Adaptive Biotechnologies Corp (ADPT) Q4 2024 Earnings Call Highlights: Strong MRD Revenue ...

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Wed, Feb 12, 2025, 12:11 AM 4 min read

Total Revenue (Q4 2024): $47.5 million, 4% growth from the same period last year.
MRD Revenue (Q4 2024): $40.1 million, up 31% from a year ago.
Immune Medicine Revenue (Q4 2024): $7.3 million, down 51% from a year ago.
Full-Year Revenue (2024): $179 million, 5% increase year over year.
MRD Revenue (Full-Year 2024): $145.5 million, up 42% from a year ago.
Sequencing Gross Margin (Q4 2024): 59%, an increase of 11 percentage points versus prior year.
Full-Year Sequencing Gross Margin (2024): 53%, compared to 41% in 2023.
Adjusted EBITDA Loss (Q4 2024): $16.4 million, compared to $24.7 million in Q4 2023.
Adjusted EBITDA Loss (Full-Year 2024): $80.4 million, versus $116.4 million in 2023.
Net Loss (Q4 2024): $33.7 million.
Net Loss (Full-Year 2024): $159.6 million.
Cash Position (End of 2024): $256 million in cash, cash equivalents, and marketable securities.
ClonoSEQ Test Volume (Q4 2024): 20,945 tests, a 34% increase from the same period last year.
MRD Pharma Revenue Growth (2024): 44% versus 2023, including $12.5 million in regulatory milestone revenue.
Full-Year 2025 MRD Revenue Guidance: $175 million to $185 million.
Full-Year 2025 Operating Expenses Guidance: $340 million to $350 million.
Full-Year 2025 Cash Burn Guidance: $60 million to $70 million.

Warning! GuruFocus has detected 9 Warning Signs with ADPT.

Release Date: February 11, 2025

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

Adaptive Biotechnologies Corp (NASDAQ:ADPT) reported a 42% increase in MRD revenue compared to 2023, driven by clinical testing and pharma.
The company obtained a new gapfill rate for its clonoSEQ test, increasing the rate by $300 per test.
Adaptive Biotechnologies Corp (NASDAQ:ADPT) completed restructuring initiatives, resulting in a 40% reduction in cash burn from 2023.
The company ended 2024 with a robust cash position of $256 million.
Adaptive Biotechnologies Corp (NASDAQ:ADPT) announced an exclusive strategic commercial partnership with NeoGenomics to expand its presence in the community.

Negative Points

Immune Medicine revenue decreased by 51% from the previous year, driven by lower Genentech amortization and reduced pharma and academic services.
Total operating spend for the quarter was $81.3 million, representing an 11% decrease from Q4 2023, but still a significant expenditure.
The company anticipates a total cash burn for 2025 between $60 million and $70 million.
Immune Medicine adjusted EBITDA loss for fiscal year 2024 increased to $26 million from $14.1 million in 2023.
The guidance for 2025 includes conservative MRD pharma services growth due to uncertainties with a new administration and broader impacts from the biopharma industry.

Q & A Highlights

Q: Can you unpack the $1,300 assumed ASP for the MRD business and what could drive it higher? A: Kyle Piskel, CFO, explained that the ASP drivers include the full-year impact of the gapfill rate for Medicare, recontracting with existing and new payers, revenue cycle management improvements, and Medicaid traction. These factors collectively contribute to the ASP target.

Q: How will the NeoGenomics partnership contribute to the 2025 guidance? A: Susan Bobulsky, Chief Commercial Officer, MRD, stated that the partnership is expected to start cross-promotion in the second half of the year, with a slow ramp-up to ensure best practices. The 2025 guidance does not include material volume from NeoGenomics, with significant contributions expected in 2026 and 2027.

Q: What is the expected pacing of margin progression and the impact of the NovaSeq X transition? A: Kyle Piskel, CFO, noted that the sequencing margin is expected to remain around 59% in the first half of the year, with improvements in the second half due to the NovaSeq X transition, which could add 5 to 8 percentage points to the margin over 12 months.

Q: Can you discuss the potential impact of the updated NCCN guidelines for B-cell lymphoma on Adaptive? A: Susan Bobulsky, Chief Commercial Officer, MRD, highlighted that the inclusion of MRD in the guidelines is a positive step, aligning with Adaptive's strategy. The company plans to continue generating data to support guideline expansion, which could aid in commercial payer contracting.

Q: What is the broader potential upside if the transition to a digital approach in the Genentech partnership succeeds? A: Harlan Robins, Chief Scientific Officer, explained that the digital approach could significantly reduce time and cost for personalized cell therapy, with applications beyond cancer therapy, such as personalized cancer vaccines and immune monitoring.

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

This article first appeared on GuruFocus.

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