Adaptive Biotechnologies (ADPT) Morgan Stanley 24th Annual Global Healthcare Conference summary

Key guideline and market updates

• NCCN guidelines for multiple myeloma now include a dedicated page for MRD testing, naming clonoSEQ specifically for the first time, which is rare for a test manufacturer.

• Guidelines now prefer 10^-6 sensitivity for MRD, aligning with clonoSEQ's capabilities and recommending use at regular intervals during maintenance and surveillance.

• Peripheral blood is now recognized for MRD assessment in multiple myeloma, supporting a shift from bone marrow and increasing potential test volumes.

• Total addressable market (TAM) was recently increased by $800 million, reflecting more tests per patient per year.

• Blood-based testing and serial monitoring are driving higher adoption, especially in community settings, with 36% of volumes now from community practices.

Financial performance and outlook

• Clinical volumes and repeat ordering rates are strong, with high compliance in EMR-integrated systems like Flatiron and Epic.

• Pharma business momentum is robust, and the company expects to generate free cash flow and EBITDA in Q4.

• Guidance for 2023 is 38%-40% growth, with potential upside due to strong adoption and pharma contributions.

• Blood-based testing now accounts for 51% of volumes in Q2, increasing the number of tests per patient and expanding market size.

• Submission to MolDX aims to increase the number of reimbursed tests per episode, expected to alleviate ASP pressure.

Strategic separation and business focus

• A separation of the MRD and immune medicine businesses is planned, driven by maturity and scale in both segments.

• MRD is now the core business, generating most revenue and investment, while immune medicine is managed with prudent investment.

• The immune medicine business leverages proprietary data and AI for applications like personalized cancer vaccines and target discovery.

• By year-end, the company will outline the path forward for the immune medicine business, aiming to maximize shareholder value.