strategies focus on expanding blood-based testing and increasing ASPs through updated payer contracts.

Financial Results

• Q1 marked a historic high for Adaptive, driven by a 30% increase in volume growth.
• Milestone payments from pharma partnerships reached $4.5 million.
• Gross margins are projected to exceed 70%, with EBITDA margins above 20%.
• The NeoGenomics partnership is anticipated to boost testing volumes by 26-27%.

Operational Updates

• Integration with Electronic Medical Records (EMR) has been implemented in 33 accounts, with 6 of the top 10 accounts integrated.
• MD Anderson’s integration led to a 14% growth in order volume for two consecutive quarters.
• By year-end, 50% of orders are expected to come through EMR integration.
• The transition to NovaSeq X instruments is underway, aiming for a launch within six months.

Future Outlook

• Adaptive is targeting community expansion, where 60% of blood cancer patients are treated, through partnerships and strategic accounts.
• The company plans to launch the first phase of its NeoGenomics partnership in the latter half of the year.
• Investment in research and development will focus on assay enhancements, blood-based testing, and new clinical indications.
• Adaptive aims to raise ASPs to $1,700-$1,800 with new gap fill pricing.

Q&A Highlights

• CEO Chad Robbins addressed potential risks from Vinay Prasad’s appointment, emphasizing continued support for MRD.
• No slowdown in pharma trial starts is expected due to administrative changes.
• The company does not foresee the need for headcount expansion but is optimizing geographic operations.
• Adaptive maintains confidence in achieving 70% plus gross margins.

Readers interested in more detailed insights can refer to the full transcript below.

Full transcript - Goldman Sachs 46th Annual Global Healthcare Conference:

Matt Sykes, Life Science Tools and Diagnostics Analyst, Goldman Sachs: Matt Sykes, Life Science Tools and Diagnostics Analyst at Goldman Sachs. This morning, I have the pleasure of welcoming Chad Robbins, Co Founder and CEO of Adaptive Biotechnologies. Chad, thanks very much for being here. Really appreciate Thanks,

Chad Robbins, Co Founder and CEO, Adaptive Biotechnologies: Matt, for having us. Appreciate it.

Matt Sykes, Life Science Tools and Diagnostics Analyst, Goldman Sachs: Let’s just maybe start with a quick recap of some of progress you’ve made to start this year. You had a really strong Q1 with volume growth, margin expansion, growth across the portfolio. Maybe give us some of the highlights and maybe talk a little bit about what you see as the most important piece of the Adaptive story for the balance of the year.

Chad Robbins, Co Founder and CEO, Adaptive Biotechnologies: Yes. Yes. I mean, I want to kind of reiterate that. I mean, Q1 was probably the best quarter, certainly from an MRD perspective in Adaptive’s history, really firing on all cylinders. So just cover that Clinical volumes are doing great.

As you are well aware, first quarter, we started off the year saying we’re going do 25% plus in volume growth. We increased that number to 30%. Our ASPs are looking really, really strong. Executing towards that $1,300 average for the year and are confident in that. We had a great milestone, 4,500,000.0 on the pharma side.

Our EMR integrations are going really well. On the cost side, everything is on track. We’ll talk about later. I’m sure the NovaSeq X transformation. And all that being said, I mean, things are just looking good already for the second quarter as much as I can say.

And then on top of that, you’ve got this really nice call option for upside in the immune medicine business, which we’ll kind of talk about some of the things we’re doing. So I guess, taking together, I couldn’t be more pleased with the progress that we’re making on all fronts.

Matt Sykes, Life Science Tools and Diagnostics Analyst, Goldman Sachs: Got it. Maybe let’s pick off a few of those comments you make. I think those are all really important points. just on the EMR integrations. Diagnostic companies talk about them all the time.

There’s some level of like 10% uplift that everyone kind of references, but you’ve got a lot coming in the back half of this year. So maybe even though it’s still in the early stages, kind of remind us of what you believe the benefit you’re going to see there from an uplift either in volumes or maybe depth of relationships? And how much of a tailwind are these integrations could be for the remainder of this year?

Chad Robbins, Co Founder and CEO, Adaptive Biotechnologies: Sure. Matt, maybe I’ll start with what we’ve done so far and what we’re seeing, and then we can do some extrapolation. So far, we’ve integrated 33 accounts. Six of our top 10 accounts have been integrated, the largest being MD Anderson, which was integrated in October of last year. We saw kind of 14% quarter over quarter growth two years in a row or sorry, two quarters in a row for our largest account.

In the first quarter of this year, we integrated Stanford, UT Southwestern. We just integrated City of Hope, so very large accounts. We are expecting that by the end of the year, 50% of our order volume will come through EMR integration. So, we’re seeing in some of as a metric, so in some of our smaller accounts that have been integrated for a year, we’re seeing kind of a 30% lift. So, it’s really nice.

But I want to caution a little bit smaller versus larger accounts. But overall, EMR integration, we believe, will really continue to drive this volume increase. Flatiron is coming in the half of this year. And as you know, or I’ll just make sure for sake of clarity, EMR integrations on Epic really focus on the academic medical center, where Flatiron and the Onco EMR system is being pushed out to the community, and that’s coming in the half. So I’ll say this.

While we haven’t exactly attributed volume growth directly to that Flatiron and EMR integrations per se, it’s the combination of factors, including EMR integration, which makes us confident that we’re going to hit the volume numbers that we put out.

Matt Sykes, Life Science Tools and Diagnostics Analyst, Goldman Sachs: Maybe talk about just a few others of those factors of driving volume growth that will help you get to that 30% growth target this year outside of EMRs.

Chad Robbins, Co Founder and CEO, Adaptive Biotechnologies: Yes, sure. One is, we I just mentioned the community, but community is incredibly important. Sixty percent of patients blood cancer patients are treated in the community. We have significant efforts to kind of continue expanding into the community. Blood based testing is incredibly important in terms of increasing the number of frequency of time points per patient.

Data generation, we continue that really underpins everything that we do, continue to demonstrate how a clinician can make a decision on a patient using our test. That’s another key metric. And then, can you EMR integration is also on the Epic side? We mentioned Flatiron, but those are continuing to expand as well. So, just efforts really across the board.

The other thing is, I’m sure we’ll get into, but we’ve got new indications. I mean, we have had growth in all of our indications, but it’s great to see we launched MCL promotionally with Medicare coverage. And for first quarter launch, seeing really nice numbers there. Diffuse large B cell lymphoma, we had a really nice update to the assay, which has taken hold, and we’ve got a nice uplift in DLBCL. So really, it’s this combination of kind of many different factors.

And like I said, right now, they’re all green.

Matt Sykes, Life Science Tools and Diagnostics Analyst, Goldman Sachs: Got it. Yes. My next question is about drivers of growth in DLBCL and MCL. We just kind of addressed that. But maybe drilling down on MCL.

Sure. Let’s talk a little bit about the recent surveillance coverage you’ve gotten for that indication, what it means, what it could kind of represent the volume growth in that indication, but also could we start seeing surveillance coverage in other indications and what is your sort of view on that progress?

Chad Robbins, Co Founder and CEO, Adaptive Biotechnologies: Yes. Just to I’ll go right into that. I’ll just mention for MCL, one of the reasons it was has been successful is really had great data on whether or not to transplant. So again, when we talk about clinical use case, doctors are only going to use it if they know how to use it, why to use it, and it has your true utility. And so that’s why we’re seeing that in MCL.

And then secondarily, to your point, we’re thrilled to see to get our recurrence monitoring coverage. So what that and just to lay this out in kind of simple terms, a patient is treated and goes through different MRD assessments to determine the disease burden during treatment. Then when a patient is in remission, that patient is kind of off that episode of care kind of bundling that we get from Medicare. In order to increase or to to add to the number of time points a patient can be tested, we got what’s called surveillance monitoring. So when a patient is in remission, you can, by medical necessity, treat the patient.

Now what we’ve estimated is that seventy percent of MCL patients will go into remission and that they’ll be tested for two to three years, call it two time points, two to potentially three time points a year. So like net net, I mean, it’s we came up to about a $15,000 per lifetime value of each MCL patient. Now to temper that a little bit, MCL is one of our smaller indications, represents five percent of the volume. But to go to your bigger question, what does this mean for the business, is I think it provides a nice template for us moving forward in other indications. Now we have not yet submitted yet in other indications.

Are generating data in other indications. The the will it really is gonna get these, treatment free. So, like, there’s certain indications like multiple myeloma and ALL, essentially monitoring in a treatment free setting. Although, that is kind of interesting because we are working towards Like, for example, in the master study in multiple myeloma, these could very well work in conjunction where you use MRD negativity at subsequent points to determine a patient truly is in remission. A patient would then sorry, a clinician would then take a patient off a therapy, patient would be in remission and then come back.

So, it’s it’s really, but we will we will most likely kind of start in a kind of the DLBCL and CLL phases before we get to multiple myeloma and ALL. But all part of the long term plan, all part of kind of the continued TAM expansion for heme MRD.

Matt Sykes, Life Science Tools and Diagnostics Analyst, Goldman Sachs: Got it. So on DLBCL and MCL, they’re both blood based indications and they’re helping to kind of drive the shift towards blood that you’ve seen in Q1 in particular. But your push for blood based testing kind of spans across the portfolio. Can you maybe talk about the progress you’re seeing in that initiative? Any potential benefits testing frequency?

I mean, you kind of addressed that a little bit. But just as you kind of move to blood across the portfolio, what kind of benefits should we see there in terms of potential volumes?

Chad Robbins, Co Founder and CEO, Adaptive Biotechnologies: Yes. I mean, ultimately, right, a blood based test is much less invasive. Some in in some settings, it’s detectinology and more of the biology calls only for blood based testing, DLBCL and c l and CLL. In others, we call it more of a complementary test, for example, in multiple myeloma, certainly in the academic medical center, both for multiple myeloma and ALL, it’s used as a complementary test to bone marrow, in between bone marrow draws. Okay.

In the community setting, though, this is where you don’t do bone marrow testing, it’s become incredibly important to be able to do a blood based kind of multiple myeloma test. I will say we had great data, a kind of a host of the top KOLs in ALL earlier this year published on blood based testing in ALL over PCR and flow cytometry as the test to do. And that’s taken hold. We’ve used that to promote, and it’s gone very, very well. Our increase in blood based testing for ALL has gone from kind of twenty three percent to thirty seven percent.

In multi myeloma, blood based testing has remained at twenty one percent. But remember, we’ve grown quite a So, on a nominal to forty percent growth in multi myeloma. So, on a nominal basis, you’re looking at pretty significant blood based growth. So, it really is a focus a long term focus of ours to move as much as we can to blood based testing.

Matt Sykes, Life Science Tools and Diagnostics Analyst, Goldman Sachs: Got it. And just following the increased Medicare rate for clonoSEQ at the beginning of this year, what progress are you making in updating contracts, signing new contracts with commercial payers at that new higher rate? Like how is that progress going?

Chad Robbins, Co Founder and CEO, Adaptive Biotechnologies: Honestly, it’s going great. We’ve had some key wins, key payer contracting wins for both for recontracting and new contracts. So I’d point to a few, some of the hard hard ones like Anthem, you know, some of the blue blues, Humana, the the key blue states. Humana, all have either contracted new contracts or recontracted. We’ve had a bunch that have recontracted at or close to the Medicare rate.

That’s something that we protect, preciously is to make sure that we’re not discounting to make sure we’re keeping the value and the price of the test high. So that’s been it’s been really good, and we continue it’s a huge effort of ours and something I’m personally very involved with our both the government and our commercial payers on a weekly basis.

Matt Sykes, Life Science Tools and Diagnostics Analyst, Goldman Sachs: Okay. You talked a little bit about what drivers are pushing you towards that 1,300 ASP target for the year. Just thinking a little bit longer term on ASPs, how high can they get over the longer term as you kind of reduce no pays? Like what’s sort of the ultimate goal do you think in the ceiling for ASPs?

Chad Robbins, Co Founder and CEO, Adaptive Biotechnologies: Yes. I mean, I’ll just put out where we’re at right now. Remember, kind of historically, we have said that we can get to an ASP of $1,700 We actually raised that number to $1,800 based on the new gap fill pricing and kind of what we’re seeing. So I think right now, we’re comfortable with that number. And as I’ll also reiterate, kind of executing towards towards that $1,300 for this year on an average.

Matt Sykes, Life Science Tools and Diagnostics Analyst, Goldman Sachs: Got it. And then just moving over to some of the milestones. You talked about the $4,500,000 in milestone payments in the first quarter. And you also talked about the funnel building following the ODAC decision. Like how should we think about milestone contribution in coming years?

And how does that change as you try to shift towards more fee for service based model?

Chad Robbins, Co Founder and CEO, Adaptive Biotechnologies: Yes. I mean, look, milestones are a little bit of a double edged sword. They’re on one hand, they’re great. It’s great cash. It comes in at 100% margin.

You know, on the on on the flip side, they’re they’re hard to predict timing, and and so it’s kinda hard to model out. You know? So that that being said, you know, we’ve made a concerted effort to see if we and by way, I was just it’s not just us. I mean, pharma companies, don’t love them either. They they kinda sign these deals and, like, then we send them an invoice.

Like, hey. You owe us 4 and a half million bucks. We’re like, wait. Whose budget is that coming from? So so, I mean, they’re they’re they’re game to to renegotiate these contracts when they come to.

I mean, not all not gonna happen overnight, but we have been successful in some new contracting and some renegotiation of existing contracts to more of a a a higher dollar for a fee for service, contract. So, you just saw kind of a higher margin, predictable revenue stream from that. Was there what was the question? Was there did I answer that? No,

Matt Sykes, Life Science Tools and Diagnostics Analyst, Goldman Sachs: did. About the shift towards fee based Okay, yes. So one of the things that’s been topical from a policy standpoint is the recent appointment of Vinay Prasad, Head of CBER. And he’s been, in the past, outspoken against MRD as a primary endpoint. Do you see any risk of slowdown in adoption to this change in leadership?

And have you had any discussions to educate, awareness, things like that?

Chad Robbins, Co Founder and CEO, Adaptive Biotechnologies: Yes. Mean, look, we’re always monitoring our business and evaluating the situation. A couple of things to point out. One is he is over CBER. So a lot of the drugs that we are involved with that have, been primary endpoint milestones aren’t aren’t going through CBER, going through other areas.

So that’s something to point out. thing is he he came from UCSF. I mean, one of our largest growing accounts in Phonaseek is UCSF. just overwhelming evidence, just in in in adoption from the clinical community, the pharma community. Again, I’m not I of course of course, it’s something that, you know, like, you know, interesting choice, and we’re work with him and and, you know, continue to educate.

He’s by the way, he he is a knowledgeable and and and a fan of MRD. So I want to be a little bit careful. It’s just in terms of kind of an endpoint. That being said, like, we’ll continue to kind of work with our pharma and also convert some of these over to fee for service deals that aren’t subject to milestones. So a lot of work going on there.

Matt Sykes, Life Science Tools and Diagnostics Analyst, Goldman Sachs: Got it. And then kind of the other side of that, have you seen any impact from your pharma customers and their willingness to start up new trials in light of uncertainty surrounding the new administration?

Chad Robbins, Co Founder and CEO, Adaptive Biotechnologies: Again, while we are monitoring it, the answer is no. I mean, we have not seen a slowdown, but we are being cautious. If if you remember, when we raised our guidance in the first quarter, we didn’t touch our pharma guidance because and we because of, you know, potential impact from political environment, etcetera. So, you know, we’re I I think we’re being prudent on it, but, you know, the reality is is, you know, MRD, yes, may maybe there’s some slight forces against, but there’s so many tailwinds that it’s it’s, you know, and and, you know, the the utility of it for pharma companies developing drugs, they they get it, and they’ve been working with us for a long time. So now they’re putting us on their new indications, etcetera.

Matt Sykes, Life Science Tools and Diagnostics Analyst, Goldman Sachs: Okay. Maybe moving to the partnership that you struck with NeoGenomics. I believe you’re working towards the Phase one launch in the second half of this year. One, how is progress going there? And what benefits could you see from the combined offering, particularly in the community setting?

You’ve already talked about some of efforts you’re doing in the community setting, but this obviously gives you better access to that setting as So maybe talk about, one, the progress you’re having on launching? And two, what benefits could you see from this?

Chad Robbins, Co Founder and CEO, Adaptive Biotechnologies: Yes. So of all, it’s going really well. Maybe setting the stage here, they’re heavily inundated in the community and 60 we’re not in 60% of the accounts that they’re in. So the leverage that we’re going to get being put on kind of a COMPASS and CHART test is we believe we’re pretty excited about that. One of the main benefits is the sample collection.

So when they’re doing a diagnostic workup and they’re getting a sample, for MRD, we’d have to go do what’s called pathology retrieval and go find the sample. In this case, we don’t have find the sample because we already have they already have the sample. That’s where we’re seeing kind of this huge benefit. I mean, look, we started working together like in earnest four months ago. We obviously announced a partnership.

We got the governance in place. We’re going we both have had experience in in kind of lab partnerships. So we’re we wanna make sure operationally that all the pipes are connected and that everything works and that we’re we probably could go faster, but I don’t think I wanna make sure we get this get this right. And and just to be clear, you know, we’ll we’ll launch in some accounts and kind of pilot kind of third and fourth quarter, but we’re really expecting when you see kind of that volume growth, and we’ll talk about profiles and everything else, but that will become really in year two and year three of the partnership and beyond if we extend the partnership. So call it 26%, 27% uplift from volume from Neo.

Matt Sykes, Life Science Tools and Diagnostics Analyst, Goldman Sachs: Okay. And just sticking to the community setting, you saw over 40% growth here in Q1. Maybe talk about any commercial initiatives that are driving that strong growth and what you guys are doing to continue the momentum there?

Chad Robbins, Co Founder and CEO, Adaptive Biotechnologies: Sure. It really breaks out three key initiatives. The is national strategic accounts. We are focused on the accounts that matter. If you look at the community, there’s these kind of network accounts that are have a large portion of the treating clinicians that are in these in these accounts.

And we’ve reorganized from a geographic model to a leader of those national accounts so that we’re implemented implementing kind of these these playbooks for these national accounts. And it’s been that that mentorship and that kind of cross pollination to say, okay. We’re gonna basically put the SWAT team, you know, to go after these these key accounts. That’s been that’s been incredibly impactful. The we have done we’ve focused a lot of our marketing budget and and, I would say, our intellectual budget, if you will, on peer to peer education.

So, we have peer to peer programming where academic KOLs are going in and doing programming, to educate the community oncologist. Because remember, it’s a little bit different of a treatment paradigm. The community oncologist, that doctor wants to know, okay. What do I do with this? How do I treat the patient?

And so we’ve not only educated in doing this program, we also simplified the messaging around that. And then the pillar of this, which we’ve already talked about, but you have to when you say, hey. What’s the optimal for the community? It’s Flatiron. I mean, Flatiron is going live, in in in in the half we we said the half of this year.

More to come on that. But those three things, plus we already mentioned Neo, which will come into play next year. So it’s really those four things. And, I mean, I just can’t stress, the importance of the community and and, well, also just, you know, getting that workflow into the community is just just key.

Matt Sykes, Life Science Tools and Diagnostics Analyst, Goldman Sachs: Got it. Before I move on to immune medicine, any questions from the audience? Great. So, to immune medicine, you have the work with Genentech in the cell therapy space. You’re also working to generate preclinical data in your lead autoimmune indication.

Maybe give us an update on the progress for both of these projects?

Chad Robbins, Co Founder and CEO, Adaptive Biotechnologies: Yes. Just we’ll start with Genentech. Obviously, the idea is to do kind of personalized cell therapy. In this case, we’re moving it to what we’re calling a digital TCR strategy where we can instead of physically sequencing the tumor and then doing our assay to pair up the T cell receptors that are responding to the tumor, we’ve been generating these massive data sets that’s going to allow us to do this essentially in vitro, like we’re going to be at this in silico model where we can essentially sequence a tumor and know what TCRs are going to bind to that tumor, hand those over to Genentech and have them put those back in. And that data is accelerating.

It’s looking really great. And why are we doing that? We’re trying to reduce turnaround time and reduce cost to make a real viable product. So that’s that’s been going great. It’s this is interesting.

This is kind of building on David Baker and and, like, I’m the guy from Google who won the Nobel Prize for AlphaFold two. This is kind of really the next big problem in biology because protein protein interaction of T cell receptor to antigen binding. And so, we’re at the forefront of this, generating massive amounts of data. And I think, as a side, probably has some interesting applications outside of this partnership for another discussion. So that’s what’s going on with that.

And then secondly, our, what I’ll call, our in house program, our strategy is pretty simple to explain, which is we have been able to identify the autoreactive T cell receptors in certain autoimmune diseases, and and they have certain families that we’re blocking with an antibody. So we can call V beta families or V alpha families that are the offending T cell receptor in certain autoimmune disorders. And so, we’re developing as we mentioned, we’ve identified our lead asset. We’re developing a preclinical package based on that. I think there’s interesting optionality of what we do with that program.

Again, stay tuned. This is super excited about this. And just in general, how we framed this business is, hey, this is a pretty low cost call option for a high value opportunity because we’ve really figured out how to ring fence the burn around it. And I think that’s resonated.

Matt Sykes, Life Science Tools and Diagnostics Analyst, Goldman Sachs: Got it. And then I’ll ask you the unfair question of so you’ve guided and ring fenced that cash burn to about 25,000,000 to $30,000,000 per year. How do you balance sort of that lower level of spend versus historical with continuing to advance the programs and move them forward? Well, yes. How do you calibrate the right balance of spend to make sure that you’re focusing a lot on MRD, but at the same time, you’re also realizing potential opportunities here?

Chad Robbins, Co Founder and CEO, Adaptive Biotechnologies: Yes. No. It’s a good and fair question. I mean, the thing to recognize, though, is that actually have some revenue coming in from that business, and it’s actually pretty high margin revenue. So that 25,000,000 to $30,000,000, from immune medicine kind of bakes in kind of the revenue from that business.

Although we obviously don’t guide to it, we do we do report on it. So kinda that’s a that’s a net number. I will tell you this. We, in no way, shape, or form, will will, won’t invest in MRD. Any anything we need to invest in MRD, we have the capital to invest in MRD.

We we have the capital to get to profitability. There’s there’s nothing that we’re gonna do to jeopardize it. And then then then kinda the point is we really phase gate our investments. So it’s based on kinda what it is that we’re seeing. And, you know, if if there’s something that we see that makes us confident that we can invest more money, we will continue to do so.

If not, I think adaptive and it’s taken some time, and we’ve made, of course, over our lifetime, we haven’t all done this perfectly. But I think we’ve demonstrated an ability to cut programs when we saw that they weren’t going to have a positive ROI in a time frame that made sense to our shareholder base. So yes, that’s how we think about it.

Matt Sykes, Life Science Tools and Diagnostics Analyst, Goldman Sachs: Got it. That’s very helpful. Maybe moving to sort of the financials and path to profitability. You touched a little bit on the transition to NovaSeq X from your NextSeq instruments, and that is expected to be a pretty major driver of margin improvements. I think you’ve called out five to eight percentage points in the twelve months.

Kind of what gives you, one, the confidence of that margin uplift and two, a seamless transition as well? It’s not easy to be kind of making this transition over.

Chad Robbins, Co Founder and CEO, Adaptive Biotechnologies: Yes. So of all, mean, this has been a multiyear project, and we’ve had really dedicated leaders from a technical standpoint, from an asset standpoint, from a software standpoint, from an operations standpoint, really kind of this team scrum approach that has very carefully managed step by step this process. And what I can say is there’s the same thing I just mentioned with phase gate with capital. There are phase gates for every step of the way when you look at different metrics to make sure that you’re on track. The good news I can say is the data is looking beautiful.

We’ve got concordance data that’s looking really good, really good. And the final step is just kind of finishing off kind of the software pipeline. But we committed to kind of a half of the year launch. We’re on time, on track. We’re confident in our ability to deliver it.

And, yes, I mean, the the margin profile, what’s going to drive it is volume. And so we can put more samples, a lot more on each flow cell. I also should say, we’re we’re we’re still going to be smart about it. We’re going keep some next weeks around as backup. We’re going to do a phased implementation where we’re doing clinical and then doing pharma.

There’s a whole bunch of things that we’re doing to say, hey, it’s a big deal. Right? And why are we doing it? Because 10% gross margin improvements at scale, yes, 5% to 8% in the twelve months, and then we do think that number is going to be double digits. I mean, so and look, I mean, we talked about kind of the long term margin profile.

That’s one of the things that’s going to get us there.

Matt Sykes, Life Science Tools and Diagnostics Analyst, Goldman Sachs: Got it. Yes, I want to touch on that a little bit. Before we get there, maybe from an OpEx perspective, you guys have done a really good job leveraging your existing sales force and driving the growth that you have experienced. Is there any need for expansion in headcount or any other commercial investments as you continue to grow? Like how do you feel you are from a commercial side?

Chad Robbins, Co Founder and CEO, Adaptive Biotechnologies: Honestly, I feel we’re pretty good. I mean like we’ve got 65 reps in the field right now, roughly split, well, about fifty-fifty. So 50 focus on academic medical centers. There are key account managers. 50 focus there are DHS’s focused on the community.

I’m not to say I mean, we’re going to add here and there, we’re going to continue to looking at kind of geographic optimization. There may be new selling strategies and things like that. But if you look at kind of the windshield time and all the metrics we kind of track by account and kind of benchmark against our peers as to kind of what kind of optimal number of counts per in clinicians per rep, we’re tracking pretty good. I mean, what we have done, we talk about leverage, like Neil is a great example of leverage, right? I mean we’re leveraging a couple of 100 person sales force to be able to get ID sample in the door with limited pretty limited financial investment.

Over time, once we’re in those accounts, partnership kind of, we’ll see where it goes. But right now, we’re we feel pretty good about the profile in the field.

Matt Sykes, Life Science Tools and Diagnostics Analyst, Goldman Sachs: Got it. And then maybe a similar question from an R and D perspective. What areas do you see is attractive to invest? And do you expect to increase the spend above that 80 to $90,000,000 range in the coming years? I mean it will scale with sales, I understand that.

But just from sort of a percentage of sales basis, how you’re thinking about it?

Chad Robbins, Co Founder and CEO, Adaptive Biotechnologies: Yes. I mean, just to be clear, that 80,000,000 to $90,000,000 spend in R and D is not for is for the whole co. And more of the spend in R and D goes to I’m than MRD. However, I do want to point out that, like we will continue looking at R and D for assay enhancements, for blood based testing, for new indications, things like that. I mean NovaSeq was and things roll off over time.

NovaSeq was a big R and D project. Mhmm. Also, remember, at Adaptive, we put software in in our r and d budget as well. Yeah. So so net net, I mean, look, we we we’re kinda looking at looking at kinda what continue we have, I believe, several years of really strong top line growth because of all the initiatives that I talked about.

But as a team, as a board, we continue to look at, okay, what’s going to continue that growth into the future? How are we going continue kind of leveraging our position in MRD, leveraging our position in hematology to continue to increase our TAM and our opportunity.

Matt Sykes, Life Science Tools and Diagnostics Analyst, Goldman Sachs: Got it. And as you approach adjusted EBITDA profitability in MRD, how are you thinking about the longer term margin profile of that business specifically? Let’s strip out I’m and just talk about MRD.

Chad Robbins, Co Founder and CEO, Adaptive Biotechnologies: Yes. I mean, that’s very clear to me. I think we’re going be at 70% plus gross margins. And let’s focus on the plus here and 20% plus EBITDA margins. Where that can go to is how much we continue to drive and execute on the business.

But I think we can really focus on the plus in that 20%. But and I’d like to continue that top line growth that we’ve been achieving over the last couple of years.

Matt Sykes, Life Science Tools and Diagnostics Analyst, Goldman Sachs: Got it. And then just maybe to finish up, are there any important data readouts or catalysts that we should be looking for? Maybe like as you kind of talk to investors, what are some of the things that we should be looking out for over the balance of this year?

Chad Robbins, Co Founder and CEO, Adaptive Biotechnologies: Yes. So of all, a lot of our major data readouts are at ASH. That being said, you know, we had great data at ASCO. You know, the MIDUS three study, which is seven ninety one patients, showed that you could use MRD interventionally to guide therapy decisions, in particular, the decisions of whether or not to transplant. That’s an 800 patient study.

In for quadruplicate therapy, there were four studies, Cepheus, Perseus, ISCO, there’s I forgot the name of the other. Four different studies for dara, isatuximab that basically said that the depth and sensitivity of response is super important to measure using MRD based on a prognostic value. So, I mean, there’s data all next week at VENETTA stop. There’s going to be another interim readout of that saying that you can if for CLL, you can take patients off of venetoclax. So, I mean, for us, there’s data that’s just generating it’s it’s it’s it’s it’s it’s and it comes in.

And some some are the ones that are really interventional, and show true clinical utility and we can just go to the community and say, here’s what to do with it. These are the key ones. And that’s also why you’re seeing some of the growth and some of those indications, and based on kind of this land and expand strategy where, okay, you go in with a use case, They do they do it at that time point. They see they they know the workflow. They understand how to read the report, and then they’re like, wow.

Why aren’t I doing this across the other patient care continuum? It’s so easy. It makes so much sense. All I’m doing is counting cancer cells. And who wouldn’t why as a doctor or a patient, you wouldn’t wanna know how many cancer cells are left in your body both during and after treatment?

Of course, you would. So that’s that so that’s how we think about the business in simple terms.

Matt Sykes, Life Science Tools and Diagnostics Analyst, Goldman Sachs: Got it. And with that, we are out of time. Chad, thank you so much.

Chad Robbins, Co Founder and CEO, Adaptive Biotechnologies: Thanks, Matt.

Matt Sykes, Life Science Tools and Diagnostics Analyst, Goldman Sachs: It was great.

Chad Robbins, Co Founder and CEO, Adaptive Biotechnologies: Appreciate it. Yeah.

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